February 8, 2010 / 9:11 PM / 10 years ago

Caterpillar joins FutureGen clean coal alliance

* Exelon joined FutureGen in January

* FutureGen to build $1.5 bln clean coal plant

NEW YORK, Feb 8 (Reuters) - Caterpillar Inc (CAT.N) said Monday it will join the FutureGen Alliance to build a $1.5 billion near zero emissions coal-fueled power plant to produce hydrogen and electricity while capturing and sequestering carbon dioxide underground in Mattoon, Illinois.

Last month, Exelon Corp EXC.N, the nation’s biggest power company, also said it would join the FutureGen Alliance.

The U.S. Department of Energy plans to provide more than $1 billion to help fund the 275-megawatt project as part of federal efforts to reduce greenhouse gas emissions such as carbon dioxide while keeping coal in the nation’s power generation mix.

Coal is the most carbon intensive fossil fuel but it generates about 44 percent of the country’s electricity.

The United States has enough coal to last more than 100 years - some say 250 years - at current rates of consumption, according to federal and other data.

But clean power is not cheap.

The FutureGen project, which will generate power for about 150,000 homes, will cost about three times more than a traditional pulverized coal fired power plant.

The Alliance expects the plant will prove the technical and economic feasibility of producing low cost power and hydrogen from coal while nearly eliminating emissions.

FutureGen will use integrated gasification combined-cycle (IGCC) technology, which turns coal into gas before removing impurities such as sulfur dioxide, particulates and mercury before burning the coal gas to generate power.

The FutureGen Alliance’s total anticipated financial contribution is $400 million to $600 million, based on a goal of 20 members each contributing $20 million to $30 million over a four to six year period.

FutureGen members include subsidiaries of Alpha Natural Resources, Anglo American (AAL.L), BHP Billiton (BHP.AX)BLT.L, China Huaneng Group, Consol Energy (CNX.N), E.ON AG (EONGn.DE), Peabody Energy Corp (BTU.N) Rio Tinto (RIO.L)(RIO.AX) and Xstrata Plc XTA.L. (Reporting by Scott DiSavino; Editing by Lisa Shumaker)

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