American Electric Power has decided to table plans to build a full-scale carbon-capture plant at Mountaineer, a 31-year-old coal-fired plant in West Virginia, where the company has successfully captured and buried carbon dioxide in a small pilot program for two years.

The technology had been heralded as the quickest solution to help the coal industry weather tougher federal limits on greenhouse gas emissions. But Congressional inaction on climate change diminished the incentives that had spurred A.E.P. to take the leap.

Company officials, who plan an announcement on Thursday, said they were dropping the larger, $668 million project because they did not believe state regulators would let the company recover its costs by charging customers, thus leaving it no compelling regulatory or business reason to continue the program.

The federal Department of Energy had pledged to cover half the cost, but A.E.P. said it was unwilling to spend the remainder in a political climate that had changed strikingly since it began the project.

“We are placing the project on hold until economic and policy conditions create a viable path forward,” said Michael G. Morris, chairman of American Electric Power, based in Columbus, Ohio, one of the largest operators of coal-fired generating plants in the United States. He said his company and other coal-burning utilities were caught in a quandary: they need to develop carbon-capture technology to meet any future greenhouse-gas emissions rules, but they cannot afford the projects without federal standards that will require them to act and will persuade the states to allow reimbursement.

The decision could set back for years efforts to learn how best to capture carbon emissions that result from burning fossil fuels and then inject them deep under-ground to keep them from accumulating in the atmosphere and heating the planet. The procedure, formally known as carbon capture and sequestration or C.C.S., offers the best current technology for taming greenhouse-gas emissions from traditional fuels burned at existing plants.

The abandonment of the A.E.P. plant comes in response to a string of reversals for federal climate change policy. President Obama spent his first year in office pushing a goal of an 80 percent reduction in climate-altering emissions by 2050, a target that could be met only with widespread adoption of carbon-capture and storage at coal plants around the country. The administration’s stimulus package provided billions of dollars to speed development of the technology; the climate change bill passed by the House in 2009 would have provided tens of billions of dollars in additional incentives for what industry calls “clean coal.”

But all such efforts collapsed last year with the Republican takeover of the House and the continuing softness in the economy, which killed any appetite for far-reaching environmental measures.

A senior Obama administration official said that the A.E.P. decision was a direct result of the political stalemate.

“This is what happens when you don’t get a climate bill,” the official said, insisting on anonymity to discuss a corporate decision that had not yet been publicly announced.

At the Energy Department, Charles McConnell, the acting assistant secretary of energy for fossil energy, said no carbon legislation was near and unless there was a place to sell the carbon dioxide, utilities would have great difficulties in justifying the expense. “You could have the debate all day long about whether people are enlightened about whether carbon dioxide should be sequestered,” he said. But, he added, “it’s not a situation that is going to promote investment.”

His department has pledged more than $3 billion to other industrial plants to encourage the capture of carbon dioxide for sale to oil drillers, who use it to more easily get crude out of wells.

The West Virginia project was one of the most advanced and successful in the world. “While the coal industry’s commitment and ability to develop this technology on a large scale was always uncertain, the continued pollution from old-style, coal-fired power plants will certainly be damaging to the environment without the installation of carbon capture and other pollution control updates,” said Representative Edward J. Markey, Democrat of Massachusetts, co-author of the House climate bill. “A.E.P., the American coal industry and the Republicans who blocked help for this technology have done our economy and energy workers a disservice by likely ceding the development of carbon-capture technology to countries like China.”

A.E.P., which serves five million customers in 11 states, operated a pilot-scale capture plant at its Mountaineer generating station in New Haven, W.Va., on the Ohio River, from 2009 until May of this year. But the company plans to announce on Thursday that it will complete early engineering studies and then will suspend the project indefinitely.

Public service commissions of both West Virginia and Virginia turned down the company’s request for full reimbursement for the pilot plant. West Virginia said earlier this year that the cost should have been shared among all the states where A.E.P. does business; Virginia hinted last July that it should have been paid for by all utilities around the United States, since a successful project would benefit all of them.

Five years ago, when global warming ranked higher on the national political agenda, the consensus was that this decade would be one of research and demonstration in new technologies. A comprehensive 2007 study by the Massachusetts Institute of Technology concluded that global coal use was inevitable and that the ensuing few years should be used to quickly find ways to burn the cheap, abundant fuel cleanly. But with the demise of the Mountaineer project, the United States, the largest historic emitter of global warming gases, now appears to have made little progress solving the problem.

Robert H. Socolow, an engineering professor at Princeton and the co-director of the Carbon Mitigation Initiative there, said he was encouraged that some chemical factories and other industries were working on carbon capture without government incentives.

Mr. Socolow, the co-author of an influential 2004 paper that identified carbon capture as one of the critical technologies needed to slow global warming, said that there was a trap ahead. “Lull yourself into believing that there is no climate problem, or that there is lots of time to fix it, and the policy driver dissolves,” he said in an e-mail. He added that for companies like A.E.P., “business wants to be ahead of the curve, but not a lap ahead.”

Article source: http://www.nytimes.com/2011/07/14/business/energy-environment/utility-shelves-plan-to-capture-carbon-dioxide.html?partner=rss&emc=rss