Fossil Energy Requests $1.1 Billion for FY 2009 Budget

Coal Research and Development, Strategic Petroleum Reserves Major Focus of Program Funding for Environmental Improvements and Energy Security

Washington, DC - The Department of Energy's Office of Fossil Energy FY 2009 coal budget request of $648 million focuses on technology allowing the United States to maintain its technological lead in coal use in a way that will not raise climate concerns. This is the largest budget request for coal research development and demonstration in over 25 years and leverages a nearly $1 billion investment in Clean Coal Technology.

The budget includes $406.5 million for Coal R&D, including In-house R&D; $85.0 million for the Clean Coal Power Initiative and $156.0 million for a new approach to the FutureGen program.

MORE INFO Fossil Energy FY09 Budget-in-Brief Go to FY 2009 Fossil Energy Budget Chart

The FY09 request continues to demonstrate the Administration's commitment to domestically produced energy from coal. Combined with the required private sector cost sharing contribution as directed by the Energy Policy Act of 2005, brings the total investment in coal technology leveraged by the Office of Fossil Energy's 2009 Budget to nearly $1 billion. In addition, the federal government provides support to advance coal technologies through tax incentives for clean coal plants, and through loan guarantees to be allocated to various types of coal power and other gasification projects.

Fossil Energy's programs create public benefits by enhancing U.S. economic, environmental, and energy security. This mission is achieved by developing technological capabilities to reduce emissions from coal-fueled electricity generation plants including dramatic reductions of carbon emissions to achieve near-zero atmospheric emissions power production. FERD supports many Presidential initiatives and priorities including the Coal Research Initiative, Hydrogen Fuel Initiative, and FutureGen. FERD also supports the Climate Change Technology Program which is a priority for the Department. FY 2009 Fossil Energy programs:

• Promote advanced, full-scale integration of integrated gasification combined cycle (IGCC) and carbon capture and storage (CCS) technology to produce electric power from coal, while capturing and sequestering carbon dioxide (CO2) resulting in near-zero atmospheric emissions coal energy systems;

• Accelerate development and deployment of coal technologies that could economically meet environmental standards and increase the efficiency and reliability of coal power plants;

• Provides strategic and economic security against disruptions in oil supplies via an emergency stockpile of crude oil.

The Clean Coal Power Initiative is a cooperative, cost-shared program between the government and industry which will demonstrate advanced coal-based power generation technologies including carbon capture and storage. 

In FY 2009, the coal budget is significantly increased with a focus on carbon capture and storage. At the centerpiece of CCS are multiple demonstration projects through FutureGen and the Clean Coal Power Initiative that will provide early commercial-scale experience with near-zero atmospheric emission coal technologies and issues to facilitate commercial deployment.

An increase in the CCPI will result in $85 million for FY2009 to complete the Round 3 solicitation, proposal evaluations, and project selections of advanced technology systems that capture carbon dioxide for sequestration or beneficial reuse. The upcoming budget request proposes to transfer $149 million in clean coal technology prior year balances to the FutureGen and CCPI projects because these balances are no longer needed to complete active CCT projects.

FutureGen will receive an $81.7 million funding increase in the FY 2009 budget from FY 2008. FutureGen will accelerate the commercial use of carbon capture and storage technologies for coal power plants. The new approach proposes multiple 300-600 Megawatt (MW) commercial-scale demonstration clean coal power plants that will operate as demonstration facilities - as opposed to a single, 275-MW R&D facility - each producing electricity and capturing and safely sequestering at least one million metric tons of CO2 annually.

One of the key ingredients of the Fuel and Power Systems program, carbon sequestration receives a significant increase in budget dollars from nearly $119 million in FY 2008 to $149 million in FY 2009. The increase helps develop economical ways to separate and permanently store (sequester) greenhouse gas emissions from the combustion of fossil fuels. The technologies will help existing and future fossil fuel power generating facilities by reducing the cost of electricity impacts and also providing protocols for carbon capture and storage demonstrations to capture, transport, store, and monitor the CO2 injected in geologic formations.

The increase supports site selection and characterization, regulatory permits, community outreach, and completion of site operations plan for large-scale, geologic, carbon storage tests. It also funds large-scale injections needed to continue towards injection and remaining infrastructure development. The additional funding also permits work on capture projects and initiates an effort to prepare for and augment the monitoring, measurement and verification which are being conducted in the Phase III tests.

Proposed funding for hydrogen from coal as a clean fuel for future advanced power technologies such as fuel cells and transportation systems is $10 million - a nearly $15 million decrease. The decrease reflects the elimination of integrated coal-biomass processing for carbon emissions research, elimination of substitute natural gas and coal-to-liquids production research, and a right-sizing the level of effort in early engineering and design studies on hydrogen production modules near-zero emission coal plants. 

The Integrated Gasification Combined Cycle (IGCC) receives a boost of $15.5 million to reach $69 million in FY 2009. This activity develops advanced gasification-based technologies which will reduce the cost of coal-based IGCC plants, improve thermal efficiency, and achieve near-zero atmospheric emissions of all pollutants. These technologies will be an integral part of the carbon capture and storage demonstration projects.

Flexible fuel cell systems that can operate in central coal-based power systems and with applications for electric utility, industrial and commercial/residential markets, receive a funding request of $60 million in FY 2009 - an increase over the FY 2008 appropriation of $55.5 million. This activity enables the generation of highly efficient, cost-effective electricity from domestic coal with near-zero atmospheric emissions of carbon and air pollutants in central station applications. The technology also provides the technology base to permit grid-independent distributed generation applications. 

Consistent with the FY 2006, FY 2007, and FY 2008 Budget Requests, the Petroleum - Oil Technology and Natural Gas Technologies research and development programs are being terminated in FY 2009.

The Ultra-Deepwater and Unconventional Gas and Other Petroleum Research Fund was created by the Energy Policy Act of 2005 (Public Law 109-58) as a mandatory program beginning in FY 2007. The program is funded from mandatory federal revenues from oil and gas leases. Consistent with the FY 2007 and FY 2008 budget requests, the FY 2009 budget proposes to repeal the program through a legislative proposal. 

Petroleum Reserves

Strategic Petroleum Reserve

As the linchpin of the U.S. energy security program, Strategic Petroleum Reserve provides strategic and economic security against disruptions in oil supplies via an emergency stockpile of crude oil. The program also fulfills International Energy Agency commitments which include coordinated energy emergency response plans and deterrence against intentional energy supply disruptions.

To further insure against supply disruptions, the FY 2009 budget proposes to double the current capacity of 727 million barrels to 1.5 billion barrels thus increasing the drawdown capability from 4.4 MMB/day to beyond 6 MMB/day. Increasing the inventory to 1 billion barrels requires expanding two existing sites and adding one new site. Land acquisition begins in FY 2008. The FY 2009 Budget Request continues activities for expansion.

Northeast Home Heating Oil Reserve

The FY 2009 budget request of $9.8 million continues operation of the Reserve and lease of commercial storage space. On July 10, 2000, the President directed DOE to establish a Northeast heating oil reserve which is capable of assuring a short-term supplement to private home heating oil supplies during times of very low inventories or in the event of significant threats to immediate energy supplies. The two-million-barrel Reserve protects the Northeast against a supply disruption for up to ten days, which is the time required for ships to carry heating oil from the Gulf of Mexico to New York Harbor.

Naval Petroleum and Oil Shale Reserves

The fiscal year 2009 budget request ($19.1 million) is slightly less than the FY 2008 request ($20.3 million). The decrease is due to the completion of the Risk Assessment and Corrective Action Studies to determine the cleanup requirements of the Elk Hills site (NPR-1) and reductions in operating and facility maintenance costs at NPR-3.

The Naval Petroleum and Oil Shale Reserve (NPOSR) mission is to complete environmental remediation activities and determine the equity finalization of NPR-1 and to operate NPR-3 until its economic limit is reached, while maintaining the Rocky Mountain Oil Field Test Center as a field demonstration facility. Since the NPOSR no longer served the national defense purpose envisioned in the early 1900s, the National Defense Authorization Act for FY 1996 (P.L. 104-106) required the sale of the government?s interest in Naval Petroleum Reserve 1 (NPR-1).

To comply with this requirement, the Elk Hills field in California was sold to Occidental Petroleum Corporation in 1998, two of the Naval Oil Shale Reserves (NOSR-1 and NOSR-3) were transferred to the Department of the Interior's (DOI) Bureau of Land Management, and the NOSR-2 site was returned to the Northern Ute Indian Tribe. The Energy Policy Act of 2005 transferred administrative jurisdiction and environmental remediation of Naval Petroleum Reserve 2 (NPR-2) in California to the Department of the Interior. DOE retains the Naval Petroleum Reserve 3 (NPR-3) in Wyoming (Teapot Dome field). Environmental remediation is performed on those facilities which no longer have value to either of the missions.

- End of Techline

For more information, contact: John Grasser, FE Office of Communications, 202-586-6503