American Electric Power Co. and Southern Co., the nation's largest producers of power from coal, are withdrawing from the FutureGen project, which is aimed at lowering carbon-dioxide emissions.

Columbus, Ohio-based AEP will withdraw from the project July 1, spokesman Pat Hemlepp said Wednesday.

AEP, which owns Public Service Company of Oklahoma, will spend some of the money previously earmarked for the investment on carbon capture and storage at its Mountaineer Plant in New Haven, W.Va., Hemlepp said.

A planned coal-fueled FutureGen plant in Mattoon, Ill., would be able to capture and bury 60 percent of its carbon emissions, which are blamed for global warming. The U.S. Energy Department expected that the 275-megawatt plant would get $1.1 billion in federal funding and as much as $600 million in industry support.

Southern is withdrawing from FutureGen "immediately," the company said in an e-mail.

Southern will focus on coal gasification at the power plant in Kemper County, Miss., and a carbon research center in Wilsonville, Ala., said Valerie Hendrickson, a company spokeswoman.

BHP Billiton Ltd., Peabody Energy Corp., Consol Energy Inc., E.ON AG, Anglo American PLC, Rio Tinto PLC, Foundation Coal Holdings Inc., a Xstrata PLC unit and China Huaneng Group are other companies involved in the alliance.

The Tulsa World Business staff contributed to this story.

SUBHEAD: Southern Co. is also bowing out of the FutureGen project to lower CO emissions.

Originally published by MARK CHEDIAK & KATARZYNA KLIMASINSKA Bloomberg News.

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