A now-bankrupt Texas company partnering with President Barack Obama's Energy Department on a clean coal project charged the federal government for spas, alcohol, and travel, the department's inspector general found.
The Energy Department’s inspector general published a report Tuesday finding the Texas Clean Energy Project, developed by Summit Texas Clean Energy, charged the agency more than $2.5 million for expenses the watchdog deemed “potentially unallowable,” including $1.2 million in lobbying costs and $1.3 million in “questionable or prohibited” travel-related expenses.
The travel-related expenses include more than $650,000 incurred by a consultant used by Summit Texas Clean Energy for items such as a spa service, alcohol, first-class travel, limousine services, receipts in foreign currency, and business meals.
Companies partnering with the government cannot charge for lobbying fees under federal law.
The inspector general blamed the Energy Department under the Obama administration for not implementing “invoice review controls” that it had required of Summit Texas Clean Energy per the terms of the deal.
In January 2010, the Energy Department’s Office of Fossil Energy awarded Summit Texas Clean Energy a $1.7 billion agreement for a carbon capture and storage project.
Of the total cost, the Energy Department paid $350 million and later gave the Texas company another $100 million.
Carbon capture is a long-elusive and expensive technology that captures carbon emissions from power plants and stores it underground as a way of limiting its impact on global warming. Experts consider deployment of the technology key to limiting global warming to “well below” 2 degrees Celsius, or 3.6 degrees Fahrenheit, the limit at which many scientists say the world would see irreversible effects of climate change.
The Texas Clean Energy Project promised to capture 2 million tons of carbon dioxide a year from a coal plant, or 90 percent of its annual emissions, and bury them underground.
Under the terms of the project, the Energy Department was supposed to obtain from Summit Texas Clean Energy invoices prior to reimbursing the company and approving the expenditures.
In numerous instances, with costs totaling $38 million, the Energy Department approved requests for reimbursement without receiving sufficient documentation.
“[The Office of] Fossil Energy had not always exercised sound project and financial management practices in its oversight of the project,” the inspector general said.
The Energy Department in June 2016 suspended funding for the project, which was plagued by delays and was unable to attract sufficient private financing.
An inspector general report that year found the Energy Department took actions “that increased its financial risk without assurances that the project would succeed.”
Summit Texas Clean Energy filed for bankruptcy in October 2017.
The new inspector general report comes after Congress last week passed a government spending bill that would extend and expand a tax credit supporting carbon capture and storage projects.