Washington (Platts)--2Dec2009/554 pm EST/2254 GMT

Funding for carbon capture and sequestration research, development and construction must be increased before CCS can become a part of the US energy mainstream, Norman Shilling, GE Energy carbon leader, said Wednesday.

In a discussion about coal's future as part of US Energy Association's technology briefings, Shilling said that to build the next generation of coal-fired power plants capable of capturing carbon dioxide, research-and-development funding must be increased.

"US funding has not been kind to energy," Shilling said.

"The stimulus package had $3.4 billion for CCS, and FutureGen is back in the works," he said. "But China is subsidizing seven 800-MW projects and is developing a CCS strategy, and the Australian government has committed $6 billion for development and large-scale facilities."

While companies like GE have experience developing integrated gasification, combined-cycle plants, and two facilities have been operating in the US since about 1995, the technology is still considered "untested."

To get over that barrier, Shilling said the public and private sectors are going to have to work together to enhance incentives so that more IGCC-type facilities can be built.

"Private-sector players need assurances that they will earn a reasonable return on their investment," Shilling said. "Right now, many aren't seeing that. They want to know that steel they put in the ground is worth something later."

The costs associated with plants that capture CO2 are higher than a utility is willing to or can pay for, he said.

"We're talking billions of dollars and that's just to build the facility. Often that doesn't include costs associated with pipelines to transport the CO2 and the injection process," he added.

Shilling said federal and state governments have yet to address the legal risk associated with storing CO2, such as who is responsible if it leaks.

Public perception is another problem for CCS. "Not under my backyard" is becoming the mantra, Shilling said.

--Regina Johnson, regina_johnson@platts.com