CHICAGO — Illinois’ congressional delegation and Gov. Rod Blagojevich vowed to fight a U.S. Department of Energy decision yesterday to withdraw its funding support for a pioneering coal plant known as FutureGen in favor of a restructured clean coal program that would limit the federal government’s costs.

The announcement came yesterday, a day after Energy Secretary Samuel Bodman told members of congress in a private meeting that the agency was close to dismantling the FutureGen project. The $1.8 billion 275 megawatt plant was to be built by a private, nonprofit consortium for the Energy Department. The consortium in December announced its selection of a central Illinois location as the preferred site for the plant over a town in Texas. Federal funds were to cover about $1.3 billion, up from an initial $800 million commitment.

U.S. Sen. Dick Durbin, D-Ill., said in a statement he had never witnessed “such cruel deception” during his 25 years in congress. “The Illinois delegation is going to make the case for FutureGen directly to the president. We will not go down without a fight,” Durbin said.

Blagojevich said in a statement: “Today marks an unfortunate setback, but we will not give up the effort to make FutureGen a reality in Illinois. I urge President Bush, who initiated the FutureGen project in 2003 and has said repeatedly that we need to develop domestic energy resources, to take a personal role in making sure the project moves forward as planned.”

In a press release, the Energy Department said it remains committed to promoting the generation of clean coal energy but under a restructured program. The department will promote the development of multiple plants and will seek $648 million in the fiscal 2009 budget to finance them. “This restructured FutureGen approach is an all-around better investment for Americans,” Bodman said.

The department also released a request for information from the coal industry on the costs and feasibility of building clean coal facilities that would achieve FutureGen’s goals, but the department would limit dramatically its financial commitment under the restructuring.

The announcement dealt a blow to Illinois which had long lobbied for the project. The 12-member private alliance includes the largest producers and users of energy. The project was expected to create 1,300 construction jobs and 150 permanent jobs and generate more than $1 billion of economic impact statewide over the construction period.

As part of its incentive package to lure the project, the state offered about $30 million in grants and sales tax exemptions and $50 million in borrowing assistance through the Illinois Finance Authority under the state’s Clean Coal Bond Program, which carries the state’s moral obligation pledge.

Backers believe the project will have a revolutionary effect, spurring additional research and plant construction internationally, with the potential to reduce the nation’s reliance on foreign oil and address the world’s energy needs with an affordable source of energy without increasing pollution.

In addition to eliminating many of the polluting emissions generated by coal plants, most of the plant’s carbon dioxide emissions that contribute to climate change will be held more than one mile underground in the Mt. Simon Sandstone reservoir. Construction was to begin in 2010. The fate of the plant is now unclear, although the alliance could apply for restructured program.

Subscribe Now

Independent and authoritative analysis and perspective for the bond buying industry.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.