Forging Collaboration for Large-Scale Technology ... · PDF file1 Forging Collaboration for Large-Scale Technology: Government, Industry, and Energy Innovation By Maja Husar Holmes

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Forging Collaboration for Large-Scale Technology: Government, Industry, and Energy

Innovation

By

Maja Husar Holmes Assistant Professor of Public Administration

West Virginia University P.O. Box 6322

Morgantown, WV 26501 [email protected]

W. Henry Lambright

Professor of Public Administration and Political Science Maxwell School

Syracuse University 419 Crouse-Hinds Hall 900 S. Crouse Avenue

Syracuse, NY 13244-1020 [email protected]

Paper prepared for presentation to the 11th Public Management Research Association, Syracuse, New York, June 2-5, 2011. As this is a work in progress, please do not cite without contacting the authors first.

Abstract:

A dominant theme in contemporary public administration research is collaboration. In public administration, collaboration is defined as the process of facilitating and operating in multi-organizational arrangements to solve public problems that cannot be solved or easily solved by single organizations (O’Leary and Bingham 2006). Cross-sector collaboration provides a possible path for solving the endemic issue of developing and deploying large-scale technology to meet energy needs. The paper examines the extant literature on cross-sector collaboration to generate specific hypotheses relevant to large-scale energy innovations and presents a case study analysis of two government-industry collaborative projects in carbon capture and sequestration. The projects contrast in terms of whether government or industry has been the prime driver. They also differ in terms of relative smoothness or turbulence in their course from concept to actuality. Stable and strong cross-sector collaborative leadership is clearly critical as a success factor. The paper concludes with implications for future research linking collaboration and energy innovation.

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Introduction

A dominant theme in contemporary public administration research is collaboration. In

public administration, collaboration is defined as the process of facilitating and operating in

multi-organizational arrangements to solve public problems that cannot be solved or easily

solved by single organizations (O’Leary et. al 2006). Collaboration can include working with

actors from different sectors of state, business, and society in order to achieve policy goals.

Cross-sector partnerships serve to advance governance by addressing three policy deficits. The

regulatory deficit can be filled by allowing partnerships to provide new norms of acceptable

behavior by non-state actors in arenas where states have historically lacked capacity.

Partnerships can address the implementation deficit by encouraging actors to carry out policy

objectives. Partnerships help overcome participation deficit by inviting less powerful

stakeholders, such as local citizens, to deliberate over and shape public policy (Forsyth 2010).

There are, however, a number of potential challenges to developing public-private

partnerships that seek to mitigate negative social, environmental, and economic externalities,

such as in the case of developing energy innovations. Challenges include finding the right

balance between private investors’ willingness to invest and public values in sustainability

objectives that are stewarded by the government; finding an incentive structure that supports

economic and sustainability objectives; and establishing an institutional framework that

combines economic, environmental, social, and financial regulatory regimes (Koppenjan and

Enserink 2009). Existing research on cross-sector collaboration has not adequately addressed

these challenges.

Extant scholarship explores the antecedents (Grazley 2008), structures (Huxham and

Vangen 2005) and process (Thomson and Perry 2006) of collaborative public management. The

exploration of collaborative relationships has focused on the implementation of social services

(Sowa 2008), emergency management (Waugh and Streib 2006) and environmental governance

(Koontz et al. 2004). Conversely, the research on relationships of organizations across sectors

(public, private, and non-profit) has almost exclusively focused on outsourcing public services

(Van Slyke 2007). We know far less about collaborating where industry is a partner, and perhaps

even a lead partner in a cross-sector relationship. It may well be, as Bryson and Crosby (2008)

have written, that practice is outstripping theory in cross-sector partnerships. This is especially

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salient in the quest to develop and deploy technologies to address negative social, environmental,

and economic externalities inherent in meeting the public need of energy generation.

Public-private partnerships in science and technology are different from those of

traditional public-private relationships that serve to contract out public services. The traditional

role of public organizations in coordinating and monitoring the execution of public policy

through private organizations does not adequately describe the emerging relationship between

government and industry to develop and deploy large scale technological advances. These new

government-industry relationships operate largely in a policy vacuum (critical legislation and

regulation has yet to be established), the success and the risk of developing new technologies to

address public needs are uncertain, and the adoption of new technologies requires significant

political and industrial will over a lengthy period.

This paper analyzes two contrasting projects of government-industry partnerships in the

energy field. Both are large in scale (both well over $1 billion and involving a host of industry

and government parties), long-term projects, and require significant political and industrial

will to be carried out. One model is a government–driven collaboration called FutureGen based

in Illinois. The other is an industry-driven model at the Mountaineer coal-fired power plant

located in West Virginia. FutureGen was begun by President Bush, terminated under Bush, and

resurrected by President Obama. The Mountaineer project was initiated by American Electric

Power and financially supported by the U.S. Department of Energy and partially funded through

the American Recovery and Reinvestment Act. The aim of these two projects is to develop and

demonstrate new technologies to capture and store carbon emissions produced by fossil-fuel

burning power plants. In deploying new technology, they reveal the potentialities and problems

in large-scale, complex government-industry collaborations.

The paper is organized as follows. The first section examines the extant literature on

cross-sector collaboration to generate specific hypotheses relevant to the projects. The second

section defines the policy context of developing large-scale energy innovations. The third section

presents a case study analysis of two industry-government collaborative projects as vehicles to

assess articulated hypotheses. The paper concludes with implications for future research on

assessing the impact and limits of cross-sector collaboration to deliver large scale solutions to

endemic public issues.

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Theoretical Expectations

The vision, commitment, and resources necessary to build and sustain cross-sector

collaboration assume that institutions do not enter these partnerships lightly. Bryson and Crosby

(2008) argue that cross-sector collaboration occurs as result of failure of any one sector -

business, markets, governments, non-profit organizations, the community at large, or even the

media - to create public value (Moore 1997). Cross-sector collaboration can advance governance

by addressing three policy deficits. The regulatory deficit can be filled by allowing partnerships

to provide new norms of acceptable behavior by non-state actors in an arena where states have

historically lacked capacity. Partnerships can address the implementation deficit by encouraging

actors to carry out policy objectives. Partnerships help overcome the participation deficit by

inviting less powerful stakeholders, such as local citizens, to deliberate over and shape public

policy (Forsyth 2010).

H1: The development and deployment of large scale energy innovation projects

requires explicit collaboration across public and private sectors because of the

inability of one sector to accomplish progress on its own.

Government and industry are inherently guided by a different set of incentives and

values. Industry, especially the utility industry, strives for reliability, reduction of uncertainty,

and of course profits. Government strives to mitigate potentially negative long-term impacts of

public and private activities, assuring environmental protection, financial stability, and public

health. Cross-sector collaboration offers opportunities to reconcile competing incentives and

values by collectively establishing institutional frameworks (Koppenjan and Enserink 2009

PAR) or defining performance measures (Amirkhanyan 2008).

H2: Cross-sector collaboration provides a mechanism to reconcile the competing

incentives and values of industry and government to develop and deploy large

scale energy innovations.

Innovation is guided by the prospect of being the first to successfully commercialize an

idea, technology, or process. Inventing the technology is not enough to lead to innovation.

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There is a growing recognition that research and development alone will not inherently lead to

technological innovation. Rather, technological innovation “is a complex process, involving

invention, development, adoption, learning, and diffusion of technology into the marketplace”

(Alic et al., 2003). Commercially deploying technologies requires a suite of actors, technology

developers and manufacturers, firms that adopt and use the technology, financial sponsors that

enable the implementation, monitoring, and validation of the technology, and government

regulators to define legal requirements and enforce compliance. In the energy sector where the

capital costs are high, the prospects of success are uncertain, and the solutions take a long time to

implement, collaborating with other public and private organizations offers an antidote to

turbulent conditions (Trist 1983) and technological and market uncertainties (Nelson 1982).

H3: Innovation in large scale technology can be understood as an inter-

organizational process, in which various organizations play different roles:

technology developer, technology user, financial sponsor or other roles. Of

particular importance is who plays the role of “driver” in the process.

Contrary to conventional wisdom that innovation is a linear model flowing from

fundamental research to development to innovation, extant research illustrates the path to

widespread adoption of new innovations as highly iterative. The path from invention to

innovation requires extensive organizational learning and incremental changes by government

and businesses. One influences the other over time. Individual organizational goals become

systemic goals in successful innovation experiences (Lambright and Teich 1976). The road to

widespread adoption of innovations, especially large-scale technologies, requires a market for

the technology, diffusion of technical and cost information, and reliable constituencies.

Policymakers use regulation, market incentives, and federal investments to spur innovation along

the bumpy road towards widespread adoption (Alic et al. 2003). The affected public plays a

critical role in large scale energy technology. Changes in energy costs influence the interest

groups at the local and national level. Public support or opposition to the implementation or

potential impact of innovation can spur or stall the path towards widespread adoption.

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H4: Organizations concerned with innovation in technology interact in a political

environment; policymakers, affected public, and others influence the dynamics of

their relationships.

Policy Context of Emerging Large-Scale Technological Innovations

The U.S. government has a tradition of promoting, supporting, and deploying large scale

technological innovations in a variety of fields, including space, defense, and energy. The fruits

of these investments can be seen in the success of manned and unmanned missions to the moon,

the planet Mars, and Earth orbit, the unparalleled defense capabilities compared to other

countries, and the advancement of nuclear, hydro, and other fields of energy generation sources.

Each of these large scale technological advances faced issues of risk, political discord, and

implementation challenges that tested their survival. Today, with the impact of climate change

looming in the imminent future, advancing technologies that will mitigate carbon emissions is

critical.

One solution promoted by an unlikely set of actors that includes environmental scientists,

environmental advocacy organizations, technology manufacturers and utility industry is the

development and deployment of large scale capture and storage (or reuse) of carbon emissions

from energy generation facilities. In 2004, a team of Stanford scientists argued for deploying

existing technology to stabilize carbon emissions globally. One of their hallmark proposals was

to create a technology “wedge” to stabilize carbon emissions by implementing carbon capture

and sequestration (CCS) at existing coal and natural gas plants (Pacala and Socolow 2004).

Environmental advocacy organizations, specifically Environmental Defense Fund (EDF),

Natural Resources Defense Council (NRDC), Clean Air Task Force, and World Resources

Institute (WRI), actively support the commercialization of CCS technology, recognizing that

coal and natural gas will continue to fuel energy generation globally in the near-term. Even

though many environmental groups would like to abandon fossil-fuel burning power plants and

leap to renewable energy sources, the current reality that two-thirds of all electricity produced in

the U.S. is generated by fossil-fuel burning power plants limits this reality. As a result various

environmental organizations have partnered with utility users, technology developers,

policymakers, and others to promote the adoption and implementation of CCS technology.

Collectively, these organizations promote policy solutions to advance commercialization of CCS

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technologies, bring together key stakeholders around CCS innovations, and serve to educate

policymakers, regulators, and citizens at the state, local, national, and international level on

potential impact of CCS on climate change.

Perhaps the most unlikely group of actors in adopting CCS technologies is the utility

companies. A small, yet influential, group of utility companies, including American Electric

Power (AEP), Southern Company, and Duke Energy, have independently piloted project

demonstrations to develop and deploy CCS technology. These industry projects face regulatory,

investment, and legal hurdles in transitioning to larger commercial scale projects. Mass

commercialization of CCS technology requires direct government support (financial and

otherwise), clarification and adoption of key regulations, and buy-in from state public service

commissions (that regulate electricity rates), landowners, and potentially affected citizens, who

pay for the electricity or who perceive possible harm from carbon sequestration in their

backyard.

At the national level, the U.S. Department of Energy has emerged as a key player in

coordinating the government promotion of CCS technology. In the last decade, CCS technology

has gained momentum as a way to mitigate the single largest source of carbon emissions from

electricity-generating power plants (EIA 2010), while maintaining continued demand for low

cost electricity. CCS is particularly salient as global demand for electricity continues to rise,

especially from coal sources, and international pressure mounts to reduce carbon emissions to

mitigate the potential impact of climate change. The concept of CCS represents an opportunity

for the government to partner with industry to successfully develop and adopt large scale

commercialization of CCS technologies.

The following section presents two case studies of government-industry partnerships to

deploy CCS technology. The case studies of the two projects serve as a vehicle to assess extant

hypotheses about cross-sector collaboration. The two case studies include an analysis of the

CCS projects developed through FutureGen and AEP’s Mountaineer Power Plant.

Case 1: FutureGen

In May 2001, Vice-President Dick Cheney released the National Energy Policy

Development Group (NEPD) Report. One of the recommendations for promoting “reliable,

affordable, and environmentally sound energy for America’s future” included investing $2

billion over 10 years in research for clean coal technology (NEPDG 2001). The report cited the

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progress made through the U.S. Department of Energy Clean Coal Technology program to

reduce Sulfur Dioxide (SOx), Nitrogen Oxide (NOx), and mercury emissions from coal-fired

power plants. The report also highlighted the emergence of a new technology to dramatically

increase the efficiency of coal-fired power plants, integrated gasification combined cycle

(IGCC). What the report lacked was explicit acknowledgement for the need to reduce carbon

dioxide (CO2) emissions to meet U.S.’s energy demand.

In the following months the Bush Administration established the Clean Coal Power

Initiative (CCPI) to facilitate government-industry partnerships to increase investment in clean

coal technology. The CCPI program selected projects for its government-private sector

partnerships through an open and competitive process. In January 2003, eight projects were

selected under the first round CCPI solicitation, of which two were withdrawn. Of the

remaining six projects supported by the first round of the CCPI, one was discontinued before

award, two were discontinued during project development, and three have been completed (DOE

2011a).

Birth of FutureGen

On February 27, 2003, the emphasis on clean coal technologies took an even more high-

profile turn with the announcement by President Bush to fund a $1 billion venture with the

electric power industry to design, build, and operate the world’s first coal-fired, zero-emissions

power plant. The U.S. government pledged $700 million from the Department of Energy budget

and an alliance of energy and power companies collectively committed $250 million to the

FutureGen project. Additional funding came from the governments of India, China, Australia,

and South Korea. While CCPI programs offered opportunities for improving efficiency in

power generation (and potentially reduce carbon emissions), the FutureGen project was

conceived to eliminate the release of carbon emissions to the atmosphere. FutureGen was billed

as a first of its kind international flagship enterprise to integrate carbon capture and sequestration

(CCS) with IGCC technology in a single commercial scale plant. It linked financial sponsors,

coal companies, utility companies, and policymakers in an alliance focused on a massive

demonstration project.

FutureGen was the biggest innovation globally. Europe, Asia, and Australia had yet to

deploy CCS technology. FutureGen offered countries, especially India and China, an opportunity

to demonstrate commitment to climate change and access to potential new technology by

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contributing to FutureGen funding. Given that much of India was still not electrified, India had

concerns about the cost of CCS implementation. China’s interest in CCS was that it wanted to

do it, but China did not wanted to be first, and it did not want to be the only nation deploying

CCS. They initiated research and development on CCS a bit later than some of the western

nations, but once the U.S. initiated FutureGen, the Chinese moved forward with their own

version of FutureGen called GreenGen.

For the original industrial companies FutureGen served as an opportunity for their

engineers to gain experience with a new technology. A formal partnership arrangement was

created in April 2005, between U.S. Department of Energy and a dozen electric utility and coal

companies from around the world.i While coal companies were part of the alliance, the balance

of power lay with the electric utilities. The FutureGen Industrial Alliance was structured as a

501(c)(3) non-profit organization, with the following clarification:

None of the members of the Alliance will realize any direct financial benefit from

their contributions to the Alliance. As a not-for-profit entity, the Alliance will own

the power plant and sell the electricity, water, and other useful byproducts to the

marketplace. Any revenues derived from operations and sales will be used to

offset the project’s operating costs (FIA 2010, 3).

This arrangement emphasized the research-mission of the FutureGen project. If revenue

generation was not the goal for the industrial partners of the FutureGen Alliance, the research in

action was a direct benefit to the partners. The benefit to the electric utility and coal companies

was that FutureGen was an opportunity for experience building. The value of this experience

was paraphrased by one DOE staffer involved with the FutureGen project.

There is no substitute for having engineers’ boots on the ground. It is one thing to

read reports about why one technique worked over another. It is another to be

involved directly when decisions were being made. The direct experience is

invaluable for replicating and building on future opportunities. Ultimately one

demonstration can answer a lot of questions (Holmes, interview with anonymous

DOE official, June, 2010)

For the U.S. government, FutureGen represented a flagship program propelling energy

technology development to address carbon emissions and reduce costs for electricity subscribers.

Interest in carbon sequestration, and ultimately in carbon capture, began under the Clinton

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Administration, arguably spurred by the 1997 Kyoto protocol discussions. In 1999, U.S.

Department of Energy Secretary Bill Richardson addressed an audience of coal experts

emphasizing that “carbon sequestration must become the third leg of our climate change strategy

– joining energy efficiency and the greater use of low- or no-carbon fuels” (Kripowics 2000, 4).

Congressional appropriations for research on carbon sequestration grew from $50,000 in 1999 to

$19 million in 2001. When President Bush took office in 2001, the Administration reframed

carbon capture and sequestration as an opportunity to promote technological innovation, rather

than explicitly mitigate carbon emissions. One observer of the FutureGen project noted that

despite administration rhetoric denouncing claims about climate change, there was much support

for research and development on CCS (Forbes 2010). Moreover, it appeared that FutureGen

project itself was spearheaded and firmly supported by the new Bush-appointed DOE Secretary,

Spencer Abraham. In February 2003 remarks announcing the creation of the Carbon

Sequestration Leadership Forum, a mechanism to develop high level international commitment

for developing and deploying CCS, and promoting FutureGen, Secretary Abraham noted that:

FutureGen will be one of the boldest steps our nation takes toward a pollution-

free energy future. Virtually every aspect of this plant will be based on cutting

edge technology. The plant will be a living prototype - a global showcase - testing

and evaluating new technologies as they emerge from research and development

(2000).

Finding a Site for FutureGen

The implementation strategy for getting FutureGen sited, developed, built, and fully

operational was ambitious. DOE aimed to the have the 275-megawatt power plant operating at

full-scale continuously by 2012. This meant that DOE and the FutureGen Industrial Alliance

had to articulate the specifics of a public-private partnership, conduct a site-identification

process, and build the power plant in less than 10 years (DOE 2004). To meet these ambitious

goals, the project required political support and industrial will. The international interest and

sponsorship was a bonus.

Political support for FutureGen was manifested in the departure from the traditional 50

percent maximum cost share the agency charged for research and development projects. The

funding arrangement for FutureGen required the U.S. federal government to foot 74 percent of

the costs. To shepherd the development of FutureGen through the implementation phase, DOE

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created a project management position. DOE actively recruited individuals with significant

political and budget management experience, rather than those with an engineering background,

to fill the position. DOE believed that more important than understanding the engineering

aspects of FutureGen was managing the budget and political process of the project. The

implementation of FutureGen would require coordinating with other federal agencies, including

Environmental Protection Agency and State Department, state and local governments interested

in siting FutureGen, and state-level Public Service Commissions.

Domestic politics also played a role in FutureGen. DOE entered into a cooperative

agreement with the FutureGen Industrial Alliance to conduct the site selection process. The

FutureGen Industrial Alliance, under the oversight of DOE, was tasked with developing the

Request for Proposal for the site selection process. In an effort to make the RFP as objective as

possible, the FutureGen Industrial Alliance identified over 100 “qualifying and scoring criteria”

for evaluating the proposals.

Interest in bringing FutureGen to specific states was high. Twelve sites responded to the

RFP, including four from Illinois, two from Ohio, and one each from West Virginia, Kentucky,

Wyoming, and North Dakota. The interest in Texas was so high that the state completed an

initial selection process and ultimately submitted two proposals to the FutureGen Industrial

Alliance. In addition to the written proposal process, the Alliance also conducted site visits for

all twelve proposals. Four sites were initially eliminated by the Alliance because they did not

meet all the evaluation criteria.ii To finalize the list of four potential sites to build the FutureGen

facility, the Alliance compared the top five sites based on “best value criteria.” These included

factors such as cost and ownership of land, expedited permitting, power sales, and CO2 title and

indemnification. In the end, the Alliance selected four sites for the Candidate Site List which

included Matton (Illinois), Tuscola (Illinois), Heart of Brazos(Texas), and Odessa (Texas).

With the conclusion of the candidate site list, DOE could move forward with completing

National Environmental Policy Act (NEPA) requirements for the four candidate sites (FIA

2006).

The site selection process was intended to be driven by objective criteria, transparency in

defining and communicating the site selection criteria and scoring. The response to the

announcement of two Texas sites and two Illinois sites as candidates for the construction of

FutureGen sparked cries of political favoritism. More likely factors that influenced the choice of

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the four candidate sites included the presence of a “geological sweet spot” in Texas and

especially in Illinois and regulatory support from the respective state governments. The geology

of the sites provided the necessary depth to sequester CO2 and density of the caprock to contain

the CO2. Policymakers in Texas and Illinois state governments had agreed to assume liability

for the geological storage of CO2 (GAO 2009). Moreover, there is evidence that Illinois state

officials had been actively marshalling support from local governments, economic development

interest groups, state agencies, and the media to win support for the FutureGen site (Hund and

Greenberg 2010).

The unique arrangement of using a non-profit organization to coalesce industrial groups

to provide additional financial support and the staffing resources to build FutureGen was a test of

industrial will in itself. The user-driven FutureGen Industrial Alliance was tasked with

managing the site selection process, recruiting and retaining industrial companies to commit to

the construction of FutureGen, and managing the project message. As a non-profit organization,

the FutureGen Alliance had a Board of Directors that included representatives from the founding

companies. Mike Mudd, a former executive with AEP and one of the original utility companies

that founded FutureGen Industrial Alliance, initially served as the Alliance’s acting CEO. In

November 2006 as the FutureGen Industrial Alliance moved forward to select the final site the

Board of Directors elected Mike Mudd to serve as CEO. The industrial interest in the FutureGen

project continued to grow as the Alliance added two additional companies in 2006.

A significant purpose of the FutureGen partnership for DOE was building relationships

with other nations to promote the development and deployment of CCS projects globally. From

the onset there was clear international interest in FutureGen. Selling the FutureGen project

internationally was both an “easy and a tough sell.” It was an easy sell, because for a relatively

low price tag, it carried a high symbolic value. The implication was that countries funding

FutureGen were contributing to a “first of a kind.” It was a tough sell because contributing

countries had a low level of responsibility and control of the project. The U.S. Department of

Energy wanted control over the project. Certain countries wanted more direct managerial

involvement in the project. The FutureGen Industrial Alliance and DOE were not interested in

sharing control. U.S. Office of Management and Budget was initially supportive (read

mandating) of international contributions to the project. But the State Department and DOE

were tasked with managing the diplomatic relations, so that international funders felt welcome

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even though they were not involved directly in technical and managerial decisions. The expected

or desired roles of the different players got muddled as a result.

Testing the Strength of the Partnership

By 2006, FutureGen was reaching a pivotal point. The project was launched under an

ambitious timetable, striving for an operational date of 2012. Yet the final site selection was still

underway. Four potential candidate sites were selected and announced by the FutureGen

Industrial Alliance in July 2006. DOE began the environmental assessment process required by

NEPA for all four sites. DOE issued a Draft Environmental Impact Statement (EIS) in May

2007 and a Final EIS in November 2007. The 2005 FutureGen Site Selection RFP noted that

DOE would issue its own acceptable list of candidate sites at the conclusion of the NEPA

process. DOE’s Record of Decision for the NEPA process was expected in September 2007.

The actual announcement of the final site selection occurred in December 2007. Even though on

paper the FutureGen project was seemingly progressing on schedule a number of emerging

issues were testing the strength of the industrial partnerships developed through the Alliance and

the partnership between the Alliance and DOE.

Interest in participating in the Alliance from utility and energy companies began to wane

as the project moved at what they regarded at a slow pace. FutureGen was not intended to make

money for the electric utility and coal producing companies. It was an opportunity to gain access

to critical engineering experience and project environmental concern. The lack of progress on

FutureGen reduced their incentive to collaborate. Moreover, some companies both within the

U.S. and globally were initiating CCS projects without government financial support.

On the policy side, DOE Secretary Spencer Abraham, who was an advocate of

FutureGen, left DOE in 2005 and Samuel Bodman took over in his role. Secretary Bodman

appeared to have much less interest in FutureGen than his predecessor. Additionally, DOE

launched several new initiatives in 2005 and 2006 aimed at creating alternative CCS research

and development opportunities for utility companies. These funding streams were smaller in

scale, and so was the expected CO2 capture capacity. But as result, utility and energy companies

began seeing partnership opportunities for developing CCS technology beyond FutureGen.

The most visible challenge affecting the FutureGen project and the cohesion of the

partnership between the Alliance and DOE was the escalating cost of the project. In 2003, DOE

made a commitment to fund 74 percent of the project. By 2007, the projected cost of the project

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escalated as a result of higher material and well drilling costs and other inflationary increases

(GAO 2010). Throughout 2007, the Alliance sought to secure commitment from DOE on

covering the escalating costs. For example, in an April 2007 project status update to DOE,

Alliance CEO Michael Mudd reiterated that industry was contributing over $400 million to the

FutureGen project with no expectation of financial return or intellectual property rights.

Fork in the FutureGen Road

As 2007 came to an end, the Alliance was anxious to announce a final site selection for

the FutureGen site. In November 2007, DOE issued a final EIS for the NEPA process in

assessing the candidate sites and found all four sites suitable. By law DOE had to wait 30 days

to issue a Record of Decision that finalized the recommendations. DOE was under increasing

pressure to address the escalating costs of the project and the anticipated value of the outcome of

FutureGen. The cost estimates for FutureGen jumped from $1 billion to $1.8 billion, mostly

related to the cost of rising steel and raw material prices (i.e. copper). DOE, under Bodman’s

leadership, was seeking to renegotiate DOE’s financial commitment with the FutureGen

Alliance. It asked the Alliance to delay the announcement of the final site selection until the cost

commitments had been renegotiated. The Alliance, however, had already made its decision on a

site location and was ready to meet its expected announcement deadline. On December 18, the

FutureGen Alliance announced that Mattoon, Illinois would be the future site of FutureGen.

DOE responded within hours by stating that it would not sign any Record of Decision on the

EIS. A Record of Decision is required for the federal funds to be expended for construction.

This decision point for DOE represented a choice between focusing on smaller scale

technology development that created a more diverse and potentially more efficient pipeline of

component innovations, or FutureGen, a full scale comprehensive power plant. The rationale

was that companies were themselves developing advanced technology, but needed help to build

it up. “Yes, FutureGen would be huge if it works,” noted one official with DOE, but it needed to

close the gap to where the risk was manageable(Holmes, anonymous interview with DOE

official June 2010). DOE also saw its mission as to promote energy innovations. The question

was if FutureGen was the best means for doing so? The challenge was to promote innovations

with risk adverse utility companies.

As FutureGen costs rose, the question was where the additional money was going to

come from. There was concern that if DOE’s Office of Fossil Fuels put additional money into

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FutureGen, the Office in essence became the “Office of FutureGen.” The only other alternative

was to seek additional funding from Congress or negotiate a power purchase agreement with the

State of Illinois (this guaranteed that Illinois bought power from FutureGen, securing a revenue

stream). Neither option was pursued with much vigor by DOE. The decision point climaxed

with a January 30, 2008 letter. DOE notified the FutureGen Alliance that it would terminate

support for FutureGen at Mattoon, citing two concerns: First, “the Department’s serious concerns

over the substantial escalation of projected costs” and second “the Alliance’s insistence

regarding project financing” (DOE 2008)

Restructuring FutureGen

The early days of 2008 were marked by uncertainty for the FutureGen project on several

fronts. The United States was in the midst of an election year that would bring a new

administration to the U.S. Presidency, the U.S. and global economy was showing signs of a

potential downturn, and the FutureGen project was at a stalemate. Illinois senators continued to

back the FutureGen site selection choice to build a new power plant in Matoon, Illinois. DOE

sought to restructure FutureGen funding to support CCS implementation by retrofitting a power

plant rather than a newly built power plant sited for Mattoon, IL (DOE 2011b). The FutureGen

Alliance representatives testified before the U.S. Senate Committee on Appropriations to secure

funding for the project in May 2008. A month later, DOE announced that it would cease funding

for the FutureGen site in Matoon, IL. By July 2008, the FutureGen Alliance succeeded in

getting the Senate to pass legislation to secure $134 million in funding for the Matoon site of

FutureGen (FIA 2008). The gap between the principal financial sponsor, DOE, and the

FutureGen Industrial Alliance remained wide.

The original FutureGen project was going nowhere. The U.S. economy stood on the

verge of collapse as the summer drew to a close, and the fall brought the election of a new U.S.

President. Funding and focus of FutureGen related projects remained in limbo. The Obama

appointee for Secretary of Energy Steven Chu took office in January 2009 and within six months

reversed the Bush Administration decision to halt funding of the FutureGen project in Matoon.

Secretary Chu authorized just over $1 billion of American Recovery and Reinvestment Act

(ARRA) funding to support the construction of a new power plant in Matoon. The one billion

dollars represented a third of the $3.4 billion ARRA funding allocated for carbon capture and

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storage initiatives. The principal sponsor was back in the partnership, but the industrial alliance

was weakening.

The FutureGen Industrial Alliance was now facing an internal threat. Three of the

original members of the Alliance defected. American Electric Power (AEP), Southern

Company, and PPL Corporation withdrew their financial support from the FutureGen Industrial

Alliance in July 2009. Moreover, the window of opportunity for being on the forefront of energy

technology innovation was closing. The IGCC technology slated as a groundbreaking

innovation in the FutureGen proposal was already being demonstrated at other sites globally. The

cutting-edge uniqueness of FutureGen technologies was sunsetting.

By July 2009, the project was being advanced on multiple fronts with varying degrees of

coordination. DOE, under the leadership of Secretary Chu, appeared interested in moving

forward with the original FutureGen Alliance decision to site the project in Matoon. A year and

a half after the NEPA Final EIS was completed, DOE issued a Record of Decision supporting all

four candidate sites proposed by FutureGen Industrial Alliance in 2008. Issuing the Record of

Decision was a critical step in moving forward with the Matoon site. The Record of Decision

also articulated significant changes to the project, including a reduction in required carbon

emission capture and technical modifications to allow for a variety of coal types to be used at the

power plant.

The FutureGen Industrial Alliance was actively seeking new members to help finance the

project given the recent departure of the three key utility companies. Recruiting new members

proved to be a difficult sell given the state of the economy and the continued uncertainty in how

the costs would be recuperated, given that electricity rates were highly regulated. By 2010, the

FutureGen Alliance recruited Exelon Corporation, a utility company, and Caterpillar, a

manufacturer of construction and mining equipment, to join the Alliance and provided additional

financing.

The continued slow progress in finalizing the funding structure and technological design

changes (i.e., transitioning carbon capture technology from IGCC to oxy-combustion

technology) was putting the project at risk for cancellation once again. The deadline for

obligating the ARRA appropriations was closing in. The total ARRA funding for the DOE

Office of Fossil Energy, which was responsible for coordinating the FutureGen project, was $3.4

billion. The FutureGen financing represented a third of the ARRA funding to DOE’s Office of

17

Fossil Fuels. Not obligating the billion dollars by the deadline would have been disastrous for the

Office of Fossil Fuels, as well as for its flagship project.

As the summer of 2010 drew to a close, FutureGen took one last turn in the road.

Secretary Chu and Illinois Senator Dick Durbin jointly issued a video announcement on the

Senator’s website that FutureGen would be constructed at an existing power plant in Illinois, not

built at a new construction site in Matoon, Illinois (Durbin 2011). Within weeks DOE selected

the Meredosia Power Plant, owned by Ameren Energy Resources, as the site. Babcock and

Wilcox, a utility construction company was added to the cooperative agreement to receive the

ARRA funding to install oxycombustion technology to capture the carbon at the Meredosia

Power Plant. FutureGen Industrial Alliance maintained a role in the cooperative agreement with

DOE, but its responsibility was now reduced to developing the pipeline, geological sequestration

site, research center, and jobs training site for the project. The goal for FutureGen 2.0, as it was

now officially called, was to begin renovating the Meredosia power plant and constructing the

carbon emission pipeline by 2012 and completing the project by the end of 2015.

This third advent of FutureGen prompted yet another round of siting competition to

determine the location of geological sequestration of the carbon captured at the Meredosia Power

Plant. The FutureGen Industrial Alliance issued a Formal Request for Site Proposals in October

2010 that included funding for a CCS research, education, training and visitor center (FIA

2010b). Within one month, six communities submitted full proposals and a month later the

FutureGen Industrial Alliance narrowed the site selection choice to four candidates (FIA 2010c).

On February 28, 2011 the FutureGen Industrial Alliance selected Morgan County to site the

carbon storage (FIA 2011).

Case 2: AEP Mountaineer Power Plant

In 1981 on the banks of the Ohio River, American Electric Power built its fourth coal-

fired power plant in West Virginia and aptly named it Mountaineer, a powerful state symbol of

West Virginia. The power station provides 1300 MW of electricity, which was enough electricity

to service a city of over a half a million residents. Since it was built 30 years ago, AEP had

replaced Mountaineer’s taller chimney stack with a shorter stack that included scrubbers to meet

Clean Air Act regulations. The Mountaineer power station is one of AEP’s most stable operating

plants, provided with a consistent source of coal located adjacent to the power plant.

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In 2003, AEP as a company was undergoing significant changes. E. Linn Draper, who

served as Chairman, President, and Chief Executive Officer of AEP for ten years, was retiring.

In the past ten years, AEP had expanded and grown to become the leading producer of electricity

in the U.S. It also became the single largest source of CO2 emissions in the U.S. (NRDC 2011).

The company was still responding to the general shocks affecting the utility industry with the

collapse of Enron in 2001 and the massive Northeast power outage of 2003. Moreover,

legislative, regulatory, and business competiveness issues of mitigating climate change at the

global level were looming on the horizon for utility companies. The 1997 Kyoto Convention had

encouraged nations to reduce greenhouse gas emissions through national measures. Even though

the provisions of the Kyoto Convention were never ratified by the United States, Kyoto spurred a

series of proposed bills in the U.S. Congress to reduce greenhouse gas emissions, mostly

focusing on alternative cap and trade mechanisms (Larson 2011). The Kyoto Convention also

prompted several state and local governments to commit to reducing greenhouse gas emissions.

Since 2005, several Governors have issued Executive Orders or signed state legislation to begin

reducing greenhouse gas emissions. AEP was in the crosshairs to either innovate to reduce CO2

emissions or face potential regulation that would diminish its capacity to grow as a company.

AEP had a history of providing low-cost, reliable electricity that took advantage of fuel

sources close to its power stations. With its base of operations in Ohio and significant utility

resources in West Virginia, Virginia, Kentucky, and Indiana, AEP relied heavily on coal for

electricity generation. It expanded its energy and fuel resources beyond the greater Appalachian

region to include low sulfur coal mined from Wyoming and Montana and natural gas resources.

Yet, approximately two-thirds of the electricity generated by AEP continued to come from coal-

fired power plants (Morris 2010). Given its heavy reliance on coal-based fuel to generate

electricity and regulatory mandates set forth by the 1970 Clean Air Act and its subsequent

amendments in the 1990s, AEP was an early adopter of SOx and NOx removal technologies.

AEP had to face emissions reductions head on given its status as one of the largest utility

companies in the U.S.

Birth of CCS at Mountaineer

By 2000, the possibility of regulation of carbon emissions was looming on the horizon.

AEP took a decisively active role in being on the forefront of the carbon regulation debate

because it would directly impact its bottom line. AEP had little control and political capacity to

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raise electricity rates in the states that it served. AEP argued that the customers and public utility

commissions expected low electricity rates and were hesitant to raise rates to cover emission

controls. AEP’s strategy to address impending policy changes on carbon emissions was to take

the stance of an early adopter (Morris 2010). It would move energy emissions innovation before

being forced to do so. AEP wanted to take the lead in the utility industry.

In 2003, AEP became a founding member of the Chicago Carbon Exchange (CCX), a

voluntary greenhouse gas emission and offset trading platform. CCX members make a legally-

binding commitment to meet annual greenhouse gas reduction requirements. AEP committed to

cumulatively reduce or offset 48 million metric tons of CO2 from 2003-2010 (AEP 2010). AEP

has also been actively lobbying for federal legislation that created a federal cap and trade system

to reduce greenhouse gas emissions and lobbied against legislation that targeted specific sectors

of the economy, such as the electric utility sector. Internally, AEP began exploring CCS

technologies. At the time many companies were “dabbling in CCS, vendors, utility companies,

even BMW” but no one company was taking specific action on implementing CCS (Morris

2010).

In 2002, DOE launched a research initiative to test the geological storage of carbon

sequestration in saline formations. DOE entered into an agreement with Battelle, AEP, BP,

Schlumberger, and the Ohio Coal Development Office to implement the $4.2 million test project.

DOE, through its National Energy Technology Laboratory (NETL), provided $3.2 million in

funding. AEP volunteered its Mountaineer Power Station as the test site, and the other

organizations provided either financial or in-kind services for the project. The project

represented the first site-specific investigation of CO2 storage in the world located at an active

power plant.

Collectively, AEP’s strategic choices, active lobbying for carbon emission legislation and

participation in carbon sequestration research initiatives poised AEP to pioneer CCS technology.

The Mountaineer Plant specifically was identified by AEP as a potential site to develop and

deploy CCS technologies. The challenge remained in moving CCS from conception to reality.

Finding a CCS Technology for Mountaineer

The turning point for AEP in deploying CCS technology came in 2005. Michael Morris

was completing his first year as AEP’s new CEO, President, and Chairman of the Board. One of

his first directives to his Executive Management Team was to evaluate current CCS technologies

20

and recommend a technology strategy for AEP to begin capturing carbon. Concurrently, the

Bush Administration signed into law the Energy Policy Act that included $1.6 billion in funding

for clean coal technologies. The funding was predominantly intended for developing carbon

capture technology and geological storage capacity. In 2005, DOE through the Office of Fossil

Fuel began announcing funding opportunities for commercial scale CCS projects. The Energy

Policy Act authorized three funding rounds for the Clean Coal Power Initiative (CCPI).

The mission of the Clean Coal Power Initiative (CCPI) was to “enable and accelerate the

deployment of advanced technologies to ensure clean, reliable, and affordable electricity for the

United States. The CCPI was a cost-shared partnership (with industry providing a minimum of

fifty percent of the cost) between the Government and industry to develop and demonstrate

advanced coal-based power generation technologies at commercial scale” (DOE 2011c). The

three rounds of funding focused on three distinct technologies and outcomes. The first round

solicited projects that improved power plant efficiency, economics, and environmental

performance. The second round focused on project proposals that improved mercury controls

and gasification technology in power plants. The third round solicited projects that demonstrated

advanced coal-based electricity generating technologies that captured and sequestered carbon

dioxide emissions. The objectives of Round 3 projects were explicit. The projects had to

demonstrate technologies at commercial scale and:

1. operate at 90 percent capture efficiency for CO2;

2. make progress towards capture and sequestration at less than a 10 percent increase in the

cost of electricity for gasification systems and a less than 35 percent increase for

combustion and oxy-combustion systems; and

3. make progress towards capture and sequestration of 50 percent of the facility's CO2

output at a scale sufficient to evaluate full impacts of carbon capture technology on a

generating plant's operations, economics, and performance (DOE 2011c).

AEP focused its strategy on meeting the requirements of the Round 3 of CCPI funding.

The site characterization completed at the Mountaineer Power Plant in 2003 through partial

funding provided by DOE had identified two feasible injection reservoirs. The challenge

remained for AEP in selecting a carbon capture technology strategy. Three general technologies

for carbon capture were circulating in the utility manufacturing industry. The first was

Integrated Gasification Combined Cycle (IGCC) which was an original technology to enable

21

carbon capture. However, demonstration projects using IGCC were proving to be either

unsuccessful or yielding very high capital and production costs. The second option, Oxy-

Combustion had proved successful in other industrial applications that separated carbon, but it

had yet to be deployed by utility companies at commercial scale. This option also used oxygen

to separate the carbon, and oxygen was an expensive ingredient for the process. The third option

was the Chilled Ammonia Process. It offered a post-combustion option to capture the carbon

emissions. The Chilled Ammonia Process was patented by Alstom, a global transportation and

power generation company. The Chilled Ammonia Process had the benefit of lower costs due to

its extensive use in other industrial applications.

Building Partnerships and Technological Choice

In March 2007, AEP, the technology user, made a decisive choice to pursue the Chilled

Ammonia Process. AEP contacted Alstom, the technology developer, to negotiate an agreement

to add CCS technology at the Mountaineer Plant. AEP wanted to avoid going to the open market

for collaborators. The burden for AEP was getting the deal sealed as quickly as possible, noting

that “There was synergy is doing research on CCS technology ahead of time, picking one

solution, but once you take that leap, you do not want someone to beat you to the punch” (Morris

2010). Alstom agreed immediately to work with AEP to construct a plant parallel to the

Mountaineer Plant that would capture carbon using the Chilled Ammonia Process.

AEP’s decision to partner with Alstom paved the way for DOE to provide additional

funding and technical support through Battelle to conduct a ten-year proof of concept effort.

The DOE’s Office of Fossil Energy contributed $7.2 million while Alstom and AEP contributed

$1.4 million for the initial phases of the project. The proof of concept focused on small-scale

pilot projects that offered process validation. DOE wanted to use the proof of concept projects to

illustrate lessons learned for deployment. The proof of concept projects had redundancies built-in

and were “gold-plated,” a fact that made them cost more or take longer to develop. The point

was to find all the quirks of the new technology and mitigate them (Sarkus and McMillan 2010).

In the case of the Mountaineer Power Plant, the proof of concept project would generate 20 MW

of electricity and capture 100,000 tons of carbon dioxide annually. In comparison, the

Mountaineer Plant currently generates approximately 1,300 MW of electricity and emits almost

7 million tons of CO2 annually without CCS technology. Hence, the proof of concept project

represented only 1.5% of the plant’s capacity.

22

By 2009 RWE, a German based utility company, and EPRI, the electricity industry’s

research institution, joined AEP and Alstom as project sponsors. Collectively, the two new

parnters committed $100 million to the proof of concept project to implement Chilled Ammonia

Process for carbon capture and sequestration at the Mountaineer Plant. In September of that

same year AEP successfully captured carbon emissions from the plant. A month later AEP

injected the carbon a mile and half underground through wells located on AEP-owned property

(DOE 2011d).

AEP leveraged the success of the proof of concept to secure an additional $334 million to

scale up the project. The American Recovery and Reinvestment Act of 2008 authorized funding

for a second set of CCPI Round 3 initiative that supported the commercialization of CCS

technologies. In December 2009 the Mountaineer Plant was selected by DOE to be eligible for

the cost share demonstration project. AEP and Alstom would provide half of the $668 million

required to scale up the project and DOE would provide the other half. Financial sponsors,

technology developers and technology users worked in a tight collaborative system led by AEP

to decisively move forward as quickly as possible. The aim was to evolve toward a commercial

scale CCS project.

Generating Global Support

AEP’s commercial-scale installation of CCS technology continues to progress in 2011.

Since the project involved federal funding through CCPI, DOE was required to meet NEPA

requirements by conducting a full Environmental Impact Statement (EIS). In June 2010, DOE

filed a Notice of Intent to prepare the EIS for the CCS project at the Mountaineer Power Plant.

By 2011, DOE had issued the Draft EIS for financing the Mountaineer CCS project and was

scheduled to hold a public hearing in New Haven, WV, the community adjacent to the

Mountaineer Power Plant. As of March 2011, the public hearing has been postponed with no

indication of when the public hearing will be rescheduled.

In February 2011, AEP received additional financial support and legitimacy for its CCS

project at the Mountaineer Power Plant from the Global CCS Institute. The Institute is a non-

profit organization funded by an initial AU$100 million dollar investment from the Australian

Government to promote knowledge sharing, advocacy for commercialization, and reducing

barriers for deploying carbon capture and sequestration technologies. AEP applied for and was

awarded AU$4 million through Global CCS Institute Project Support Program to document and

23

share its experience in deploying a large scale CCS project. The Global CCS Institute funding

does not directly cover construction or deployment costs for integrating CCS technology at the

Mountaineer Plant. It does identify and showcase the Mountaineer Power Plant as a credible and

significant project that will offer useful lessons for deploying CCS technology at a commercial

scale. The linkage between Mountaineer and FutureGen for AEP lies at least in part on the

reality that as AEP invested in Mountaineer, AEP saw less need to invest in FutureGen.

Particularly, as FutureGen went through sporadic starts and halts.

Hypotheses Assessment

The FutureGen and Mountaineer case studies offer opportunities to test extant hypotheses

regarding cross-sector collaboration.

H1: The development and deployment of large scale energy innovation projects

requires explicit collaboration across public and private sectors because of the

inability of one sector to accomplish progress on its own.

The two projects illustrate that no one sector can accomplish large-scale innovation on

their own. The absence of a regulatory framework that either dictates carbon management or

provides incentives for carbon management partnership between public and private sector is a

barrier to innovation. Explicit interest, commitment, and even financial incentives may not be

sufficient to sustain long-term partnerships to develop large scale innovations in the energy

sector. The FutureGen and Mountaineer projects are alive, and may succeed in spite of these

barriers, but the incentives are incomplete. There needs to be both push from the research and

development side and pull in the form of a regulatory regime for carbon reduction.

H2: Cross-sector collaboration provides a mechanism to reconcile the competing

incentives and values of industry and government to develop and deploy large

scale energy innovation.

The case analysis of the two projects does not necessarily support this hypothesis.

Incongruence between industry and government incentives and values remain through the

partnerships in deploying large scale technology innovation. Specifically, industry seeks to

24

move decisively when opportunities arise for deploying technologies, while government

institutions seek a more deliberative decision-making process that involves the affected public,

local and state agencies, other competitive industrial organizations, and other nations. The

values espoused by the actors within the partnership are multiple and often inconsistent.

Industrial organizations operate within an incentive structure system that is constantly evaluating

investment choices from a spectrum of opportunities, funding is only provided to the projects

that offer greatest return on investment compared to other potential projects. This return on

investment may be financial, but also experience and learning from new technologies.

Government programs on the contrary are structured to promote specific technologies,

innovations, or initiatives and face losing funding if project funding is not obligated according to

certain “rules of the game,” which usually entail constraints. State and local government

agencies must balance values of economic development, potential impact of the CCS project,

and the cost of electricity rates. The affected publics articulate their values in terms of the

impact of the CCS project on their personal property, health, and livelihood. Other nations

espouse a myriad of values that include promoting economic development, anticipating carbon

emission regulation, and promoting innovation and learning. All players want a cross-sector

mechanism, which may be formal or informal, to maximize their distinct values.

H3: Innovation in large scale technology can be understood as an inter-

organizational process, in which various organizations play different roles:

technology developer, technology user, financial sponsor or other roles. Of

particular importance is who plays the role of “driver” in the process.

One of the striking differences between the two cases is who drove the innovation process. In

the case of FutureGen, government was the lead driver. In the case of Mountaineer, AEP led the

way to implementing CCS technology. Government failed as driver for FutureGen, but may

have recovered momentum recently. Even though the FutureGen Industrial Alliance played a

significant role in facilitating the technological design, siting process, and securing private sector

financing for the project, DOE remained in control of the project due to its dominant financial

responsibility for the project. DOE exercised this authority by mandating a change in the CCS

technology, withdrawal of financial support, negotiating an alternative site for FutureGen under

25

the Obama administration, and ultimately reducing the responsibility of the private sector

partners to address the sequestration component of FutureGen. AEP has been more successful

driver of innovation demonstrated by its capacity simply to move forward to implement CCS

technology. AEP has had greater control of the innovation process and its choice of actors

involved in implementing CCS technology. In the case of the Mountaineer Power Plant, the role

of government was limited to provided funding for the CCS project. The level of funding has

made DOE serve as facilitator rather than as a managing partner. DOE had no control over

AEP’s choice of CCS technology. The scope of affected publics was limited in that AEP owned

the land for the injection site. In short, the business organization made its goals the goals of the

inter-organizational (inter-sectoral) relationship.

H4: Organizations concerned with innovation in technology interact in a political

environment; policymakers, affected public, and others influence the dynamics of

their relationships.

The FutureGen case illuminates the politics of innovation graphically. The lack of long-term

political support accounted for FutureGen’s demise under the Bush administration more than any

technological factor. What one DOE Secretary started, another maintained, and then abandoned.

What happens to FutureGen under Obama and Mountaineer going forward will also depend on

political support. Sequestration of carbon will raise NUMBY (Not Under My BackYard) issues.

For both FutureGen and Mountaineer sites were chosen where public attitudes were perceived as

favorable – or at least not actively hostile. The process of innovation has a long way to go and

will require support from affected publics as projects move from carbon capture to sequestration.

Conclusion

It is clear that there is a need to join contemporary public administration research in

collaboration with efforts to understand large scale technological innovation. Collaboration

involves bringing often contesting actors together for public purposes. Technological

innovations in energy are an increasing urgent purpose. Government and industry need to be

aligned to bring about required reforms. The evidence presented in these case studies illustrates

how difficult it is to do this under some circumstances, but does show it is also possible. The key

is leadership in orchestrating collaboration. The more collaboration researchers think about

26

innovation in energy technology, the more relevant will be their research, and more effective will

be efforts to cope with the nation’s energy and climate challenges.

27

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i The partner companies in the FutureGen Industrial Alliance in 2005 included Alpha Natural Resources, Inc.,

(Linthicum Heights, MD), American Energy Power (AEP), Inc (Columbus, OH), Anglo American Services (UK) Limited

(London, UK), BHP Billiton Energy Coal Inc (Melbourne, Australia), China Huaneng Group (Beijing, China), CONSOL

Energy Inc (Pittsburgh, Pennsylvania), PPL Corporation (Allentown, PA), Peabody Energy Corporation (St. Louis,

Missouri). Rio Tinto Energy America (RTEA) Services (Gillette, Wyoming), Southern Company (Atlanta, GA), E.ON

U.S. LLC (Louisville, Kentucky), Xstrata Coal Pty Limited (Sydney, Australia).

ii These sites included proposals from Ohio (Meigs County), North Dakota, Wyoming, and West Virginia. The

remaining eight sites were first scored based on the proposal criteria individually by members of the Alliance

Proposal Evaluation Team. The goal was to identify sites that would meet two specific goals, an acceptable

location for siting a power plant and an acceptable location to support geological storage of the CO2 emissions.

The scores were aggregated to create two ranked lists of sites, one based on the suitability criteria for the location

of power plant and one on the geological target formation. The result of the rankings yielded five potential sites

that ranked the highest and within 5 percentage points of each other. The other three sites had significantly lower

scores than the top‐ranked sites.