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The federal government's decade-long odyssey to develop the FutureGen clean coal project in Illinois took another twist Monday when a key partner, Ameren Corp., pulled out.

St. Louis-based Ameren didn't provide a reason for its withdrawal, but the company is negotiating an option to sell portions of its Meredosia plant in Morgan County, Ill., to the FutureGen Alliance, a consortium of mining companies and other utilities, that vowed to see the project through to completion.

The announcement was the latest in a line of changes for FutureGen, a venture conceived by the George W. Bush administration nearly a decade ago. Today, it remains the nation's most visible effort to develop a next-generation coal-fueled power plant where most carbon dioxide emissions would be captured and disposed of underground.

Some skeptics have dubbed the project NeverGen -- a label that seemed fitting when initial plans were scrapped in 2008 amid rising costs and political bickering. Supporters, meanwhile, say carbon capture technology is a necessity if the country is to ever address global warming -- an issue that has gotten little attention from policymakers since the recession.

The Obama administration is among those supporters of FutureGen and revived the project last summer with Ameren's 70-year-old Meredosia plant as the centerpiece. Congress approved $1 billion in Recovery Act funds to support the effort.

Ameren was charged with re-powering one of the aging plant's four generating units to enable the capture of most carbon dioxide emissions.

The original estimate for the power plant work was $730 million. But projected costs jumped 50 percent to $1.1 billion, bringing the total project cost to $1.65 billion, according to an updated cost estimate provided to the Department of Energy earlier this year. The remainder of funds -- $550 million -- is set aside for construction of a carbon dioxide pipeline and permanent underground storage.

Ameren, meanwhile, has been taking steps in recent weeks to pare costs. The company is offering buyouts to 715 employees at its Missouri utility and administrative support units, it has taken steps to reduce capital expenditures, and last month announced plans to shutter two power plants, including Meredosia.

The company won't participate in FutureGen after next month, but has pledged to help obtain environmental permits and maintain the plant so that it can be used after operations cease on Dec. 31.

"Because this project is important to the state and Morgan County economies and America's energy future, we have pledged our continued support through the ongoing development phase," spokesman Brian Bretsch said in a statement.

The FutureGen Alliance, whose members include St. Louis-based Peabody Energy Corp., had just been responsible for handling carbon dioxide after it left the plant. Now, the group said it's ready to take on the entire project, and believes it can retrofit the plant for less money than Ameren.

The group said in a statement that it identified "several hundred million dollars in potential cost reduction opportunities" that will be studied in the coming months.

"We have an opportunity to lead the entire program, build on potential cost savings, and bring the power plant on-line in 2016 as planned," Ken Humphreys, the alliance's chief executive, said in a statement.

The Energy Department is providing more time for the alliance to work on the project's preliminary designs with the goal of helping reduce costs, alliance spokesman Lawrence Pacheco said. Any agreement involving the transfer of parts of the Meredosia plant also requires government approval. 

The Energy Department said it continues to see FutureGen as a necessary project that can help U.S. power plant owners reduce carbon emissions from their existing fleets.

"We look forward to reviewing (the alliance's) application for the next phase of the project," spokesman Damien LaVera said.

U.S. Sen. Dick Durbin, D-Ill., one of FutureGen's strongest supporters in Congress, also expressed optimism that Ameren's departure from the project would ultimately benefit the effort. The Illinois General Assembly, too, helped FutureGen's chances this year by passing legislation related to locations for new pipelines and liability management.

The 429-megawatt Meredosia plant is located two hours north of St. Louis on the east bank of the Illinois River.

Plans for FutureGen call for a rarely used oil-fired unit at the plant to be re-powered with oxy-combustion technology, which involves burning coal in oxygen instead of air. The result would be an emissions stream of nearly pure carbon dioxide. About 90 percent of the carbon dioxide emissions, or about 1.3 million tons annually, would be captured. It would then be compressed to a liquid, transported via pipeline and buried thousands of feet underground.

When the revamped FutureGen project was announced last summer, plans called for construction to begin in 2012 and for the plant to be complete in the third quarter of 2015.

The estimated completion date was later pushed back to 2016. Even that is an ambitious target because this will be the first time that oxy-combustion technology is used on a commercial scale.

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