A coal gasification plant in development in Mississippi is more than $4 billion over budget and years past deadline—and now it may have to rethink plans to burn gasified coal in favor of cheaper natural gas after a recommendation from state regulators.

The recommendation was made to prevent potential rate increases as the Kemper County plant continues to face cost overruns. Kemper was supposed to be up and running by 2014, for less than $3 billion. But the plant has now run up a $7.5 billion tab and may need redesigns on a critical part, a process that could take up to two years to complete, according to E&E News. No official decision has been made yet, but the Mississippi Public Service Commission made it clear last week that burning cheaper natural gas instead of gasified coal may be a long-term solution for the facility.

Kemper already burns natural gas at its facility, but Southern Company, which owns Kemper, has poured billions into building “transport integrated gasification” (TRIG) technology. TRIG converts lignite coal into synthesis gas using a two-round process to convert a higher percentage of lignite into gas at a low temperature. Syngas made from lignite coal burns cleaner than burning the pulverized coal itself, and, with the addition of a carbon capture unit, Kemper expects to reduce greenhouse gas and particulate pollution by 65 percent. The syngas production process for lignite coal was developed by Southern with the help of the Department of Energy at the National Carbon Capture Center in Wilsonville, Alabama.

According to a carbon capture and storage (CCS) project database maintained by Massachusetts Institute of Technology, plans for Kemper started in 2004 but “costs began increasing almost immediately, especially once construction began in 2010 and the company discovered that many of the original designs needed major changes.” Specifically, pipe thickness and metallurgy appeared to have been miscalculated, and, after those changes were made, the support structures for the pipes had to be changed.

With the structural issues addressed, the plant has been able to test the production of gasified coal for electricity over the course of about 200 days as of Southern’s last Securities and Exchange Commission (SEC) filing. But keeping the plant running full time has been more challenging. Utility Dive noted earlier this month that Kemper’s gasifiers have suffered leaks and ash buildup.

The Kemper facility also captures carbon dioxide emissions from the burned fuel and transfers it to a nearby oil field, where the CO 2 is pushed underground to facilitate oil production.

Mississippi Power, the company that runs Kemper for Southern, says that it expects syngas production in service by the end of June, although continued modifications to the facility are needed. The MPSC told the power company in a letter last week (PDF) that it must “remove risk from ratepayers for the lignite coal gasifier and related assets.” Mississippi Power has 45 days from July 6 to negotiate a settlement with the MPSC.

The debacle raises questions about the viability of “clean coal” projects in the US, especially given the low price of natural gas. The “clean coal” branding has been panned by environmentalists (there are no coal projects as yet that emit no greenhouse gases), but research into schemes to make coal less polluting has benefited from federal and state support. Still, CCS research hasn’t seen a lot of funding compared to the massive scale of renewable funding that’s taken place in the last year—according to an International Energy Agency (IEA) analysis reported by Reuters, “$80 billion has been invested in renewable energy compared with $20 billion in CCS.”

Kemper in particular showed promise because Southern owns a lignite coal mine close to the plant. But with natural gas prices as low as they are, the power plant may struggle to justify using coal in the first place.