US pays price for $500m budget blunder
Mar 12, 2009 8 comments
A $500m accounting error led to the Bush administration scrapping a carbon–capture and storage demonstration plant last year according to a report by the US House of Representatives committee of science and technology. The project was scrapped because costs appeared to have ballooned from $1bn to $1.8bn when in fact it had only risen to $1.3bn.
The report concludes that the Bush administration’s abrupt pull-out “severely” damaged the country’s reputation as an international science partner and “left the country with no coherent strategy for carbon–capture”.
First announced by President George W Bush back in 2003 FutureGen was designed as a coal-fired power plant that would not emit any carbon dioxide by capturing and storing it underground in a technique known as carbon capture and sequestration (CCS). To be built in 2013, the plant was to have been constructed by the FutureGen Alliance — a public–private partnership set up to design, build and operate the plant.
Huge cost overrun?
However, in the 2008 financial year budget, the Department of Energy (DOE), led by Samuel Bodman, cancelled a $1.1bn grant for the project because of the apparent huge cost overrun. “Unfortunately, the Bush Energy Department withdrew their support for FutureGen before the Alliance could complete a new cost estimate in June 2008,” Lawrence Pacheco, a spokesperson for the company told physicsworld.com. However, that figure now seems to be wrong. The report by the House, says that Bodman made an “inexcusable error for the head of a federal agency”. The cause for the mistake was that the initial $1bn estimate was made using constant 2004 dollars, but for the cost estimate last year the DOE factored in inflation through until 2017, which led to the cost ballooning to $1.8bn.
An audit carried out by the US Government Accountability Office in February concluded that the cost of the FutureGen project had actually increased by only 39% to $1.3bn in constant 2005 dollars — $500m less than the DOE calculated.
‘Shovel ready’ projects
Following from President Obama’s $787bn stimulus package announced last month, the DOE gained an extra $1.6bn in funding beyond its 2009 budget of $4.0bn. Some of this may be spent on “shovel ready” projects, which could include FutureGen. “The Alliance will make the case that it is shovel ready,” says Pacheco, “[FutureGen is] the furthest along of any similar project and can deliver much needed CCS technology to the world.”
The FutureGen Alliance now plans to meet with energy secretary Steven Chu to kick-start the project. The Nobel–prize winning physicist has already stated his support of CCS demonstration plants.
About the author
Michael Banks is news editor of Physics World magazine