Monday, August 13, 2012





"Circumstances have changed"


Falling victim to low gas prices and politics

Clean Chicago Energy handed serious setback 

Friday, August 10, 2012

Leucadia National's Chicago Clean Energy coal gasification project has suffered the same fate as a long list of once promising coal-to-gas projects in the US.

Illinois Governor Pat Quinn has vetoed the bill that would have saved the project by equiring two utility companies to buy SNG from the $3 billion plant proposed for South Chicago. 

"That is not a fair deal for ratepayers," said Governor Quinn, reflecting the opinion of other government leaders in the US who have pulled the plug on similar projects.

"This leaves the controversial project mired in uncertainty," reported an industry news service.

While the governor said he did not oppose the concept of the plant, he commented that "circumstances have changed" since he signed another bill last year that supported a coal gasification plant in the city.

The vetoed bill would have required power company Ameren Illinois and Nicor Gas to pay for 95% of the costs of the plant while receiving only 84% of its output.  Both companies lobbied hard against the plan.

In the meantime, US natural gas prices are at lowest levels seen in many years, and are expected to stay that way for the foreseeable future.  This has thrown most of the proposed US coal-to-gas and IGCC projects in the US onto the back burner.

"The fact of the matter is natural gas prices are low and demand is flat or declining," said Howard Lerner, executive director of the Environmental Law and Policy Center.  "The market (for costly SNG) is very tight for anybody proposing to build a new plant."

New York-based Leucadia National, parent company of Chicago Clean Energy, said that the governor's decision was "unfortunate".

"We know that this $3 billion investment in Illinois was good for the state's economy, its environment, its workers and its consumers," the company said. "While we find the governor's decision unfortunate, we look forward to continuing our work at our other facilities throughout the country." 

Leucadia, with considerable support of the US Dept. of Energy,  currently continues development of  similar projects in Indiana, Louisiana and Mississippi.  However, we see the future of these projects as shaky, at best.

Construction of the South Chicago plant was to have started in September 2014 and ready by March 2018.