Blagojevich signed legislation that gives companies planning to build new power plants access to $300 million to $500 million in state-backed bonds.
The plants must burn Illinois coal.
The legislation also makes it easier for companies to get state grants that became available in other coal legislation signed by former Governor George Ryan two years ago.
Representative Stan Reitz Thursday said the new legislation was needed to boosting the state's coal industry.
The governor signed the bill at a ceremony at Southern Illinois University's coal development park in Carterville.