News of the potential collapse of the FutureGen project rattled the blogosphere Wednesday, with opinions ranging from "Oh no!" to "Good riddance!" (see Green Light, Clean Break and Cleantech Blog posts).

And startups with technologies to make coal cleaner also reacted, discussing how the news might impact them.

The research project to build a "near zero-emission" coal-fired power plant with the capacity to generate 275 megawatts of energy -- and to capture and store carbon dioxide underground -- has been in the works since the Clinton administration and had been expected to be up and running by 2012.

The trouble began after the FutureGen Alliance of coal companies and electric utilities in December announced it had picked Mattoon, Ill., as the site of the plant (see Illinois to Get a Low-Emission Coal-Fired Power Plant). Later that month, the U.S. Department of Energy released a statement reminding the alliance that federal regulators would have to approve any site selection and saying the department was concerned about the projected cost overruns, which were 58 percent higher than the $950 million originally expected (see DOE Pulls Back on FutureGen's Reins).

On Tuesday, U.S. Senator Dick Durbin, D-Ill., met with Secretary of Energy Sam Bodman and released a press statement indicating that the DOE has pulled its support of the project.

"After our meeting today, it is clear that Secretary of Energy Sam Bodman has misled the people of Illinois, creating false hope in a FutureGen project which [it] has no intention of funding or supporting," he said, in the written statement. "In 25 years on Capitol Hill, I have never witnessed such a cruel deception."

Durbin said the state plans to urge President Bush to support the project. "The final decision must be made by President Bush, who announced FutureGen in 2003 and even referred to this critical technology research in his State of the Union speech last night," he said. "We will not go down without a fight."

The FutureGen Alliance also announced it remains committed to the Mattoon site for the project.

The news is a blow to hopes that the project could help prove the feasibility of coal-gasification and carbon-sequestration technologies. And whether or not the project stalls, industry insiders already are using the cost overruns as an example of what can go wrong with the idea of capturing carbon and storing it underground.

In his Clean Break blog, Toronto Star reporter Tyler Hamilton previously wrote that carbon capture and sequestration might end up being a smoke screen that prevents governments from tackling climate change in a more meaningful way. On Wednesday, in a Clean Break post titled "FutureGen in trouble: I rest my case," he wrote "Get used to it," in response to FutureGen's cost overruns.

Industry insiders reacted to the news with laughter and sighs.

"Jeez, they've been working on this project five years and pulled the plug on it," said Andrew Perlman, CEO of GreatPoint Energy, which is developing a technology to convert coal into natural gas, and plans to capture and sequester the carbon. "I don't think that's smart on the part of the government, because who's going to want to go down that path in the future?"

Michael Tian, an equity analyst for Morningstar, said he still expects "something like this" to go forward.

The rising cost of the project is "no surprise," he said.

He added that the government's cold feet might result in the department taking on less of the costs than previously expected and that governments might be less inclined to finance these projects "straight up," instead offering incentives such as loan guarantees in the future.

Tian said the project's demise could hurt the clean-coal industry, but added he doesn't expect companies to stop pursuing the technologies.

Still, so-called "clean-coal" companies such as GreatPoint said they aren't too concerned.

"It would have been a nice project for proving out the technology, but I think there are lots of other options," Perlman said. "If we were going to wait for a government project to prove out the technology, we think we'd have to wait a long time."

GreatPoint, which last week announced a partnership with Peabody, the world's largest coal company, plans to complete its first commercial plant in 2011, and Perlman said it's progressing ahead of schedule. The company also is building a new pilot plant to replace its old one, in Massachusetts, and expects to finish it in September.

While sequestration is a core part of GreatPoint's prospects, other projects aside from FutureGen already are proving the technology can work, Perlman said. He pointed to a gasification project in North Dakota, which pumps carbon dioxide into southern Canada, where the pollution is used to enhance oil recovery.

"We think that's a good model for proving the technology works -- a good start -- and there are others," Perlman said.

GreatPoint would be unaffected if the FutureGen project were canned, aside from the possibility of hiring some of the project's employees, said Perlman, who added that GreatPoint already has hired one of FutureGen's technical staff members.

"We have very strong investors and deep-pocketed partners, and we fully intend to move forward with out project," he said. "We see ourselves as completely unimpacted by [FutureGen] and we fully intend to sequester carbon dioxide."

He said he doesn't expect private investors to be discouraged by the potential fall of FutureGen either, as the unreliable whims of government already are a well-known risk.

"I certainly don't think most investors thought a government-run consortium of companies would be the way to move the technology forward quickly," Perlman said. "It's a race and we had a different perspective of how to get there. That's one of the reasons we have decided, to date, to be very careful not to rely on any government subsidies or support."

However, Perlman said the news underlines the idea that the private market, not governments, are best suited to pick technologies and projects.

Luca Technologies, which doesn't plan to capture and sequester carbon, but instead plans to use microorganisms to convert hydrocarbons into natural gas underground, leaving the carbon behind, also said it would be unimpacted if FutureGen fell through.

"We kind of pre-sequester carbon," CEO Robert Pfeiffer said. "We really have not had much support in the past for any government studies -- this really is a different green path -- so it really wouldn't have much of an impact on us."

Meanwhile, Peabody Energy spokesman Derrell Carter said projects like FutureGen "are crucial for advancing clean-coal technologies."

"As one of the founding members [of the FutureGen Alliance], we are committed to seeing the project through to completion," Carter said. "We feel technology is the key to managing carbon."

Aside from the FutureGen Alliance, Peabody also is involved in "a multitude" of other projects to advance the technologies in different areas, Carter said.