U.S. scraps plan for biggest clean-coal power plant

WASHINGTON (Reuters) - Ballooning construction costs that nearly doubled the price tag for building the world's cleanest coal-burning power plant to $1.8 billion prompted the U.S. Energy Department on Wednesday to pull the plug on funding the project.

A consortium of utility and coal companies in December picked a site in Mattoon, Illinois, to build the so-called FutureGen plant, which would burn coal and sock away heat-trapping carbon dioxide emissions underground.

However, the Energy Department, which would bear about 75 percent of the plant's costs, balked at cost overruns for the project - originally expected to come in near $900 million.

Instead, the Energy Department said it will fund "multiple" projects with the aim of getting commercial-scale integrated gasification combined cycle coal plants operating by 2015.

The department said two sites in Texas and two in Illinois -- including the Mattoon site -- could be eligible to host the projects.

The 13-member FutureGen Alliance includes U.S. utilities and coal producers such as American Electric Power Co and Peabody Energy along with international miners Anglo American, BHP Billiton and China's largest coal-based power company, China Huaneng Group.

(Reporting by Chris Baltimore; Editing by David Gregorio)