U.S. Department of Energy officials had pledged to provide half of the project's cost, providing about $334 million in federal funds from the Obama administration's economic stimulus package.

Various experts and reports, ranging from the U.S. Government Accountability Office to a joint DOE-Environmental Protection Agency task force, have concluded that CCS technology was unlikely to be perfected and widely deployed unless greenhouse gas limitations gave companies an incentive to act.

Morris called his company's decision a "classic 'what comes first?' situation."

"The commercialization of this technology is vital if owners of coal-fueled generation are to comply with potential future climate regulations without prematurely retiring efficient, cost-effective generating capacity," Morris said in a prepared statement. "But as a regulated utility, it is impossible to gain regulatory approval to recover our share of the costs for validating and deploying the technology without federal requirements to reduce greenhouse gas emissions already in place."

In late March, the West Virginia Public Service Commission had agreed to allow AEP to pass about one-third of its expenses to date on the CCS project onto its ratepayers in West Virginia. Commissioners said customers in West Virginia should not shoulder the entire costs, urging AEP to spread them among the various states where it operates. Utility commissioners in Virginia had suggested they would approve a similar arrangement.

While touting the promise of CCS for the state's coal industry, most West Virginia political leaders bitterly fought legislation containing such emissions limits.

Sens. Jay Rockefeller and Joe Manchin, both D-W.Va., did not address AEP's concerns about the lack of climate legislation in prepared statements issued in response to Thursday's announcement by the company.

Rockefeller said, "Unfortunately, the financing to continue this demonstration project to Phase II just isn't available. Nonetheless, I sincerely hope and believe that it will lead to other opportunities, and eventually help pave the way to a bright energy future for West Virginia and build jobs in our state."

Manchin said, "I strongly believe that we need to continue this project and I hope the Department of Energy will find a way to support this critical program that is important to West Virginia and our nation's energy future."

Reach Ken Ward Jr. at kw...@wvgazette.com or 304-348-1702.

Columbus, Ohio-based AEP said it would put on hold indefinitely a $668 million expansion of the carbon capture and storage, or CCS, project at its Mountaineer Power Plant at New Haven in Mason County.

AEP officials cited inaction by Congress and the Obama administration to put in place legal requirements to reduce greenhouse gas emissions, saying without such limits in place it was impossible to finance the project.

The announcement by AEP was widely seen as a huge blow to any efforts to allow coal to be burned while reducing the industry's contribution to global warming.

David Hawkins, director of the climate center at the Natural Resources Defense Council and a major CCS supporter, said the AEP decision was bad news for all concerned.

"While the days are numbered for many coal plants, many others around the world will continue to operate and CCS is essential to cut carbon pollution from those plants," Hawkins said. "The principle blame for this shortsighted decision belongs to the polluter lobbies who killed climate protection legislation in the last Congress and to the legislators who were cowed by those lobbyists."

AEP's decision was initially reported by The New York Times Wednesday night and then formally announced by the utility early Thursday morning.

"We are placing the project on hold until economic and policy conditions create a viable path forward," said Michael G. Morris, the company's chairman and chief executive.

Coal is the nation's largest single source of global-warming pollution, representing about a third of U.S. greenhouse emissions, equal to the combined output of cars, trucks, buses, trains and boats. Scientists have for years recommended swift reductions in carbon dioxide emissions by mid-century to avoid the worst consequences of climate change.

Experts say the key to protecting the coal industry's future is to perfect technologies to capture carbon dioxide from plant emissions and pump those emissions underground. However, CCS has never been deployed on a commercial scale. Critics worry about the expense, safety and a host of technical hurdles, including the huge infrastructure needed to install the equipment on power plants across the world.

At the Mountaineer facility, AEP had already been testing a CCS project it hooked up to a very small stream of carbon dioxide emissions equal to about 20 megawatts of the plant. The newer project was to expand that to cover emissions equal to about 235 megawatts of the 1,300-megawatt plant, or still less than one-fifth of the total emissions.

U.S. Department of Energy officials had pledged to provide half of the project's cost, providing about $334 million in federal funds from the Obama administration's economic stimulus package.

Various experts and reports, ranging from the U.S. Government Accountability Office to a joint DOE-Environmental Protection Agency task force, have concluded that CCS technology was unlikely to be perfected and widely deployed unless greenhouse gas limitations gave companies an incentive to act.

Morris called his company's decision a "classic 'what comes first?' situation."

"The commercialization of this technology is vital if owners of coal-fueled generation are to comply with potential future climate regulations without prematurely retiring efficient, cost-effective generating capacity," Morris said in a prepared statement. "But as a regulated utility, it is impossible to gain regulatory approval to recover our share of the costs for validating and deploying the technology without federal requirements to reduce greenhouse gas emissions already in place."

In late March, the West Virginia Public Service Commission had agreed to allow AEP to pass about one-third of its expenses to date on the CCS project onto its ratepayers in West Virginia. Commissioners said customers in West Virginia should not shoulder the entire costs, urging AEP to spread them among the various states where it operates. Utility commissioners in Virginia had suggested they would approve a similar arrangement.

While touting the promise of CCS for the state's coal industry, most West Virginia political leaders bitterly fought legislation containing such emissions limits.

Sens. Jay Rockefeller and Joe Manchin, both D-W.Va., did not address AEP's concerns about the lack of climate legislation in prepared statements issued in response to Thursday's announcement by the company.

Rockefeller said, "Unfortunately, the financing to continue this demonstration project to Phase II just isn't available. Nonetheless, I sincerely hope and believe that it will lead to other opportunities, and eventually help pave the way to a bright energy future for West Virginia and build jobs in our state."

Manchin said, "I strongly believe that we need to continue this project and I hope the Department of Energy will find a way to support this critical program that is important to West Virginia and our nation's energy future."

Reach Ken Ward Jr. at kw...@wvgazette.com or 304-348-1702.