In vetoing two bills Monday that would have paved the way for two coal-to-gas plants to be built in the state, Gov. Pat Quinn signaled his support for cleaner uses of Illinois coal but said he would not support the technology at the expense of consumers.
The bills would have forced state utilities to buy synthetic natural gas, which was expected to be more expensive than natural gas for the next two decades, from a $3 billion plant on Chicago’s Southeast Side proposed by New York-based Leucadia National Corp. and a $1 billion southern Illinois plant proposed by Power Holdings of Illinois.
The extra costs would have been passed on to people via their home heating bills, costing consumers as much as $191 more a year to heat their homes beginning around 2015 and continuing for roughly two decades.
“Our investments in clean coal must not come at the expense of consumers,” said Quinn, who sided with environmental and community groups and the Citizens Utility Board, a consumer advocacy group he co-founded.
David Kolata, CUB executive director, said, “Working families are the backbone of a strong economy, and adding to their fixed monthly costs would only weigh down a state already struggling with the economy.”
Leucadia said in a statement that the company is disappointed but would reassess the situation to determine its next steps. Leucadia said the project would have created thousands of jobs and was supported by area businesses, as well as labor, advocacy and community organizations.
Because the bills were passed in the last legislative session, the General Assembly can’t override the vetoes. Supporters of the projects would be forced to try again under new legislation.
State Rep. Marlow Colvin, D-Chicago, who sponsored the Leucadia bill, said he is hopeful a revised version would meet with the governor’s approval at a later date.
“These plants would have been the cleanest fuel plants in the entire United States of America. I remain undaunted,” Colvin said. “I’m encouraged by the governor’s veto message. We’ll retool and address those concerns the governor raised in his veto message.”
Power Holdings could not be reached.
Over the last two months, community and environmental groups opposing Leucadia’s proposed plant had flooded Quinn’s office with postcards, phone calls and handwritten letters asking him to veto the bill, culminating with a rally last week at the Thompson Center where protesters wore death masks and coal devil costumes.
The 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 said its plant would have created about one-hundredth of the pollution of traditional coal-fired power plants. That’s because 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.
Tom Shepherd, Southeast Environmental Task Force secretary and board member, said the fact that neighborhood residents opposed the plant showed that “people here thought that their health and well-being were so much more important” than the promise of jobs.
Becki Clayborn, a regional representative for the Sierra Club’s Midwest Clean Energy Campaign, said she was amazed at “how that group of people just exploded.”
The bills would have forced utilities to purchase the gas produced from coal and refinery waste from the proposed Chicago plant for 30 years and for 10 years from the proposed coal-to-gas plant in Jefferson County.
“Illinois shouldn’t legislate sweetheart deals for specific energy companies,” said Howard Learner, executive director of the Environmental Law & Policy Center, which analyzed the costs the bills would have had on consumers. “These were overpriced projects relying on enormous ratepayer subsidies.”
Over the last three years, Leucadia has spent $86 million to investigate, evaluate and obtain permits for energy projects, including gasification plants in Rockport, Ind., Moss Point, Miss., and Lake Charles, La., according to company regulatory filings.
In each case, the company is asking for significant outside equity investment and long-term commitments from state governments that would require local utilities to purchase the gas those plants would produce.
In Louisiana, Leucadia has been awarded $128 million in investment tax credits and $260 million in federal funds for carbon capture and sequestration, and the Lake Charles Harbor and Terminal District has awarded $1.6 billion in tax-exempt bonds to support the approximately $2.3 billion plant, proposed by Leucadia’s wholly-owned subsidiary, Lake Charles Cogeneration LLC.
In July 2009, the company’s gasification projects in and Indiana received the go-ahead from the U.S. Department of Energy to begin a due-diligence process that would lead to loan guarantees worth $3.6 billion.