Coal-to-gas bills return to General Assembly

Posted: 6/2/2011

From Chicago Tribune:

Two bills Gov. Pat Quinn vetoed this March were resurrected late Tuesday night and passed through the General Assembly.

The bills would have paved the way for coal-to-gas plants to be built on the Southeast side of Chicago and in Downstate Illinois.

Advocates of one of the plants, a $3 billion one proposed by New York-based Leucadia National Corp., say they expect their bill to pass muster with Quinn after added revisions that aim to protect consumers. Similar protections were added to a $1 billion southern Illinois plant proposed by Power Holdings of Illinois.

The original bills would have forced state utilities to buy synthetic natural gas produced from coal and refinery waste to heat consumers' homes. An analysis by the Environmental Law and Policy Center had determined that consumers could see rate increases of as much as $191 a year if the two proposed plants were built.

Incorporating comments and concerns from Quinn, Citizens Utility Board and others who came out against the projects earlier this year, House and Senate sponsors added consumer protections in the form of consumer protection funds, firm rate caps and profit-sharing to ensure that consumers do not see gas bills increase because of the fact that synthetic gas is expected to be more expensive to produce than the natural gas used to heat homes now.

The bill for the Chicago project guarantees consumers will not see rates increase by more than 2 percent as a result of the Leucadia project. The bill also added a more robust reserve account to mitigate any increases that could come from consumers paying more for the synthetic natural gas while natural gas prices remain low.

"Illinois legislators understand that clean energy is the future and Illinois can be a leader in this field," said David Hagen with Eco-Industrial Development, the developer on the project. "But we haven't reached the finish line yet. We are eager to work with Governor Quinn to ensure Illinois is at the forefront of clean energy technology."

If the bill becomes law, the facility -- to be located on a 140-acre brownfield at  115th Street and Burley Avenue -- would sell be guaranteed a buyer for 100 percent of its output, selling 43.5 billion cubic feet of synthetic natural gas to the state's four major gas utilities for 30 years, at a price set by formula. Consumers would pay for the gas through their utility bills, but the bill guarantees that consumers will save $100 million over 30 years.

Earlier this year, community and environmental groups opposing Leucadia's proposed plant flooded Quinn's office with postcards, phone calls and handwritten letters asking him to veto the bill. Protesters expressed concerns the plant would add more pollution to their neighborhood, whose air contains the state's highest levels of toxic heavy metals, chromium and cadmium, as well as sulfates, which can trigger asthma attacks and increase the risk of heart disease.

Leucadia says its plant is expected to create about one-hundredth of the pollution of traditional coal-fired power plants. Gasification plants don't burn coal, which send toxic byproducts into the air through a smokestack. Instead, the coal is gasified through a chemical process and byproducts are collected, to be sold and reused.

The bill requires that 85 percent of the carbon dioxide emissions from the plant be captured and sequestered or Leucadia faces a fine of $20 million, but environmental advocates remained unconvinced Wednesday.

"There are definite changes on the consumer protection side, but the fact remains this is a very risky experiment that we will all be subsidizing for 30 years," said Jack Darin, director of the Sierra Club, Illinois Chapter. "We have seen no details on how they are going to handle the tremendous levels of new pollution the plant will create."

The Leucadia project still has several hurdles to cross before it can become a reality while the Power Holdings project Downstate is nearly shovel-ready, with options to coal reserves in Washington County to feed the Jefferson County facility, an air pollution permit, agreements in place for carbon sequestration and a construction timeline that begins in January, said Representative Dan Reitz (D-Sparta) who sponsored the last-minute amendment Tuesday night that paved the way for the Power Holdings project.

Leucadia does not yet have permission to add pollution to a crowded industrial area in Chicago and has not pinned down a buyer for its carbon dioxide emissions, which could be piped deep underground or used for enhanced oil recovery.

The owners of the industrial site where Leucadia wants to set up its coal-to-gas plant are locked in a legal battle to persuade the state to let it sell its permission to pollute to Leucadia along with the site.

The Illinois Environmental Protection Agency has opposed the sale of the pollution offsets.

The project's developers have said that once the plant is operational in 2015, it would create 200 permanent jobs and hundreds more at related businesses.

"We can't afford to keep these jobs if it's going to cost us the ultimate price of the environment," said Peggy Salazar, acting executive director of the Southeast Environmental Task Force.

She said legislators need to stop to coal and instead look to technology like wind and solar. Using coal could produce more coal dust in the neighborhood, she said, and coal mining is detrimental to the environment.

"Coal cannot be clean," she said. 

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