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Illinois Governor Advances Coal-to-Natural Gas Plant

Illinois Gov. Pat Quinn on Wednesday signed legislation to help create the state's first coal gasification plant, which is expected to reduce carbon emissions and create 1,500 jobs.

The $3 billion proposed Chicago Clean Energy project would be built on a brownfield site within the Chicago-Calumet Industrial Corridor on the city's southeast side. It would, for the first time in the state, use the advanced "clean" coal process known as gasification, which allows production of substitute natural gas from Illinois coal and petroleum coke without burning them. The proposed facility would use at least one million tons of Illinois coal per year, which would open the state's coal industry to more markets.

Carbon dioxide and other emissions are captured as part of the gasification process and eventually sequestered underground. Some experts view gasification as a lynchpin to develop coal facilities with reduced greenhouse gas emissions.

Quinn had vetoed earlier versions of the legislation after some critics claimed that the state's consumers would face price hikes of up to $191 a year for 30 years. The final legislation for Chicago Clean Energy included input from the governor, the Environmental Law and Policy Center, the Citizens Utility Board, local organizations near the project site and other stakeholders.

The state's four major gas utilities would buy Chicago Clean Energy's synthetic natural gas for 30 years at a price set by formula; consumers would pay for the gas through their utility bills. The bill guarantees that consumers will save $100 million over 30 years. The enacted legislation requires utilities to purchase the gas produced at the future plant and proportionally allocates the natural gas produced at the facility to the state's gas utilities. Several consumer protections include a rate cap, a reserve account that aligns the interests of the developer with those of the consumer and a revised system to share savings and potential revenues with consumers.

Leucadia National Corp., the company behind the Chicago Clean Energy project, said it is committed to working "closely with local leaders and community members to make this project a tangible benefit to Chicago and the entire state of Illinois," said Executive Vice President Tom Mara. Chicago Clean Energy expects to generate more than $10 billion in economic output for Illinois and create about 1,100 construction jobs, 200 permanent jobs and 165 additional mining jobs.

The legislation is not a guarantee that Leucadia will build the facility. The company now begins a regulatory review that could take several years. The plant would be required to capture and sequester 85% of the carbon dioxide (CO2) emissions or it could be fined up to $20 million. Leucadia as yet does not have permission to add pollution to the industrial area in Chicago where the plant would be located and it has not obtained a buyer for the CO2 emissions. The U.S. Environmental Protection Agency also has not signed off on the sale of pollution offsets.

Despite the reductions in CO2 and the new job creation, the proposed facility has not drawn universal praise.

"We've pretty much seen enough of this stuff already," said Tom Shepherd of the Southeast Environmental Task Force. "When we talk about a new future, or as the governor called it -- that we have to 'win' the future -- I disagree with him about coal being the future. And I'm not alone in that."

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