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!

Don't Forget - Visit


Gasification Editor - GTW said...

Just to confuse matters over the "real" cost of FutureGen, the following AP report was sent to me in response to the above posting on the GAO findings.

Energy Secretary Says FutureGen Price Tag May Be $2.3 Billion.

The AP (3/12, Hebert, Jackson) reports, "The price tag for a futuristic coal-burning power plant that President Barack Obama is thinking of reviving seems to still be going up, though a [GAO] report Wednesday said the Bush administration overstated the cost when it canceled the project last year." According to the AP, "Energy Secretary Steven Chu acknowledged that when the [FutureGen] plant was canceled a faulty cost analysis put the price...higher than it should have been - at as much as $1.8 billion. While disavowing any responsibility for the mistake, Chu said now that even the $1.8 billion figure may be low." The secretary later "told reporters that because of commodity costs and other factors, some estimates now put the price of the plant at $2.3 billion."

Gasification Editor - GTW said...

And another report today piles the criticism of DOE's decision a bit higher:

DOE’s Decision to Abandon FutureGen Was Illogical, According to Staff Report Released by Chairmen Gordon and Miller
Source: U.S. House of Representatives, Committee on Science and Technology

In an effort to kill the FutureGen project, top officials at the Department of Energy knowingly used inaccurate project cost figures and promoted an alternative plan that career staff repeatedly warned them would not work, according to a majority staff report to Science and Technology Committee Chairman Bart Gordon (D-TN) and Investigations and Oversight Subcommittee Chairman Brad Miller (D-NC).

FutureGen was a highly-touted initiative announced by President George W. Bush in February of 2003 to demonstrate that coal could be changed from an environmentally challenging energy resource into an environmentally benign one by sequestering carbon dioxide emissions and eliminating other pollutants. The Energy Department and its industrial partners would build a 275-megawatt, integrated gasification combined cycle coal (IGCC) power plant that would incorporate carbon capture and sequestration (CCS). It would have been the first plant of this type in the world. But in January of 2008, former Energy Secretary Samuel Bodman pulled the plug on the project, reconfiguring it as a privately funded initiative with limited government subsidies. To date, nothing has come of this new initiative.

“To knowingly abandon a program that held out the hope of making a real impact in the effort to reduce greenhouse gases from coal in favor of another program that held out no hope at all—not commercially and not to provide technological innovation to capture and sequester carbon—is inexcusable,” said Gordon. “All we have to show for ‘Plan B’ is lost time and an abandoned global leadership role.”

mack said...

This is a great post Dmitry. I just had one of the ‘Doh!’ moments and ran back to correct my own site before publishing my comment. You see my own comment form did not match what I’m about to advise. I get less comments than you, so never noticed any problem. I’ve changed it now anyway so here goes.

money and profit