Wednesday, March 11, 2009

IGCC Cost Error or Illinoisian Math - You Call it

$500M math error found in FutureGen cost

e all learned in today's headlines that the cost of the FutureGen project did not really double, as claimed by the Bush administration in their Xmas Eve 2007 dumping of the ill-fated US flagship IGCC+CCS project

No, as it turns out, the DOE "erred" by $500 million. The project cost may actually have increased by only 39% above its original $1 billion budget, and should not have been killed after all.

Politics and economics
Apparently, the resurrection of the FutureGen project - in Illinois - was on the new administration's agenda all along.

Thanks to the Government Accountability Office they now have the vehicle to put it back on track - in less than two months after Obama took office!

A GAO report that just brought this to light was prepared for Representative Bart Gordon (D-TN), chairman of the House Science Committee. (Why did it take a year to surface? And, why didn't FutureGen supporters challenge this "mistake" earlier?)

Rep. Gordon, expressed "astonishment" that the top DOE leadership made critical decisions about US energy future and efforts to combat global warming on the basis of "fundamental budget math errors".

He called it "math illiteracy on a grand scale and with global consequences."

To inflate or not to inflate?

What's all the fuss about anyway? What "mistakes" have been uncovered?

According to the GAO report, it all happened back in December, 2007 - just after it was prematurely announced that the selected site for the project would be Mattoon IL, and not in Texas.
After spending some $175 million on the project, the DOE announced that the estimated cost had doubled from the original $950 million estimate, and pulled the plug on the project.

This conclusion, now says the GAO, was reached when DOE
inaccurately compared the original estimated project cost in constant 2005 dollars with a new estimate in fully inflated dollars that reflected what would have been spent over the life of the project.

Based on the same constant 2005 dollars, say GAO auditors, an apple-to-apples comparison would have concluded that the plant would cost $1.3 billion, an increase of about $370 million, or "only" about 39 percent, over DOE’s original estimate.

It did not increase by more than $900 million as previously concluded by DOE, a near doubling of the project cost, say GAO auditors.

Could it be?

And why would the DOE be so bold as to make such a blatant apples-to-oranges comparison in broad daylight? Why wasn't this error caught sooner?
And why did the GAO report just now surface?

Could it be that the FutureGen Alliance's "premature" announcement of its decision to build the project in Illinois had something to do with a change in the DOE's methods used to estimate project costs?

Could it be that such an "error" was pure politics, and it took a full change in government to get the GAO to issue its report and bring this all to light?

According to the Times article, internal DOE communications were found indicating that key members of DOE management were looking for reasons to kill the project.

As a substitute, the DOE is supporting a number of regional CO2 capture and storage demonstrations, such as the WESTCARB oxy-fuel project in California, but no alternative commercial-scale power project has yet surfaced to replace FutureGen.

This may change soon as the economic stimulus bill just rushed through by the Obama administration and passed by Congress may provide money for the original FutureGen project.

As reported by the Washington Post last week, the bill contains language providing for $1 billion for a "clean coal" research project. Everyone seems to know that this project is FutureGen. President Obama supported the project when he was a senator from Illinois, and new Secretary of Energy Steven Chu "would support it with some modifications" according the the Post.

Chu has been q
uoted as saying that FutureGen "deserves a fresh look" among potential clean coal projects.

So, stand by IGCC fans.

A year after Matooners awoke to find coal in their stockings, it looks as if a belated Xmas present may be on its way.

Yes, my Illinoisian friends, there is
clean-coal Santa Claus in the White House after all!

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