Despite his previous statements regarding global warming's harmful effects on the future, Gov. Dave Freudenthal defended the state's decision to permit a new pulverized coal-fired power plant.

It comes less than two weeks after Freudenthal publicly stated that he believes there's a special place reserved in purgatory for this generation if it does not take advantage of opportunities to cut carbon emissions.

Asked Friday if the state's approval of the Dry Fork Station pollution emissions permit undermines his message to federal regulators to fund clean coal technologies, Freudenthal said "no," and didn't elaborate.

Construction of the 385-megawatt Dry Fork Station power plant north of Gillette commenced immediately upon issuance of the permit this week, according to Basin Electric Power Cooperative officials.

The Powder River Basin Resource Council condemned the actions and noted that other states, such as Kansas, are more progressive toward curbing carbon emissions.

On Thursday, Kansas Department of Health and Environment denied an air quality permit for two 700-megawatt plants that would also use conventional, CO2-emitting technology.

"We're permitting outdated coal-fired power generation technology that even the utility industry's most reliable investors and lenders are beginning to question," Bob LeResche, Powder River Basin Resource Council chairman, said in a prepared statement on Friday.

"Regardless of the governor's progressive pontifications, Wyoming seems determined to stay in the Dark Ages," LeResche added.

Dry Fork Station is expected to pump 3 million tons of carbon dioxide into the atmosphere for the next 40 years. Man-caused carbon dioxide emissions are a significant contributor to global warming.

Basin Electric spokesman Floyd Robb said the co-op decided to withdraw its application for a $750 million USDA loan for the power plant because it stipulates an environmental impact statement study. Robb said inflation of labor costs, manufacturing, steel and other materials could add $175 million to the total cost of the project during the year-long EIS process.

Inflation has already increased the cost of the project from $800 million a few years ago to $1.3 billion today, according to Robb. Instead, Basin Electric will seek financial backing from Wall Street investors.

"Because of Basin Electric's strong financial position and our strong credit ratings, we believe we will be able to obtain favorable financing terms and rates," Robb told the Star-Tribune.

At least seven Rural Utilities Service loan applications for conventional power plants are being challenged by environmental groups in federal court.

Dry Fork Station will not be constructed as "carbon capture-ready," according to Robb. That represents a huge risk for the company and its members, according to industry finance experts.

David Siever of Capital Technology Inc. spoke earlier this month at the University of Wyoming's "Finding the Balance: Energy and Climate" forum. He said investors see too much risk in building new pulverized coal-fired power plants because it is extremely expensive to retrofit them to meet pending carbon capture and sequestration regulation.

On the other hand, billions of investment dollars remain pent-up until such regulation is passed, Siever said at the forum.

Basin Electric officials insist the company is a leader in developing "new" technologies to reduce carbon emissions.

"We are sequestering over 3 million tons of carbon per year from our Great Plains Synfuels Plant near Beulah, N.D.," Robb told the Star-Tribune. "Since the start of that project, we have sequestered over 10 million tons of carbon."

Robb said Basin Electric has solicited proposals from engineers to demonstrate a carbon-capture pilot project at an existing coal-fired power plant in North Dakota.

"When regulations are put in place concerning the control of carbon, Basin Electric will comply with the law," Robb said.

Until federal regulations are in place, it remains uncertain how much it will cost to retrofit the Dry Fork Station plant, which will largely serve natural gas, coal and other industrial customers in northeast Wyoming.

"We are showing load-growth (among Basin's members) and we need the resource only by 2011 to meet it," Robb said.

He added that until the co-op knows what the regulations are, it's impossible to answer what the cost of retrofitting the plant will be.

Energy reporter Dustin Bleizeffer can be reached at (307) 577-6069 or dustin.bleizeffercasperstartribune.net.