Illinois Governor signs bill meant to stoke new uses for coal

CHICAGO, ILLINOIS - Looking to stoke the state's flagging coal industry, Gov. Rod Blagojevich signed legislation meant to help develop new markets for Illinois coal by encouraging its conversion to synthetic natural gas.

The new law removes some regulatory obstacles to the production of ultra-clean, high-efficiency coal gasification sites, which could use Illinois' high-sulfur coal to produce natural gas through newly developed technology.

The gas would be sold to plants primarily to power electric generators.

"Legislation such as this allows us to take a national leadership role in clean-coal technology," Blagojevich said recently. "We're seizing a tremendous opportunity to demonstrate to the world that there are innovative and environmentally-friendly ways to use more Illinois coal, which will give this critical industry an important economic boost."

The law permits gas utilities to enter into 20-year supply contracts with any synthetic natural gas producer that starts construction in Illinois by mid-2008 using the type of coal common in Illinois. Unless state utility regulators deem the cost of the gas unreasonable, they cannot easily prevent the contract from going through. The contractual guarantees are meant to help developers get financing for the new projects.

One developer, Power Holdings of Illinois LLC, is planning to begin construction in 2007 on a $1 billion, privately financed gasification site southwest of Mount Vernon in Southern Illinois.

The plant could use 3.5 million tons of Illinois coal a year, company President Robert Giltin said Tuesday during the governor's bill signing ceremony.

Since the federal Clean Air Act took effect in 1977, essentially outlawing high-sulfur Illinois coal, more than four dozen Illinois mines have shut down, cutting thousands of jobs. The new technology, known as Integrated Gasification-Combined Cycle, can clean Illinois coal to meet federal emissions standards.

The legislation, which amends the state's Public Utilities Act, was approved on the last day of the Legislative session.

State Sen. James Clayborne, an East St. Louis Democrat who sponsored the measure, said the legislation would broaden the market for clean-coal technology, "allowing us to mine more Illinois coal that not only reduces our dependence on foreign energy sources and creates good jobs but does so in an environmentally responsible way."

It also could help create an estimated 1,400 jobs, said state Rep. Kurt Granberg, D-Centralia.

"The slumbering Illinois coal industry has a better chance of bursting back into business with this initiative by reopening mines," Granberg said. "This innovative legislation has the potential to relieve shortages and high pricing by creating natural synthetic gas, thereby resulting in lower, more stable prices for consumers."