Failing ‘Clean Coal’ Project Uses Obscure DOE Reg To Keep Its Subsidies

(REUTERS/Jonathan Ernst)

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Michael Bastasch Energy Editor

The company behind a troubled clean coal project in Texas was able to hang on to its government funding last week by taking advantage of a federal regulation governing informal dispute resolutions.

The Energy Department was about to pull funding for the Texas Clean Energy Project (TCEP) Friday, but were stopped at the last minute after Summit Power, the company behind TCEP, cited a regulation giving it the right to an informal dispute resolution.

The DOE told Bloomberg in an emailed statement that while the agency “has a responsibility to the taxpayer,” it also must follow laws that include “the right of a company to seek an informal dispute resolution.”

“We have been working with the project as we understand how important it is to move this technology forward,” DOE said. “We will continue to work with the company to figure out the best next steps.”

TCEP has had a conflicted existence. On the one hand, TCEP is supported by taxpayer funding from the DOE as it searches for a way to eliminate carbon dioxide emissions from coal power.

On the other hand, the project has been opposed by environmentalists and some conservative groups who say they don’t want tax dollars to be wasted on unproven clean coal technology.

“This has officially reached the point of absurdity,” Lukas Ross, an activist with the eco-group Friends of the Earth, told Bloomberg. “This project should have been killed a long time ago, and no loophole should be allowed to keep it on life support.”

TCEP isn’t the only so-called carbon capture and storage (CCS) project to suffer from huge setbacks. The DOE-backed Kemper CCS plant in Mississippi has cost taxpayers $265 million, and is more than two years behind schedule.

The DOE’s inspector general issued a report on TCEP in March warning the Obama administration project is on shaky ground and could lose taxpayers a whopping $450 million.

DOE had already spent $116 million on TCEP by the time the IG had issued its report, and auditors were worried taxpayers could lose even more money on a project that hadn’t even broken ground.

“Although we have not yet completed our audit, we are issuing this Special Report to communicate our immediate concern about the Project to allow the Department sufficient time to take actions to protect taxpayer funds,” the IG warned in a recent report on the viability of The Texas Clean Energy Project (TCEP).

“Although construction of the plant was originally planned for completion in June 2014, the Project remains in the project definition phase,” the IG warned. “Additionally, we found that the Department had taken actions that increased its financial risk in the Project.”

DOE signed a $1.7 billion cooperative agreement with Summit Texas Clean Energy LLC in 2010 to finance TCEP, which was estimated at the time to only cost $1.9 billion. Now, the project’s costs have doubled to $3.9 billion and delays cost taxpayers even more money.

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