Some Illinois coal industry officials fear FutureGen ultimately could feel the ramifications from Quinn’s vetoes of Senate Bills 3388 and 1927 for syngas projects proposed by Leucadia National and Power Holdings of Illinois LLC for Chicago’s South Side and Jefferson County in southern Illinois, respectively.

The bills would have required the state’s public utilities to enter into long-term agreements to purchase the plants’ syngas at what consumer advocates such as the Chicago-based Citizens Utility Board claimed would be above-market prices, resulting in higher rates for consumers.

CUB, which Quinn helped to found 28 years ago as a young legislator, cheered the bills’ demise. David Kolata, the group’s executive director, said the legislation, if signed into law, “could have sent the average family’s gas bill soaring by hundreds of dollars over the next decade.”

A dejected Phil Gonet, president of the Illinois Coal Association, offered a far different reaction. “This is it for those two projects,” he said. “Power Holdings is up against the deadline for their construction permit, and I don’t see that they would be able to go through the Legislature again and try to get something passed. I think they’re running out of time.”

Leucadia is involved in several other coal gasification projects around the country, including Indiana Gasification LLC in Spencer County, Ind. “They have a different strategy,” Gonet said. “Maybe they can rethink their position.”

Under Power Holdings’ air/construction permit from the Illinois Environmental Protection Agency, the company must begin on-site work on the plant near Waltonville by early 2012, according to Steve Shaw, CFO, Power Holdings. Whether that can happen now is unclear. “Power Holdings is terribly disappointed,” he said. “We don’t think the [governor’s] analysis is correct and the veto is in the best interests of the citizens of Illinois.”

Shaw added his company is evaluating several options, including going forward with the existing project, starting from scratch with new legislation or scrapping the project.

Together, the two projects would create an estimated 2,500 construction and 700 coal mining jobs, fueling demand for an additional 4 million tons of high-sulfur Illinois coal annually.

In his Power Holdings veto message, Quinn, a Democrat known for taking pro-consumer stands, said, “maximizing clean-coal capabilities is essential if Illinois is to remain at the forefront of clean energy development. Clean coal technologies continue to show promising results in Illinois and around the world. Our state, with its abundance of coal and cutting-edge technologies, is positioned to take the lead. Our investments in clean coal must not come at the expense of consumers. Not only must new projects and policies be designed to improve our environment and expand our economy, they must also distribute burdens more proportionally among residential users and businesses and provide greater protections against cost overruns and higher energy prices. Unfortunately, the bill before me today falls short of these goals.”

Gonet believes, though, the governor is sending a strong message that Illinois is not friendly to coal gasification. The Democrat-controlled state Senate sent a mixed signal earlier this year when it gave final approval to both the Leucadia and Power Holdings bills, but handily defeated legislation that would have authorized Tenaska’s $3.5 billion Taylorville Energy Center coal gasification project in Christian County. That bill would have forced the state to buy the plant’s entire 602-mw output at prices that would have raised most consumer bills an average of 2%. Tenaska spokesperson Jana Martin said in mid-March the Omaha, Nebraska-based independent power developer is still reviewing its options.

Gonet said he worries the long-delayed FutureGen project might experience some negative effects as well. “This could affect Future, which needs to have a 30-year agreement” to sell the output from a repowered Ameren Illinois coal-fired power plants in southern Illinois. Carbon dioxide emissions captured in the $1.3 billion project, which would use oxy-combustion clean coal technology, would be sent more than 30 miles via pipeline to a newly chosen storage site in northwestern Morgan County, Ill.