September 28, 2011 / 6:56 PM / 8 years ago

US DOE to fund Summit with $450 mln for clean coal

* American Electric Power shelved similar plant in July

* DOE boosts funding from $350 million

WASHINGTON, Sept 28 (Reuters) - The U.S. Department of Energy said on Wednesday it will provide a Texas clean coal plant with $450 million in funding months after a power company shelved plans for a similar plant in West Virginia.

The DOE said in a document filed with the Federal Register on Wednesday it will provide Summit Texas Clean Energy LLC with $450 million through a cooperative agreement, up from its original plan to provide $350 million.

Summit plans to design, build and operate the coal-burning power plant which will capture about 90 percent of its greenhouse gas emissions and keep them from reaching the atmosphere.

“The CO2 will be delivered through a regional pipeline network to existing oil fields in the Permian Basin of West Texas for use in enhanced oil recovery (EOR) by third-parties,” the DOE said in the document.

The DOE is funding the plant through a federal clean coal power program that was created during the administration of George W. Bush in 2005. The program received some of its funding under President Barack Obama’s stimulus act.

Carbon capture and sequestration, or CCS, has been touted as one possible way to reduce the country’s greenhouse gas emissions. But it has suffered a series of setbacks, including high costs, and the failure by the U.S. Senate to pass an energy bill that would have put a cost on emitting carbon dioxide and other greenhouse gases.

In July, American Electric Power Co Inc (AEP.N) shelved plans to capture heat-trapping emissions from a coal plant in West Virginia, citing that failure to put a cost on emissions. [ID:nN1E76D0OY]. The move was a blow to U.S. efforts to rein in emissions from plants using CCS.

The DOE’s funding of the Texas plant will cover about 26 percent of the project’s total capital cost of more than $1.7 billion, and the rest is expected to come from private sources, it said. (Reporting by Timothy Gardner; Editing by David Gregorio)

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