The U.S. Energy Dept. says it will build a flagship clean-coal powerplant in Illinois, reversing a previous Bush administration move to scrap the ambitious FutureGen project in favor of smaller carbon-capture and -storage projects (CCS) around the U.S.

Energy Secretary Steven Chu and his industry partner, the FutureGen Industrial Alliance, a group of 20 leading power utilities and coal companies, reached agreement on the project: a 275-MW integrated gasification combined-cycle powerplant that could cost between $1.3 billion and $1.8 billion.

The plant will be sited in Mattoon, Ill., 180 miles south of Chicago, and will be the first commercial-scale, coal-fired powerplant to capture its carbon-dioxide emissions and permanently store them in underground geological formations. Chu alluded to opportunities to sell the technology to China and other major coal-using countries.

The Bush administration early last year abandoned plans to build the project, citing huge budget overruns and an unfavorable cost-sharing structure. The alliance heavily lobbied the Obama administration and Congress to restart the project. FutureGen will be one of the highest-profile government projects, using $1 billion of stimulus funds. The FutureGen alliance will contribute between $400 million and $600 million over the next four to six years as the plant is built, DOE says. The powerplant agreement will result in a formal record of decision by the end of June.

FutureGen initially will capture 60% of its emissions and ramp up to 90% in its last phase, a development that dismays past supporters. “In scaling back the amount of carbon the plant will cut costs, the Obama administration has turned FutureGen to YesterGen,” says John Thompson, an official of the Clean Air Task Force, a Carbondale, Ill., environmental group.