BPU Awaits Funding Opportunity

The proposed Jamestown Board of Public Utilities carbon capture and storage initiative will not qualify for the money that would have helped pay for FutureGen, once the flagship of the federal government's clean coal research efforts.

The U.S. Department of Energy will divide the hundreds of millions of dollars among much larger projects that employ Integrated Gasification Combined Cycle technology, the same technology that was to be used in the FutureGen plant.

IGCC technology is a different method of coal burning that is more economical on power plants much larger than the proposed 43-megawatt Circulating Fluidized Bed plant the BPU hopes to build on Steele Street to replace the old, inefficient and dirty Samuel A. Carlson Generating Station.

''It looks like the project will not qualify as an applicant for that FutureGen project,'' said David Leathers, BPU general manager. ''The restructuring of FutureGen was specifically ... targeted to IGCC plants greater than 300 megawatts.''

BPU officials await the opportunity to submit a formal application for funding through Round 3 of the DOE's Clean Coal Power Initiative, which is more tailored toward projects like the Jamestown carbon capture and storage initiative.

The DOE was expected to request CCPI proposals months ago. Some worried it would wait until after the November election, though both presumptive presidential nominees - U.S. Sen. John McCain, R-Ariz., and U.S. Sen. Barack Obama, D-Ill.- have expressed their support for clean coal efforts. Others believed it was being put off until the DOE figured out how to restructure the FutureGen project.

According to Leathers, the time may be fast approaching for an application to be submitted to the DOE.

''We feel the CCPI solicitation will be out in a month or so,'' Leathers said.

The FutureGen project was aimed at building an IGCC plant that produced hundreds of megawatts of electricity, virtually no pollutants and a steady stream of carbon dioxide ready to be buried deep underground. As the price of the project continued to rise, the DOE decided to withdraw from the public/private initiative and use the money it would have spent on FutureGen to finance multiple IGCC initiatives.

At the time, BPU officials didn't expect the FutureGen restructuring to benefit the Jamestown project, though they assumed a wait-and-see attitude. Instead, their hopes continued to rest on acquiring tens of millions of dollars through the CCPI program.

Without that money, it will likely be difficult for the project to proceed. For one thing, the private companies that hope to use the proposed BPU power plant as a means of demonstrating the viability of carbon capture and storage technology - companies like the industrial gas supplier Praxair, the carbon compressor manufacturer Dresser Rand and the consulting firm Ecology and Environment - need the money to build the equipment.

In addition, Gov. David Paterson's recent endorsement of the Jamestown initiative hinges on the project team acquiring ''substantial funding'' for the project from the DOE ''or other entities,'' according to the agreement reached between the project team and the state.

And BPU officials have said the proposed CFB power plant - which will emit a very low amount of most harmful pollutants but only slightly reduces dangerous carbon dioxide emissions without the carbon capture and storage system - is now intimately tied to the carbon capture and storage initiative.

The Cost Question

If the project proceeds, the power plant will be built with an expensive air separation unit that will produce pure oxygen. That oxygen will then be combined with recycled flue gas and fed into the fire in place of regular air, so the plant will emit little more than a steady stream of carbon dioxide for easy capture - a process called oxy-fuel combustion perfected by Praxair.

Carbon compression and purification equipment that will also be built beside the plant will then compress the carbon dioxide into a liquid-like state. The carbon can then be transported via pipeline to a site suitable for carbon storage - and it will be injected thousands of feet underground, where harmful carbon dioxide emissions originate in the form of coal, oil and other fossil fuels. There, it will be absorbed by porous rock formations and contained under the extreme sub-surface pressures.

The private partners have assumed responsibility for finding the money to pay for the carbon capture and storage component, which is expected to cost $135 million. But it remains unclear what the base plant - which remains the BPU's responsibility - will ultimately cost, though the plan calls for excess sales of electricity to provide more than enough money to pay off the bonds. Project opponents believe the $145 million projection is no longer accurate, and that the rising cost of fuel and construction materials will make the plant much more costly.

They also say that - since the energy-intensive carbon capture and storage system will reduce power output by 30 percent - the BPU will be left with less power to sell to other utilities.

BPU officials say that position rests on the assumption that the BPU will be forced to operate the carbon capture and storage system for the entire lifespan of the plant while no other carbon-emitting power plants in the country will be held to the same standard. In addition, they say it rests on the assumption that stringent federal regulations on carbon dioxide that will affect all carbon-emitting plants and a federal cap-and-trade program do not go into effect, which they believe to be unlikely.

The agreement between the state and the project team considers the possibility of a federal cap-and-trade program being put into effect. According to the agreement, if that happens, the project team will have to use some of the proceeds from selling carbon credits to pay the state back the $6 million Paterson has committed to the project.

The state's support for the project comes with several other requirements. For one thing, BPU ratepayers must be protected ''to the extent practicable from potential long-term operating losses associated with exploring and/or demonstrating the feasibility of (carbon capture and storage technology).'' In addition, the BPU will be required to develop a conservation incentives program ''that will achieve maximum energy savings economically feasible'' in the BPU service area.

Also, the BPU will have to operate the carbon capture and storage equipment for the entire lifespan of the plant, emitting no more carbon dioxide than a natural gas plant of comparable size. Environmentalists that oppose the project and have criticized Paterson for his endorsement remain unsatisfied with that amount, though natural gas plants are generally not among the power-generating methods to which they oppose.