July 1, 2009 / 6:10 PM / 11 years ago

U.S. gives up to $408 million to "clean coal" projects

WASHINGTON (Reuters) - The U.S. Energy Department said on Wednesday it will provide up to $408 million in funding for two projects aimed at developing advanced “clean coal” technologies.

The department said it will provide up to $308 million to Hydrogen Energy International LLC in California and up to $100 million to Basin Electric Power Cooperative in North Dakota as part of the department’s Clean Coal Power Initiative.

This is the third round of funding from the program, which was created to increase investment in low-emission coal technology through a cost-sharing partnership between the federal government and private industry. The program was allocated an additional $800 billion under the U.S. economic stimulus package passed this year.

“Today’s announcement represents a major step forward in the fight to reduce CO2 emissions from coal-based power plants,” Energy Secretary Steven Chu said in a statement. “These new technologies will not only help fight climate change, they will also create new jobs and position the United States as a leader in carbon capture and storage technologies for many years.”

Hydrogen Energy, a joint venture owned by BP Plc’s alternative energy unit and Rio Tinto, will use the funding to build an integrated gasification power plant in California’s Kern County that will convert coal and petroleum coke into hydrogen and carbon dioxide.

The hydrogen will be used to fuel the plant, while the carbon dioxide will be transferred via pipeline to nearby oil reservoirs for storage. Once completed, the project will capture more than 2 million tons of carbon a year.

Basin Electric Power will use the government money to help deploy carbon capture and sequestration technology at the company’s existing Antelope Valley Station near Beulah, North Dakota.

“We need to develop technology to use coal while lowering carbon emissions. This grant will allow Basin Electric to do just that,” North Dakota Democratic Senator Kent Conrad said.

Coal proponents say the government must provide more support for technology that would allow power plants fueled by coal to trap and store carbon gases, especially as Congress considers climate change legislation that would essentially place a cost on carbon emissions.

Coal-fired power plants provide about half of the nation’s electricity, but account for about 80 percent of carbon dioxide emissions from domestic power generation.

The funding announcement followed the department’s decision last month to restart FutureGen, the country’s first commercial-scale carbon capture and sequestration project.

The clean coal venture had been scrapped by the Bush administration due to a ballooning price tag of about $1.8 billion.

Editing by Walter Bagley

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