GOV. BLAGOJEVICH ANNOUNCES THAT INDIANA GOV. DANIELS IS JOINING ILLINOIS' BID TO LAND $1 BILLION FUTUREGEN CLEAN COAL PROJECT

CHICAGO - Chances for the Midwest attracting the $1 billion FutureGen project got an important boost today with the signing of an agreement through which Illinois and Indiana will make a united bid to attract the breakthrough clean-coal development to the Illinois Coal Basin. The Memorandum of Understanding between Illinois Gov. Rod R. Blagojevich and Indiana Gov. Mitch Daniels states that Illinois' strong financial support and appealing geologic features make the state the ideal host for the federally supported FutureGen project - the near-zero emissions power plant that will also produce hydrogen fuel and allow capture and possible use of carbon dioxide.

"This agreement shows vision in creating a regional, bipartisan alliance that pools our two states' assets to realize our common goal of developing our abundant coal reserves in an environmentally responsible manner," Gov. Blagojevich said. "We share a coal basin that spans the Wabash and Ohio rivers, and we share a commitment to unlocking the full energy potential of Illinois Basin coal through coal gasification technology. The only way to make coal king again is to make coal clean, which is what we are both committed to doing."

"We have all the elements that are needed for this project: the natural resources, ideal geologic structure, and a commitment to clean coal as American's ace in the energy hole," Gov. Daniels said.

Through the agreement, Indiana supports Illinois' application to site the state-of-the-art, public-private electric generating facility in Illinois, while Illinois supports carbon dioxide sequestration projects related to FutureGen in Indiana. An ongoing collaboration over the past two years will continue to develop sequestration in Indiana, Illinois and Kentucky to ensure that FutureGen can meet its near-zero emissions goal.

The FutureGen Industrial Alliance, an industrial consortium, was recently designated by the U.S. Department of Energy (DOE) to choose a site for what is being described as the coal-fueled power plant of tomorrow. The Alliance also will select technology for the project, hire a design-construction team to the facility and operate it when it is complete.

The Alliance and DOE will launch the site selection effort in 2006, with an aggressive schedule to start construction within three years and have the plant in operation by in 2012.

"In conjunction with Indiana, we will make it clear to the Alliance that our coal fields should be the focal point for deployment of coal gasification technology," Gov Blagojevich said. "We will continue to cultivate our already strong reputation as the first stop for prospective developers of coal-fueled energy projects for the next generation."

The Alliance is a non-profit coalition of the world's largest coal and energy companies. Its members have committed more than $250 million to project development. The U.S. government would invest about $700 million.

Public and private entities in 14 states have expressed interest in hosting or participating in the project, according to the Alliance. Gov. Blagojevich recently joined with U.S. Senator Richard Durbin (D-IL), U.S. Senator Barack Obama (D-IL), U.S. Rep. Jerry Costello (D-Belleville) and U.S. Rep. John Shimkus (R-Collinsville) in sending a letter to the Alliance emphasizing Illinois' advantages as a site for the prototype facility.

Coupled with Illinois' geographic and geological advantages, such as ample coal reserves and underground carbon dioxide storage capacity, Gov. Blagojevich signed legislation earlier this year to support FutureGen with the nation's most comprehensive coal development investment package. This support includes direct grants, tax waivers and credits and financing incentives.

The Illinois Department of Commerce and Economic Opportunity, through its Office of Coal Development, has also been conducting preliminary reviews of several potential sites throughout the state.

A multi-year project, FutureGen's first budget period runs through Jan. 31, 2007. First-year spending of $10.2 million will focus on establishing the configuration and cost of the facility and developing a short list of potential sites.

Coal represents more than 85 percent of U.S. energy reserves and fuels 50 percent of U.S. electric production. Throughout the world, coal use has grown more than five times faster than projected in the past three years.

Members of the FutureGen Alliance are: American Electric Power; BHP Billiton; the China Huaneng Group; CONSOL Energy Inc.; Foundation Coal; Kennecott Energy, a member of the Rio Tinto Group; Peabody Energy and Southern Company. The not-for-profit Battelle research and development firm is serving as the Alliance coordinator.