The Clean-Coal Contest

A coal-fired power plant is not the sort of enterprise that states typically fight each other to get. But FutureGen, a $1 billion clean- coal demonstration project, is no ordinary power plant. When it opens in 2012, it will be the world's first coal plant to spew no toxic emissions or greenhouse gases into the air.

Seven states competed for the right to host FutureGen, offering the project--a joint effort between the federal government and a consortium of energy companies--millions of dollars in incentives. In July, the list was narrowed to two finalists: Illinois and Texas. The states aren't just looking to land 1,300 construction jobs and another 150 or so to run the plant; they want FutureGen to anchor a whole industry of research and development based on using coal cleanly.

With energy prices soaring, coal has been enjoying a comeback lately. It's cheap, and there's enough of it in the ground to power the U.S. economy for hundreds of years. FutureGen will experiment with "gasifying" coal to produce electricity, rather than simply burning it. The plant will also try capturing carbon dioxide, global warming's primary culprit, and pumping it underground. Potential sites in Illinois and Texas are undergoing an environmental-impact review; a final choice is expected by this time next year.

Illinois touts its central location, which will be important for shipping in different varieties of coal from mines in the East, South and West. The state also is offering a package of tax breaks, grants and subsidized loans worth $80 million. Two downstate sites, in the towns of Mattoon and Tuscola, are in the running. Both places propose injecting FutureGen's carbon dioxide into a saline aquifer deep underground. "We have excellent geology," says Alan Gilmore, the city administrator of Mattoon. "And we have excellent rail service."

Texas also has two potential sites, one in the west Texas oil town of Odessa and the other in Jewett, halfway between Dallas and Houston. The state is offering $20 million in incentives and is playing up its experience with handling carbon dioxide in unusual ways. It's nothing new for Texas oil companies to inject carbon dioxide into wells in order to flush oil out of hard-to-reach places. Texas already is experimenting with sequestering CO2 in a saline aquifer near Houston. "We have a long history of utilizing and storing carbon dioxide," says Michael Williams, chairman of the state's Clean Coal Technology Council.

What is new, however, is FutureGen's goal of storing the carbon dioxide underground forever. Scientists believe it will work safely, but just in case it doesn't, the Texas legislature passed an unusual law that would make the state the owner of FutureGen's CO2. That would indemnify the energy companies involved in the project. FutureGen's boosters in Illinois are lobbying legislators there to pass a similar law.