The US Department of Energy in late January decided to pull the plug on funding for the FutureGen project launched in 2003 to demonstrate how coal can be burned cleanly, with carbon emissions stored underground in a process known as sequestration.

Government officials say they remain committed to the idea of clean coal, but a public spat with a public-private alliance raises doubts about any viable project.

FutureGen, a partnership with utilities and coal companies in the US, China, Europe and Australia, announced Thursday it would continue to pursue the project despite the loss of an estimated 1.1 billion dollars in US government funding, or some three-fourths of the project.

The project, which last year selected a site at Mattoon, Illinois, "is in the best position to move ahead with the urgency that the energy and climate challenges demand," FutureGen chief executive Michael Mudd said.

"The board wants to move forward with the project," said FutureGen spokeswoman Carly Baker.

"They believe it is in the best interest of the public."

But FutureGen officials said they would continue to work with the US Congress and administration officials in an effort to secure funding.

US Energy Secretary Samuel Bodman argued that FutureGen no longer needs taxpayer support.

"Innovations in technology and changes in the marketplace have created other viable options," Bodman wrote in a letter to the St. Louis Post-Dispatch. "That diminished the need for a demonstration project."

But FutureGen officials disagree. Baker said the project is developing methods "to get the technology that could be used in future plants around the world."

"There's no other plant," she said, which uses both coal gasification and carbon capture and sequestration to virtually eliminate pollution and greenhouse gas emissions, she said.

Coal has been blamed by environmentalists as a major culprit in global warming because of its high level of carbon dioxide emissions.

But it supplies about half the electric power needs in the United States and two-thirds of energy needs in China, since it costs less than most alternatives and both countries have ample domestic supplies.

President George W. Bush has long been a backer of clean coal technology, and some studies suggest coal could be competitive with other energy sources even with new technology to remove carbon and other pollutants.

Senator Dick Durbin, an Illinois Democrat, said the administration's decision to turn its back on FutureGen after years of planning was a "cruel deception."

Julie Ruggiero, a spokeswoman for the Department of Energy, said the administration remains committed to clean coal efforts but wanted to change course in face of a project with "escalating costs," much of which were to be assumed by the government.

"Coal is our nation's most abundant energy resource, and we want to burn coal more cleanly," Ruggiero told AFP. "This administration has invested over 2.5 billion dollars since 2001 on clear coal research."

Ruggiero said the administration is seeking to restructure FutureGen to establish "multiple commercial sites" and "a better balance of taxpayer and private share" of costs.

Deputy Energy Secretary Clay Sell said the government began reassessing its role after "I learned early last year that the cost estimates for this project had nearly doubled."

Sell said FutureGen would place the government at risk by surrendering the plant to mortgage holders if any of the private companies defaulted.

"Ultimately, we could not come to an agreement with the FutureGen Alliance as to how to restructure the existing project and, ultimately, we believed that the public interest mandated that we restructure our overall approach to accomplish the objectives of the FutureGen effort," Sell told a conference call of journalists.

The deputy secretary said there are over 33 plants that are being proposed using the new technology to store carbon underground.

"This fact, this changing underlying market dynamic, underpins why we believe our new approach is fundamentally better to advance the state of carbon capture and sequestration," he said.

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