DE KALB, Miss. – If coal has a future, it lies here, off a state road lined with churches, crawfish billboards and boarded-up houses. One of the poorest places in America, this is also home to one of the most expensive power plants ever built.

The Kemper County Energy Facility is the showcase for the decades-old dream of “clean coal” — the idea that the country’s most important, but dirtiest, power source can be burned with minimal damage to the environment.

What Southern Company and its subsidiary Mississippi Power have constructed here over the past five years can rightly be described as an engineering marvel. Fifteen stories of metal scaffolding surrounds a labyrinth of steel, concrete and more than 170 miles of piping. When the Kemper plant starts to burn coal, there will be nothing else like it in the world: Instead of releasing millions of tons of carbon dioxide into the atmosphere every year, it will capture 65 percent of that greenhouse gas and ship it off to an aging oil field, where it will be pumped underground to help produce valuable crude.

Just one problem: It was supposed to be doing all those things two years ago. The plant was scheduled to start generating power in 2013. But during the permitting and regulatory approval process, opening day got moved to 2014. Blaming bad weather, faulty estimates and contractor delays, company officials again delayed the deadline to May 2015. Now Kemper managers say the plant won’t be online until the first half of next year at the earliest. And as the plant blows through deadlines, the cost has ballooned dramatically: An original price tag of $1.8 billion has swelled to $6.2 billion. Last week, Kemper lost one of its major partners because of the construction delays and higher-than-expected costs projected for producing electricity.

Clockwise: The Kemper County Energy Facility’s gasification system, which turns coal into a mix of hydrogen and carbon monoxide; workers exiting a 15-story elevator at the power plant; state-of-the-art scrubbers that will capture hydrogen sulfide and carbon dioxide; construction managers. | William Widmer for POLITICO | William Widmer for POLITICO

For any other power project, this would be just a local problem ─ a power company’s cost overruns. But Kemper is a showpiece and a symbol. Most Americans haven’t heard the name, but Kemper represents a survival strategy for coal. Every time the Environmental Protection Agency adopts new standards for pollution at power plants, coal becomes more expensive to burn. This summer’s expected clean-power regulations will for the first time impose carbon dioxide limits on both new and existing units. As the regulations tighten, and coal becomes hemmed in by more and more anti-pollution rules, the Kemper plant — the only new facility to break ground since late 2008 — increasingly represents coal’s chance at a future in that new world.

It is also turning into a lesson in just how hard survival is likely to be.

As clean-coal projects go, Kemper — even with its delays and cost overruns — practically counts as a success story. Another high-profile test case for the technology — FutureGen 2.0 in central Illinois — died three months ago after its federal subsidies evaporated. Two more major federally funded demonstration projects in California and Texas are also imperiled.

This is not what the future was supposed to look like. “Most people have said burning coal without creating pollution was as likely as the Red Sox winning the World Series,” President George W. Bush said in early 2005 not long after Boston’s baseball team broke an 86-year title drought. “Anything is possible. Clean coal technology advances — will advance, and when it does, our society will be better off.” He wasn’t the only one making big promises: The U.S. has invested billions of dollars over the past three decades promoting clean coal technologies, funding that has gone toward tax credits, grants awarded directly to industry, scientific research, pilot demonstration projects and a major lab outside Birmingham, Alabama, where electric utility companies and engineers can test their ideas on two operational power plants.

For all that money, there's been little payoff yet in real-world electricity production. Many environmentalists have always been skeptical. They see clean coal as an oxymoron, another expensive way to prop up an outdated fossil fuel. But it’s also starting to draw skeptics from coal country.

“If somebody had told me that all these years later and all these dollars later we’ve gotten no further than we’ve gotten I’d have not believed it,” said Sen. Tom Carper, a Delaware Democrat and senior member of the Environment and Public Works Committee who often touts his family roots in the small coal mining town of Beckley, W. Va. “It’s hard to understand. Hard to fathom. A great disappointment.”

Energy Secretary Ernest Moniz, in a November 2013 Facebook post after visiting Kemper with dozens of foreign dignitaries, said plants like it “represent the future of fossil energy.” And with it, presumably, the future of a powerful coal industry, and tens of thousands of jobs. Clean coal was supposed to be one of those challenges America could meet with enough gumption and technical savvy. But with so many obstacles along the way, the power plant emerging in the southern Mississippi pine forest here is turning into a singular test of whether such a thing is even possible at all.

How Kemper even got this far is remarkable.

Once king in the U.S., coal has been on defense pretty much since the original conception of the Mississippi power plant about a decade ago. Demand for the country’s most abundant fossil fuel has dropped dramatically in recent years. In part this is due to the discoveries of vast domestic troves of natural gas, an efficient and lower-emission power source that has become less expensive over the last decade. Another big driver has been environmental rules. Coal’s viability has been chipped away by a stack of hard-fought EPA standards, most recently limits on mercury, a dangerous neurotoxin. Environmentalists have also been waging a sustained legal war with striking success. The result is that companies are wary of making big financial investments, and new coal plants today are a rarity.

Without a major reversal to the EPA policies, coal’s future has come to depend on "clean coal," a shorthand for a suite of technologies that in recent decades has helped dramatically slash sulfur dioxide and nitrogen oxide emissions. The cutting edge of coal technology — and what is emerging as the biggest challenge, with Kemper as a test case — is “carbon capture,” the science of pulling the vast quantities of carbon dioxide out of coal smoke and then storing and shipping it to a permanent reservoir where the greenhouse gas never enters the atmosphere. The technology has been in development for years, but only a tiny handful of companies have both the money and the incentive now to try turning it into reality.

Enter Atlanta-based Southern Company, one of the largest electric utility companies in the country and one of the nation's biggest consumers of coal. As the industry braced for the EPA’s expected tightening of air pollution regulations this summer, Southern Company, which had started to rely more on natural gas, knew it would have to modernize further. It would be an expensive process, but useful: Adding a major clean-burning plant like Kemper would lower the company’s overall carbon footprint and also give it a stable coal-burning anchor that could help brace against any future fluctuations in natural gas prices.

Clockwise: The Liberty Baptist Church and cemetery, established in 1842, sits just across a state road from the Kemper County Energy Facility; Holly Anna Burford, 4, plays with her dog Bullet while her mother Lanita Burford tends to her younger sister Caroline at Kamp Kemper, one of several nearby trailer and RV parks that are home to many of the power plant’s workers; trailers lined up at a nearby RV park; lunch customers at TM's Snack Shack, which opened near the start of the Kemper plant’s construction. | William Widmer for POLITICO

In searching for a spot to build a pilot plant, Southern Company settled on a location in rural Kemper County, about 200 miles inland from the Gulf Coast, a safe distance from the Hurricane Katrina-like storm surges that can cripple the region’s power grid during emergency situations. The plant would be built next to a new surface coal mine to eliminate the cost of transportation for the fuel.

At the time Kemper was set in motion in the mid-2000s, the country was riding a clean coal wave. Out of some 150 new coal plants that industry was proposing for construction, about three dozen considered using some form of carbon capture technology. Bush, meantime, was spending several billion dollars promoting it, too.

Building a new, expensive power plant would be a long gantlet to run, but Southern Company enjoyed some crucial advantages. The governor of Mississippi at the time was Haley Barbour, the former Republican National Committee chairman, who knew the company well: He had worked as a lobbyist for Southern Company before his 2004 inauguration. Barbour took an active interest in getting the Kemper plant up and running, urging state lawmakers to pass a law allowing power companies to raise rates on customers to pay for new plants during construction, rather than wait until the units are actually up and generating electricity. In a May 2010 letter to the Mississippi Public Service Commission, which played a critical role in the state approval process, Barbour also warned of an “awful, outrageous outcome” if the state lost out on $680 million in federal grants and tax breaks available “exclusively for the specific technology” that Kemper would deploy.

Kemper’s political wiring goes even further: A 2010 report by the Mississippi Business Journal found Barbour’s former colleagues at the Washington-based lobbying firm BGR Group claimed credit on their website for helping Southern Company in 2008 secure some of its federal subsidies, namely a $270 million Energy Department grant that originally had been awarded to a different Southern Company-connected clean coal project near Orlando, Florida, that was canceled.

Barbour helped shovel some of the ceremonial dirt at Kemper's December 2010 groundbreaking. “Prayers of thanksgiving are very appropriate here,” he said alongside company brass at the event, according to a Meridian Star report that said the Republican had also touted how the project would mean $2.4 billion in investments for local communities.

Lignite coal strip-mined directly adjacent to the Kemper County Energy Facility. Southern Company and Mississippi Power expect to mine about 185 million tons of coal here over the next 40 years. | William Widmer for POLITICO

Progress since then has been anything but smooth. Southern Company, which in its earliest iteration in 2006 envisioned a $1.8 billion project, (excluding costs for the adjacent mine and carbon dioxide pipeline) has had a litany of missed deadlines and budget overruns. It had to repay more than $130 million in federal tax credits after missing its May 2014 deadline to start producing power — a delay that company officials blamed in a 2013 filing with the Securities and Exchange Commission on "abnormally wet weather and lower-than-planned construction labor productivity." Critical pieces of the plant’s infrastructure have been built, torn up and rebuilt again. For every month of delay, Southern Company has said in its financial disclosures to the SEC that the plant’s price tag goes up between $25 million to $30 million.

Those construction delays and rising costs last week even prompted a group of Mississippi electric power cooperatives to cancel plans to buy a 15 percent share of the Kemper plant, exposing Southern Company and Mississippi Power to more questions about their finances. On Friday, Fitch Ratings warned of “mounting pressure” on Mississippi Power’s financial rating and predicted a one or two notch downgrade because of continued uncertainty over the power plant. For its part, Mississippi Power said it was “disappointed” that South Mississippi Electric Power Association was backing out of the Kemper project and promised it would refund $275 million in deposits, plus interest, while also exploring its future financing options.

On a recent weekday tour of Kemper, accompanied by three corporate public relations officials, the on-site managers downplayed the many delays and cost overruns as a fact of life for any company trying innovative new technology in a pressure-filled regulatory and economic environment.

When it started constructing the plant in 2010, Southern Company had about 20 percent of Kemper's design completed. "We were right on the mark with cost estimates with respect to the design around the major components of the facility: the gasifier, steam generator and combustion turbine," said company spokeswoman Jeannice Hall. "Where we missed it, and where many first-of-a-kind facilities like the Kemper facility miss the mark on estimating, is in the quantities of piping and wiring and the labor associated with these materials." One big fix, for example, required replacing about 1,500 linear feet of pipe because of mistakes in the amount, thickness, quality and chemical reaction in the original materials.

The power plant is now “98 percent or so complete,” the officials said, but still needs about a year of tinkering and testing to ensure it can operate safely, reliably and efficiently.

“You don’t build any plant and you just turn it on and it works,” said Tim Pinkston, a Southern Company veteran who has worked for more than a decade developing the specific brand of carbon-capture technology being deployed at Kemper. “There’s always things you have to adjust on.”



In the long arc of American energy politics, Kemper stands as a testament to the huge gap between promises and what can really be achieved — sort of like pledges for U.S. energy independence, or turning the country's transportation fleet from gas to electricity or hydrogen.

Clean coal has been a remarkably persistent dream, and one with true bipartisan backing. It has an environmentalist sheen that appeals to Democratic leaders, and a pro-coal effect that Republicans can believe in. Ronald Reagan championed his clean coal technology spending when negotiating with Canada on acid rain. By 1995, Bill Clinton declared an Energy Department clean coal program such a success that it wasn’t even needed anymore. Clean coal was a rare point of agreement for Al Gore and George W. Bush, who both made aggressive pitches for the idea in their 2000 campaigns. The first iteration of FutureGen, the now-defunct Illinois project once touted as the world’s first near-zero emissions coal plant, emerged out of Bush’s 2003 State of the Union speech.

Clean coal also triggered a misstep in the Obama campaign — Joe Biden in 2008 exposed Obama to an easy Republican attack line when the vice presidential candidate was caught on camera in Ohio telling a woman, “We’re not supporting clean coal.” But in his first term, Obama got on board and pushed a rich package of clean-coal subsidies and incentives in the 2009 climate-change bill. (The legislation passed the House but ultimately died in the Senate.) Since taking office in 2009, Obama has dedicated $6 billion to efforts to make coal more climate-friendly; his latest budget called for $2 billion in tax credits for companies willing to be early innovators.

Coiled cables, hard hats, tools, and heavy-duty bolts at the Kemper County Energy Facility. | William Widmer for POLITICO

The promise embodied by Kemper is still a viable one, at least in theory. Earlier government-backed clean coal programs yielded breakthroughs on scrubbers and other equipment for cleaning up major air pollutants like sulfur dioxide and nitrogen oxide. After lengthy legal battles over what the electric utility industry was required to deploy, many of those technologies are now installed on many power plants across the country. The big difference now is “carbon capture” technology, the one that would make Kemper the kind of coal plant that is expected to survive under the upcoming EPA rules - in its draft form, the Obama-led agency even cited the Mississippi power plant as an example for the rest of the industry to follow. While the different technologies needed to capture, sequester and store carbon dioxide emissions underground have been independently demonstrated, wrapping everything together on a full-scale, commercially operating power plant remains a complicated challenge.

If and when it becomes operational, Kemper will need to deal with a “parasitic effect” where about a quarter of the overall electricity generated by the power plant is needed just to run the equipment that will capture the carbon emissions. Kemper has also been a drag on Southern Company’s bottom line. It’s paying for a large portion of the cost overruns; something not lost on UBS financial analysts, who in May 2014 suggested selling the company’s stock because of difficulties in getting the power plant operational.

It has also had to wage fights in court. The Sierra Club won a unanimous 2012 Mississippi Supreme Court ruling that rejected the plant’s state construction permit. A two-year appeal battle followed the state’s second authorization effort, and the dispute between the environmental group and the power company ended last August in a settlement that forced Southern Company in part to phase out coal at two other major power plants in south Mississippi and Greene County, Alabama.

More recently, activist and businessman Tommy Blanton won his own narrow 5-4 Mississippi Supreme Court decision in February ordering Mississippi Power to refund more than $257 million in rate increases collected to help fund the power plant’s construction. The company is seeking a rehearing while also proposing a range of possible rate increases on its customers ─ including one option that would go up as much as 40 percent. Blanton, meantime, insisted that building a costly prototype power plant at Kemper still doesn’t make sense.

“These are some of the poorest people in our whole country being asked to pay for an experimental science project,” he said. “Ethically, it doesn’t pass muster.”

As Kemper has struggled, many of the other clean coal projects have fared even worse. American Electric Power secured regulatory approval for a clean-coal project in Ohio in 2007, but construction never started; the company struggled to come up with an estimated $2 billion for the 600-megawatt plant. And Excelsior Energy’s proposed Mesaba Energy Project in Minnesota, slated to open in 2011 but which saw its own projected costs balloon to $2 billion, didn't get to a groundbreaking either; its executives blamed diminished electricity demand from the recession and heavy competition from natural gas.

So far, one major power plant has managed to make carbon capture technologies work. In Canada, SaskPower launched the first coal plant in the world to sequester its carbon dioxide emissions from an existing facility. The $1.2 billion retrofit now captures 90 percent of its emissions and sends them via an eight-inch pipe to an oil field for energy production about 45 miles away.

“It’s working great,” said Mike Monea, president of the company’s carbon capture and storage initiatives at the Boundary Dam Power Station, which is about 10 miles north of the U.S. border near Estevan, Saskatchewan. But the plant uses a different technology from Kemper’s and is also nowhere close to Kemper’s size ─110 megawatts, compared with about 580 megawatts. It also required $200 million (U.S.) in Canadian government subsidies.



The once impressive pipeline of major American clean-coal projects is now down to Kemper and three other schemes at earlier stages of development, two in Texas and one in California. Where clean coal proponents are really placing their hopes is overseas. Worldwide, a few nations are trying their own variations of Kemper ─ and this may turn out to be more important in the long run, given the growing power appetites of China and India, both prodigious users of coal and the planet's current No. 1 and No. 4 greenhouse gas emitters, respectively. (The U.S. is second, followed by the 28-nation European Union bloc.)

China is planning 11 large-scale clean coal projects, up from six in 2011, according to data compiled by the Australian-based Global CCS Institute. In the United Kingdom, two carbon capture projects at power plants are the finalists competing for £1 billion in government support – prizes are expected to be announced by next spring. The United Arab Emirates is home to the first large-scale carbon capture and sequestration project for a natural gas-fueled iron and steel plant, with a target launch date next year.

This is how Kemper’s owners hope their project can help move the needle globally, as well as in Mississippi. Southern Company CEO Tom Fanning touted Kemper in a recent Atlantic Council speech as a global model for many new power plants because of its reliance on lignite, a soft form of coal that makes up about half of the world’s reserves. The carbon capture process will bring the company financial benefits by selling off its ammonia and sulfuric acid byproducts and by using its CO 2 emissions to generate an estimated 2 million barrels of oil a year. “Not bad,” Fanning said. “That could make a lot of sense in a developing economy.”

The Energy Department, too, is taking a long view. DOE had stood by Kemper during its delays and budget overruns. In an interview, Christopher Smith, the assistant DOE secretary of fossil energy, said it is “unquestionable” that the Mississippi power plant will soon be up and running.

“When you’re doing something for the first time, it’s a big undertaking,” Smith said. “In order to get these technologies off the ground, you’ve got to find companies willing to go first. Southern has been a really good ambitious and forward-leaning partner in that regard.”

Smith said he isn’t concerned that Kemper was one of only two remaining projects of its kind that have broken ground in the U.S. “We’ve got our hands full with what we’ve got,” he said, noting that the federal effort to get the technology into the field can take time and won’t necessarily reap immediate dividends. “Technologies do take a while to be developed,” he said.

Not everyone, however, shares his optimism. Bud Albright, the former George W. Bush Energy Department point man on the now-mothballed clean-coal project called FutureGen, recalled catching “absolute holy hell” when he had to brief the Illinois congressional delegation on why a Republican administration was backing out of its own high-profile clean coal project. Ultimately, he said DOE realized by late 2007 that the math didn’t add up, and taxpayers could have been left on the hook.

Albright said he wasn’t ready to make a judgment when asked whether the billions that the federal government and industry had spent over three-plus decades on clean coal technology had been wasted. But he also noted that there’s been no full commercial success on carbon capture efforts at a power plant that didn’t also need some kind of hefty government subsidy.

“I’m not negative on [carbon capture],” he said. “I just haven’t seen it work. Everyone talks about it being ready in two years, in five years. It’s always tomorrow. It’s never today.”



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