DOE pulls funding for Texas clean coal project

Dive Brief:

The Department of Energy has effectively ended a Texas clean coal project, pulling some $240 million in funding following years of delay and concerns over the project's inability to secure commercial debt and equity project financing.
The "adverse effect of changing energy markets" also played a role in the agency's decision to pull the Texas Clean Energy Project from its 2017 budget request.
While some environmental activists had called for the project to be shuttered, Inside Climate News reports the plan had a diverse group of supporters, including the Clean Air Task Force, Natural Resources Defense Council and the Great Plains Institute.

Dive Insight:

The Texas Clean Energy Project had a diverse range of support but it was years behind schedule and yet remained in the initial phases, according to an Inspector General report critical of funding through the agency's Clean Coal Power Initiative.

In 2010, DOE awarded a $1.7 billion cooperative agreement under the initiative for TCEP, which was estimated to cost $1.9 billion. DOE's share of the project costs was $350 million, and it later increased its commitment to $450 million. The remaining costs were to be provided by Summit Texas Clean Energy LLC.

However, the project languished, leading to DOE skepticism.

"Due to Summit’s inability to obtain the required commercial debt and equity project financing and the adverse effect of changing energy markets on the demand for coal-based power plants, we are concerned about the viability of the Project and the Department’s continued involvement," DOE said last month in a special report.

DOE said that as of February, the project remained in the first phase, and the agency had reimbursed Summit approximately $116 million in project costs, or approximately one-third of its total commitment. That initial phase, including decisions on the technology, schedule, and cost baselines, was originally scheduled for completion in December 2010.

Inside Climate News reports project backers have turned to Texas lawmakers for help.

"TCEP is not stalled. It is advancing and still attracting private capital," Jason Crew, chief executive of Summit Texas Clean Energy wrote in a letter to Texas Rep. Lamar Smith.

Some groups hailed the DOE's decision.

“Wasting our tax dollars on projects like the Texas boondoggle is not the answer to the climate crisis,” said Lukas Ross, climate and energy campaigner at Friends of the Earth, in a press release also issued by Taxpayers for Common Sense and the R Street Institute.

Other groups are still supporting the project, however.

Canceling the project would be "unfortunate," said a group of green advocates including Clean Air Task Force, Natural Resources Defense Council, Great Plains Institute, Center for Climate and Energy Solutions and Third Way. The groups made their case in a March letter to DOE.

Failure of the project to move forward would mean "the loss of the substantial taxpayer dollars already provided to the project and ... the loss of an important opportunity to add a significant project employing a high level of carbon capture for power and chemical processes," the groups said.