A tiny Illinois town on Wednesday refused to provide land to store carbon dioxide from around the region, challenging the Obama administration's decision to back a storage facility in the town instead of providing $1 billion to construct an innovative, near-zero emissions power plant.

The U.S. Energy Department last week abruptly abandoned a long-running plan to build a novel "clean coal" power plant in Mattoon, Ill. Instead, the Energy Department awarded $1 billion to retrofit a shuttered Ameren Corp. (AEE) facility in Meredosia, Ill. and to help establish a pipeline to transport carbon dioxide from around the region to Mattoon to be injected into the land there. The land was purchased in late 2008 by a development group for Coles County and a coalition of coal producers and utility companies called the FutureGen Alliance.

"Hosting the original FutureGen was something this community embraced with great pride," Angela Griffin, the president of the development group Coles Together, wrote in a letter to Sen. Dick Durbin (D., Ill.) She said that the new project "does not provide for the highest and best use of" the land and wrote that if the Obama administration goes forward with the new project, "it must be without Coles County."

The announcement continues the roller-coaster history of the FutureGen project, which was launched by the George W. Bush administration in 2003 only to be canceled five years later after cost overruns. The project's backers had anticipated that the arrival of U.S. President Barack Obama, a one-time Illinois senator who has vowed to limit carbon-dioxide emissions associated with global warming, would advance the "clean coal" plant. In late 2008, the group bought a 400-acre site for $7 million.

The optimism gave way to disappointment and anger when the U.S. Energy Department announced it had backed out of the plan and would instead use Mattoon as a storage site. The decision raised questions about the use of the $1 billion awarded by the U.S. government along with the $200 million that companies had planned to invest for the new project.

Lawrence Pacheco, a spokesman for the FutureGen Alliance, declined to comment. An Energy Department spokeswoman didn't immediately respond to a request for comment.

In a statement, Durbin said that he was "disappointed by the decision of community leaders" but said that "I will abide by their decision."

He said that he remains "convinced" that the new project, dubbed FutureGen 2.0, "will create thousands of jobs" and "provide important environmental benefits." He said that he is "committed to moving this project forward."

-Siobhan Hughes; Dow Jones Newswires; (202) 862-6654; siobhan.hughes@dowjones.com
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