Thursday, Dec. 15

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Gov. Blagojevich announces that Indiana is joining Illinois' bid to land $1 billion FutureGen clean coal project     Send a link to a friend

[DEC. 15, 2005]  CHICAGO -- Chances for the Midwest attracting the $1 billion FutureGen project got an important boost Wednesday with the signing of an agreement through which Illinois and Indiana will make a united bid to attract the breakthrough clean coal development to the Illinois Coal Basin. The memorandum of understanding between Illinois Gov. Rod R. Blagojevich and Indiana Gov. Mitch Daniels states that Illinois' strong financial support and appealing geologic features make the state the ideal host for the federally supported FutureGen project -- the near-zero emissions power plant that will also produce hydrogen fuel and allow capture and possible use of carbon dioxide.

"This agreement shows vision in creating a regional, bipartisan alliance that pools our two states' assets to realize our common goal of developing our abundant coal reserves in an environmentally responsible manner," Blagojevich said. "We share a coal basin that spans the Wabash and Ohio rivers, and we share a commitment to unlocking the full energy potential of Illinois Basin coal through coal gasification technology. The only way to make coal king again is to make coal clean, which is what we are both committed to doing."

"We have all the elements that are needed for this project: the natural resources, ideal geologic structure and a commitment to clean coal as American's ace in the energy hole," Daniels said.

Through the agreement, Indiana supports Illinois' application to site the state-of-the-art, public-private electric-generating facility in Illinois, while Illinois supports carbon dioxide sequestration projects related to FutureGen in Indiana. An ongoing collaboration over the past two years will continue to develop sequestration in Indiana, Illinois and Kentucky to ensure that FutureGen can meet its near-zero emissions goal.

The FutureGen Industrial Alliance, an industrial consortium, was recently designated by the U.S. Department of Energy to choose a site for what is being described as the coal-fueled power plant of tomorrow. The alliance also will select technology for the project, hire a design-construction team for the facility and operate it when it is complete.

The alliance and the Department of Energy will launch the site selection effort in 2006, with an aggressive schedule to start construction within three years and have the plant in operation in 2012.

"In conjunction with Indiana, we will make it clear to the alliance that our coal fields should be the focal point for deployment of coal gasification technology," Blagojevich said. "We will continue to cultivate our already strong reputation as the first stop for prospective developers of coal-fueled energy projects for the next generation."

Coal represents more than 85 percent of U.S. energy reserves, and it fuels 50 percent of U.S. electric production. Throughout the world, coal use has grown more than five times faster than projected in the past three years.

Public and private entities in 14 states have expressed interest in hosting or participating in the FutureGen project, according to the alliance. Sending a recent letter emphasizing Illinois' advantages as a site for the prototype facility, Blagojevich joined with U.S. Sen. Richard Durbin, D-Ill.; U.S. Sen. Barack Obama, D-Ill.; U.S. Rep. Jerry Costello, D-Belleville; and U.S. Rep. John Shimkus, R-Collinsville.

With Illinois' geographic and geological advantages, such as ample coal reserves and underground carbon dioxide storage capacity, Blagojevich also signed legislation earlier this year to support FutureGen with the nation's most comprehensive coal development investment package. This support includes direct grants, tax waivers, and credits and financing incentives.

The Illinois Department of Commerce and Economic Opportunity, through its Office of Coal Development, has been conducting preliminary reviews of several potential sites throughout the state.

A multiyear project, FutureGen's first budget period runs through Jan. 31, 2007. First-year spending of $10.2 million will focus on establishing the configuration and cost of the facility and developing a short list of potential sites.

The FutureGen Alliance is a nonprofit coalition of the world's largest coal and energy companies. Its members have committed more than $250 million to project development. The U.S. government would invest about $700 million.

Members of the alliance are American Electric Power; BHP Billiton; the China Huaneng Group; CONSOL Energy Inc.; Foundation Coal; Kennecott Energy, a member of the Rio Tinto Group; Peabody Energy; and Southern Company. The not-for-profit Battelle research and development firm is serving as coordinator of the alliance.

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Text of the agreement signed by the Illinois and Indiana governors:

MEMORANDUM OF UNDERSTANDING BETWEEN THE STATE OF ILLINOIS AND THE STATE OF INDIANA

DECEMBER 14, 2005

WHEREAS, the U.S. Department of Energy has launched a $1 billion initiative, with private sector and international support, to design, construct and operate a nominal 275-megawatt (net equivalent output) prototype plant that will, when operational, produce electricity and clean-burning hydrogen with near-zero emissions and demonstrate the effectiveness, safety and permanence of geologic carbon dioxide sequestration; and

WHEREAS, this full-scale prototype power plant, which has been named FutureGen, will turn coal into a gas, employ the latest technology to remove the resultant air pollutants (sulfur dioxide, nitrogen oxides, and mercury), separate carbon dioxide from other gases, and inject and permanently sequester the isolated carbon dioxide in underground formations, all as a means of reducing greenhouse gases; and

WHEREAS, by virtue of its capabilities, FutureGen will, according to the U.S. Department of Energy, be one of the boldest steps our nation takes toward a pollution-free energy future and serve as a platform to test and evaluate new technologies as they emerge from research and development; and

WHEREAS, there is a high degree of confidence that the prospects for FutureGen's success will be enhanced by multi-state collaboration with respect to site selection, evaluation of available water sources, access to the electrical grid, and opportunities for geological carbon sequestration; and

WHEREAS, an industry-based consortium, known as the FutureGen Consortium, expects to partner with the U.S. Department of Energy to develop the FutureGen project; and

WHEREAS, being selected by the FutureGen Consortium as the site for the FutureGen plant will lead to valuable opportunities to develop an understanding of, and the necessary infrastructure to support, the low-emissions coal gasification process as a way of meeting future electrical generation and other fuel needs using coal—America's most abundant fossil resource:

NOW, THEREFORE, in consideration of the premises and of the mutual undertakings contained herein, the State of Illinois ("Illinois") and the State of Indiana ("Indiana," and, with Illinois, the "parties"), acting by and through their executives, hereby agree as follows:

1. The parties will pool their collective expertise in a joint effort to secure the FutureGen project for that part of the Illinois Coal Basin that is shared by the two states. With goal of ensuring environmental quality, abundant electricity supplies and economic growth, the parties will make all reasonable efforts to assure that the FutureGen power plant demonstration project is sited within Illinois and that at least one carbon sequestration demonstration project is sited within Indiana.

2. Illinois already has in place a variety of financial incentives, has established a solid technical collaboration among the Illinois, Indiana and Kentucky geological surveys, and has held initial discussions concerning potential sites for the FutureGen plant. Indiana will become a partner in that effort, bringing its expertise and sharing its knowledge base in the process.

3. The parties believe that their joint collaboration and mutual support are essential to affording them the best opportunity to secure, for them and their citizens, the benefits of this important federal initiative, with the goal of continuing to utilize abundant and low-cost coal resources and making preparations for the hydrogen economy, while meeting concerns over the harmful effects of emissions, including greenhouse gases.

IN WITNESS WHEREOF, the parties have, through their duly-elected executives, entered into this Memorandum of Understanding as of the date first written above.

Rod R. Blagojevich
Governor of Illinois

Mitchell E. Daniels Jr.
Governor of Indiana

[News release]

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