Illinois General Assembly - Full Text of HB3668
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Full Text of HB3668  96th General Assembly

HB3668ham001 96TH GENERAL ASSEMBLY

Executive Committee

Filed: 3/19/2009

 

 


 

 


 
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1
AMENDMENT TO HOUSE BILL 3668

2     AMENDMENT NO. ______. Amend House Bill 3668 by replacing
3 everything after the enacting clause with the following:
 
4     "Section 1. Short title. This Act may be cited as the
5 Climate Action and Clean Energy Investment Act of 2009.
 
6     Section 5. Legislative findings.
7     (a) The General Assembly finds that:
8         (1) The Intergovernmental Panel on Climate Change has
9     concluded that it is "unequivocal" that the Earth's climate
10     is already warming and that most of the warming is due to
11     the burning of fossil fuels and other human activities.
12         (2) Warning signs of global warming are being
13     discovered and reported throughout the world. Melting
14     glaciers, severe storms, prolonged drought, reduced
15     mountain snow-pack, and dying coral reefs are among the
16     signs that global warming is underway.

 

 

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1         (3) Decisive action at the international, national,
2     state, and local levels to address the threat of global
3     warming is necessary to meet the challenge posed by global
4     warming.
5         (4) Illinois businesses and industry will benefit from
6     proactive policies that make the State competitive as the
7     world's economy shifts from high-carbon to low-carbon
8     energy technologies.
9         (5) By exercising a global leadership role, Illinois
10     will position its economy, technology centers, and
11     financial institutions to benefit from the new low-carbon
12     economy, with millions of "green jobs" expected to be
13     created from the next generation of industries that produce
14     and sell alternative fuels, export renewable energy,
15     design high-tech energy efficiency solutions, and sell
16     carbon emission reduction credits.
17         (6) Many of the clean energy policies that reduce
18     global warming pollution also provide economic and quality
19     of life benefits such as reduced energy bills, green space
20     preservation, air quality improvements, reduced traffic
21     congestion, improved transportation choices, and economic
22     development and job creation through the application of
23     energy conservation and new energy technologies.
24         (7) In the absence of a federal policy, states and
25     cities are establishing their own plans to reduce carbon
26     dioxide emissions. For example, 8 northeastern states

 

 

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1     began a regional cap and trade program this year to reduce
2     greenhouse gas emissions from their electric power
3     industry. Ten western states have adopted a regional cap
4     and trade plan to reduce GHG emissions from power plants,
5     transportation fuels, building energy use, and industrial
6     sources. Thirteen states have adopted automobile standards
7     to address global warming.
8         (8) The mayors of more than 376 U.S. cities, including
9     Richard M. Daley of Chicago, Ross Ferraro of Carol Stream,
10     Michael Belsky of Highland Park, Al Larson of Schaumburg,
11     and Richard Hyde of Waukegan have signed the U.S. Mayors
12     Climate Protection Agreement, pledging, among other
13     things, to meet the Kyoto Protocol goal of reducing
14     greenhouse emissions in those cities to 1990 levels by
15     2012.
16         (9) A market-based cap and invest program holds great
17     promise to help Illinois reduce greenhouse gas emissions in
18     a cost-effective manner. The cap and invest program is best
19     pursued in cooperation with other states, particularly
20     Midwestern states. The interests of the public are best
21     served by a cap and invest program that is as broad,
22     simple, predictable, equitable, and transparent as
23     possible.
24         (10) The right to emit greenhouse gases should be
25     auctioned rather than given away. An auction of emissions
26     allowances would generate hundreds of millions of dollars

 

 

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1     annually, and the proceeds of each auction should be used
2     to create green jobs, develop clean energy sources, and
3     help consumers manage and reduce their energy costs.
4         (11) The Illinois Environmental Protection Agency
5     shall propose and the Illinois Pollution Control Board
6     shall adopt a market-based cap and invest program that
7     achieves the greenhouse gas reduction targets specified in
8     this Act. The program shall be developed and implemented in
9     consultation with State agencies and stakeholders,
10     including the environmental justice community, industry
11     sectors, business groups, academic institutions,
12     environmental organizations, and others, in a manner that
13     minimizes costs and maximizes benefits for the economy in
14     Illinois, improves and modernizes energy infrastructure in
15     Illinois, maintains electric system reliability, maximizes
16     additional environmental and economic co-benefits for
17     Illinois, and complements the State's efforts to improve
18     air quality.
 
19     Section 10. Definitions.
20     "Agency" means the Illinois Environmental Protection
21 Agency.
22     "Allowance" means an authorization from the Agency to emit,
23 during a specified year, up to one ton of carbon dioxide or an
24 equivalent amount of other greenhouse gases, as determined by
25 the Agency.

 

 

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1     "Board" means the Illinois Pollution Control Board.
2     "Cost-effective" or "cost-effectiveness" means the cost
3 per unit of reduced emissions of carbon dioxide or an
4 equivalent amount of other greenhouse gases, as determined by
5 the Agency.
6     "Direct emissions" means greenhouse gas emissions made by a
7 greenhouse gas emission source at that source.
8     "Emissions offset" means an action that (i) is undertaken
9 by a greenhouse gas emission source not subject to the
10 emissions cap, (ii) achieves the equivalent reduction of
11 greenhouse gas emissions over the same time period as a direct
12 emission reduction, and (iii) is approved by the Agency.
13     "First deliverer of electricity" means: (i) for
14 electricity generated within Illinois or other participating
15 states, the generator of that electricity; (ii) for electricity
16 generated outside Illinois, the entity that first delivers the
17 electricity to Illinois customers for consumption in Illinois.
18     "Greenhouse gas" (GHG) or "greenhouse gases" includes all
19 of the following gases: carbon dioxide, methane, nitrous oxide,
20 hydrofluorocarbons, perfluorocarbons, and sulfur hexafluoride.
21     "Greenhouse gas emission source" or "source" means any
22 source or category of sources that emits greenhouse gases at a
23 level that, in the opinion of the Agency, necessitates
24 participation by the source or category of sources in the cap
25 and invest program in order for the State to effectively reduce
26 greenhouse gas emissions and monitor compliance with the

 

 

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1 Statewide greenhouse gas emissions limit.
2     "Leakage" means a reduction in emissions of greenhouse
3 gases within Illinois or other participating states that is
4 offset by an increase in emissions of greenhouse gases in
5 non-participating states.
6     "Market-based cap and invest program" means a program
7 established under this Act and corresponding regulations that
8 creates a "cap" on the sum of all GHG emissions from all
9 covered sources; reduces the cap over time; creates tradable
10 emissions "allowances" equivalent to a specified amount of GHG
11 emissions, with the total amount of allowances equal to the
12 emissions cap; requires covered sources to submit allowances
13 equivalent to the level of emissions for which they are
14 responsible at the end of each of compliance period; authorizes
15 covered sources to choose the best mix of reducing emissions or
16 buying allowances for their situation; provides for the
17 auctioning of emissions allowances by the Agency and the
18 investment of those proceeds in technologies and projects to
19 help Illinois meet the Act's GHG reduction goals; mitigates
20 potential transition costs; and promotes adaptation to climate
21 change impacts.
22     Participating state" means a state of the United States
23 that has adopted a similar market-based program to reduce GHG
24 emissions and that has signed a Memorandum of Understanding
25 with the Agency to allow interstate trading of allowances and
26 emissions offsets.
 

 

 

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1     Section 15. Market-Based Cap and Invest Program.
2     (a) Pursuant to the Illinois Administrative Procedure Act,
3 the Agency shall propose and the Board shall adopt by October
4 1, 2010, rules necessary to establish and implement a
5 market-based cap and invest program effective January 1, 2012,
6 to limit the emissions of greenhouse gases, subject to the
7 provisions of this Act. The rules shall be designed to
8 facilitate the State's participation in the emerging
9 midwestern greenhouse gas cap and trade system. The rules shall
10 require aggregate greenhouse gas emission reductions from
11 covered sources of at least 25 percent below 2005 levels by
12 2020, 45 percent below 2005 levels by 2030, and 80 percent
13 below 2005 levels by 2050.
14     (b) In developing and adopting these rules, the Agency and
15 Board shall do all of the following:
16         (1) design the rules in a manner that is equitable,
17     seeks to minimize costs and maximize the total benefits to
18     Illinois, and encourages early action to reduce greenhouse
19     gas emissions;
20         (2) ensure that activities undertaken to comply with
21     the rules do not disproportionately impact low-income
22     communities;
23         (3) ensure that entities that have voluntarily reduced
24     their greenhouse gas emissions prior to the implementation
25     of this Section receive appropriate credit for early

 

 

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1     voluntary reductions;
2         (4) ensure that activities undertaken under the rules
3     complement and do not interfere with efforts to achieve and
4     maintain federal and State ambient air quality standards
5     and to reduce toxic air contaminant emissions;
6         (5) consider the cost-effectiveness of the rules;
7         (6) consider overall societal benefits, including
8     reductions in other air pollutants, diversification of
9     energy sources, and the provision of other benefits to the
10     economy, environment, and public health.
11         (7) minimize the administrative burden of implementing
12     and complying with these rules;
13         (8) minimize leakage.
14         (9) consider the significance of the contribution of
15     each source or category of sources to statewide emissions
16     of greenhouse gases;
17         (10) ensure that greenhouse gas emission reductions
18     achieved are real, permanent, quantifiable, verifiable,
19     and enforceable by the Agency; and
20         (11) ensure that greenhouse gas emission reductions
21     are in addition to any greenhouse gas emission reductions
22     otherwise required by law or regulation, and any other
23     greenhouse gas emission reductions that otherwise would
24     occur in Illinois or a participating state.
25     The Agency shall consult with the Illinois Commerce
26 Commission and the Illinois Power Agency in the development of

 

 

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1 the rules as they affect electricity and natural gas providers
2 in order to minimize duplicative or inconsistent regulatory
3 requirements.
4     After January 1, 2012, the Agency may revise rules adopted
5 under this Section and adopt additional rules to further the
6 provisions of this Act.
7     (c) All allowances issued by the State shall be auctioned,
8 and the proceeds of each auction must be used to benefit the
9 public under Sections 20 and 25. Auctions shall be implemented
10 quarterly by the Agency. Two pre-compliance auctions shall be
11 held between January 1, 2011, and December 31, 2011, to
12 facilitate market price discovery and compliance planning by
13 capped sources.
14     Each source shall own and provide to the Director at the
15 close of the applicable compliance period allowances equal to
16 its direct emissions during that period; such allowances may be
17 issued by other participating states with which the Agency has
18 established a trading relationship. A source may acquire
19 emissions offsets from other sources in lieu of reductions at
20 its facilities. However, offsets should be limited to 1% of
21 total emissions or 10% of required emissions reductions for
22 that compliance period, whichever is less. Emissions offsets
23 should be generated by projects implemented within the
24 participating states to capture the economic benefits of these
25 projects and to protect public health by reducing conventional
26 smog-forming and toxic air pollutants.

 

 

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1     Rules adopted under this Section shall, at a minimum, cap
2 emissions from the following sources: sources that are the
3 first deliverer of electricity in the State, including
4 electricity generated outside the State; large industrial
5 stationary sources; large manufacturers and distributors of
6 transportation fuels, including, but not limited to, oil
7 refineries, oil storage facilities, and wholesale and retail
8 distributors; manufacturers and distributors of natural gas
9 and oil used to heat and power buildings, including, but not
10 limited to, oil refineries, oil storage facilities, and
11 wholesale and retail distributors of natural gas; and any other
12 sources or categories of sources that the Agency determines may
13 be included under the cap without undue administrative
14 difficulty and from which emissions can be reliably quantified
15 and monitoredy.
 
16     Section 20. Global Warming Action Fund. The Global Warming
17 Action Fund is established as a special fund in the State
18 treasury to receive revenues from the auction of allowances
19 under subsection (b) of Section 15. Revenues generated by the
20 auctioning of allowances shall be used to support programs and
21 projects that contribute to the emission reduction goals of
22 this Act, including, but not limited to, those that (i)
23 increase utilization of renewable energy, energy efficiency,
24 low-emitting modes of transportation, geologic carbon
25 sequestration, and terrestrial sequestration (such as programs

 

 

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1 that enhance the stewardship and restoration of the State's
2 forests and wetlands) (ii) address transition costs, including
3 job training or transition programs that help industries adapt
4 to clean technology and production, and (iii) provide
5 assistance to utility consumers.
 
6     Section 25. Analysis of Investment and Expenditure
7 Options.
8     (a) The Agency and the Department of Commerce and Economic
9 Opportunity shall conduct the analysis described in this
10 Section and present their findings and recommendations to the
11 General Assembly by January 1, 2010. The Agency and the
12 Department of Commerce and Economic Opportunity shall consult
13 with the Illinois Finance Authority, the Illinois Department of
14 Labor, the Illinois Commerce Commission, the Illinois Power
15 Agency, the Illinois Department of Natural Resources, the
16 Illinois Department of Agriculture, and other interested
17 stakeholders, including, but not limited to, the environmental
18 justice community, industry sectors, business groups, academic
19 institutions, and environmental organizations. The analysis
20 shall consider how the State can best use the revenues in the
21 Global Warming Action Fund to serve the State's overriding
22 interest in making the transition to an economy with low
23 greenhouse gas emissions in a way that maximizes public
24 benefits and minimizes public costs.
25     (b) The analysis shall make recommendations regarding the

 

 

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1 specific apportionment of allowance revenues among various
2 options that benefit the public, including, but not limited to,
3 those programs and projects discussed in Section 20.
4     (c) The analysis shall model and estimate the impact of
5 revenue apportionment on the State economy, its residents, and
6 its natural resources of the various options considered and
7 shall recommend the optimal mix of revenue uses. In determining
8 the optimal mix of revenue uses, the analysis shall recognize
9 the long-term nature of the transition and prioritize those
10 investments with a long-term yield. In identifying the optimal
11 uses of revenues, the analysis shall select uses that:
12         (1) produce the most cost-effective emission
13     reductions on a societal basis;
14         (2) maximize greenhouse gas emission reductions in
15     capped and non-capped sectors;
16         (3) minimize disruptive economic impacts on workers,
17     businesses, and low-income and other consumers;
18         (4) equitably distribute the costs and benefits of the
19     transition among State residents, communities and economic
20     sectors, with specific recommendations and strategies to
21     assist low-income residents in reducing their greenhouse
22     gas emissions;
23         (5) maximize sustainable economic development and job
24     growth;
25         (6) protect and enhance the public health, water
26     quality, air quality, habitat, and other natural

 

 

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1     resources; and
2         (7) avoid creating among revenue recipients a sense of
3     entitlement to a long-term stream of revenues which would
4     in turn create incentives to oppose emission reductions
5     that would reduce the size of the Fund.
6     When possible the analysis shall quantify the impact of
7 each revenue use on emissions, emission reduction costs, jobs,
8 and other benchmarks related to the goals stated in this
9 subsection.
 
10     Section 30. Transition to a federal program. If the
11 federal government adopts a program that the Agency determines
12 to be comparable to the market-based cap and invest program
13 authorized in Section 15, the Agency shall immediately begin to
14 transition into the federal program in order to create one
15 national system of tradable greenhouse gas emissions.
 
16     Section 35. Enforcement. The Agency shall monitor
17 compliance with and enforce any rule adopted by the Board under
18 this Act.
 
19     Section 80. The State Finance Act is amended by adding
20 Section 5.719 as follows:
 
21     (30 ILCS 105/5.719 new)
22     Sec. 5.719. The Global Warming Action Fund.
 

 

 

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1     (415 ILCS 140/Act rep.)
2     Section 90. The Kyoto Protocol Act of 1998 is amended by
3 the repealing Act.
 
4     Section 99. Effective date. This Act takes effect upon
5 becoming law.".