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.