Illinois' brilliant new climate, jobs, and justice bill

In 2016, Illinois passed a decent enough energy bill. It shored
up the state’s (relatively modest) renewable energy standard and
kept its existing nuclear power plants open. It was a compromise
among varied interests, signed into law by a Democratic
legislature and a Republican governor. At the time, I figured it
was the best any state in the coal-heavy Midwest was likely to
do.


Well, that will teach me to go around figuring. Just five years
later, Illinois has raised the bar, passing one of the most
environmentally ambitious, worker-friendly, justice-focused
energy bills of any state in the country: The Climate and
Equitable Jobs Act.


Illinois is now the first state in the Midwest to commit to
net-zero carbon emissions, joining over a dozen other states
across the country. It is also a model for how diverse
stakeholders can reach consensus.


What’s changed in Illinois


A great deal has changed since that 2016 bill was passed.


First and foremost, in 2018, Democrats gained a trifecta in state
government, increasing their lead in both houses of the Illinois
General Assembly and putting Democrat J.B. Pritzker in the
governor’s office. As I have emphasized numerous times now,
Democratic control is a necessary (if not sufficient) condition
for ambitious state energy policy.


Soon after the 2018 election, negotiations over a new energy bill
began in earnest.


The state’s labor community was sensitive to the fact that it had
largely been left out of the 2016 bill; the legislation contained
no labor standards, and recent years have seen Illinois renewable
energy projects importing cheaper out-of-state workforces. Labor
didn’t want to get left behind in the state’s energy transition,
so it organized a coalition of groups under the banner Climate
Jobs Illinois and set about playing an active role in
negotiations.


Renewable energy developers — cognizant of the fact that Illinois
is falling short of its renewable energy goals (it’s at 9
percent; it’s supposed to be at 21) and state funding has dried
up for new renewable energy projects — organized as Path to 100.


Environmental and climate-justice groups organized as the
Illinois Clean Jobs Coalition.


All the groups introduced energy bills of their own. And then
they spent years banging their heads together.


But there was another key difference: this time around, utilities
were not at the table.


Exelon subsidiary ComEd had been caught up in a bribery scandal
that left it disempowered and weak, under a deferred prosecution
agreement. The scandal also led to House Speaker Michael Madigan,
a reliable utility ally, being removed from his position.


Utilities were, to put it crudely, on the s**t list, allowing
political leadership to restrain their historic (and largely
counterproductive) influence.


Nonetheless, by all accounts, negotiations were difficult; the
bill was declared dead several times. Senate President Don Harmon
(D) said several times that it is the single most complex piece
of legislation he’d ever worked on. There were uncertainties and
impasses right up through the final week.


But they got it done! It passed with bipartisan supermajorities:
83-33 in the House and 37-17 in the Senate. Pritzker signed it on
September 15.


One crucial piece of the puzzle was new political leadership,
from Pritzker on down. Harmon, who became Senate president in
2018, is a longtime champion of renewable energy. In January
2021, Rep. Chris Welch, a widely respected deal-maker, replaced
Madigan as House Speaker. Welch pursued what his office calls
“distributed, collective leadership” — key members of the House
Democratic leadership took responsibility for acting as liaisons
to the legislature’s Black caucus, the environmental community,
and coal communities.


By all accounts, everyone performed their roles ably, holding an
unwieldy coalition together through choppy waters. Illinois
politics reporter Rich Miller has a nice rundown of the final
passage, which he calls “a spectacular victory.”


From the beginning, everyone involved was more or less aligned
around rapid growth of renewable energy and full decarbonization
of the electricity sector by 2045.


The most contentious issue proved to be the schedule for
decarbonization. The environmentalists in the Clean Jobs
Coalition wanted steady 20 percent reductions every five years,
starting in 2026. The labor groups in Climate Jobs Illinois were
worried that shutting down fossil fuel plants that fast would
lead to the state being forced to import fossil fuel power from
out of state, sacrificing jobs to no environmental gain.


Particularly thorny was a municipally owned coal plant, the
10-year-old Prairie State Energy Campus in southwestern Illinois,
which is the state’s biggest greenhouse gas emitter and a
horrendous financial boondoggle that costs more to run than its
power is worth.


Part of the problem is that the plant, owned by a consortium of
nine public power agencies, was largely funded by municipal bonds
from the communities meant to receive its power; those
communities were worried they’d get stiffed if the plant retired
early. (Enviros claimed they could close the plant, use the
savings to pay off the bonds, and still come out ahead, but that
was met with some skepticism.)


To make a long story short: first Pritzker wanted the plant’s
retirement date at 2035. Then he agree to 2045. Then Senate
Democrats voted through a plan that would have let the plant pump
out 100 percent of its current emissions through 2045. That was
unacceptable to environmentalists and Pritzker, who wanted
interim reduction targets. That flummoxed the process for a bit,
but in the end, labor agreed to it.


Even after that, there was some last-minute drama from the
governor’s office, leading to a stalemate with Harmon; finally,
they agreed to kick the bill over the House, where Welch dragged
it over the finish line.


Anyway, that’s probably more process drama than you wanted. Let’s
look at what’s in the bill.


Clean energy and good wages, justly distributed: the Illinois
energy bill


I’m not going to cover the entire 900-page bill. We’ll just hit
the highlights.


Emission reductions and clean electricity


Today, Illinois gets about 40 percent of its electricity from
nuclear power and less than 10 percent from renewable energy. The
new renewable portfolio standard (RPS) will raise renewables’
share to 40 percent by 2030 and 50 percent by 2040, with the goal
of a zero-carbon electricity sector by 2045 — and beyond that, a
net-zero-carbon state economy by 2050. This is extremely
ambitious and a new benchmark for the Midwest.


Subsidies to renewable energy will roughly double, to around $580
million per year. An additional $317 million the big utilities
had previously collected will be spent on clean-energy projects
rather than refunded to customers as scheduled. (It’s a long
story.)


The popular Illinois Solar for All program, which helps get
rooftop solar power to low-income renters and homeowners (as well
as public buildings and nonprofits serving environmental justice
communities), will have its funding increased from $10 million to
$50 million a year.


Obviously, Illinois will have much more trouble hitting its
decarbonization targets if its nuclear power plants shut down, so
the bill provides the Byron, Dresden, and Braidwood plants with
about $700 million in subsidies over the next five years. (The
size of the subsidy, considerably less than the $5 billion Exelon
wanted, was informed by an independent analysis commissioned by
the governor’s office.)


All private coal- and oil-fired power plants must get to zero
emissions (i.e., retire) by 2030. Municipally owned coal plants —
Prairie State and Dallman Station — must reduce emissions 45
percent by 2035 (which will mean shutting down one of two
boilers) and 100 percent by 2045.


All private natural gas plants must reach zero emissions — either
by retiring or by switching over to hydrogen — by 2045. Until
then, their emissions in a given year can not exceed the average
of the previous three years, i.e., can not rise. (Plants can stay
open if a government assessment finds that they are necessary for
grid reliability.)


Importantly: fossil fuel plants will be shut down according to
their proximity to low-income and marginalized communities, not
necessarily according to greenhouse gases or economics.


Every five years starting in 2025, the Illinois Environmental
Protection Agency, the Illinois Power Agency, and the Illinois
Commerce Commission (ICC) must produce a report on the state’s
progress toward its renewable energy goals.


The ICC will also begin developing a renewables access plan to
increase electricity transmission throughout the state.


For the record: a recent study led by former Illinois Power
Agency Director Mark Pruitt found that getting to 40 percent
renewable energy by 2030 “would deliver over $1.2 billion in
lower total electricity costs for Illinois.”


Transportation decarbonization


The bill establishes the goal of getting a million electric
vehicles on Illinois roads by 2030. In part, that will be
achieved through a $4,000-per-vehicle rebate for EV customers
(which, added to the EV credit in the current federal bill, would
mean a combined rebate of $16,500). Electric utilities will be
required to submit clean-electrification plans to the ICC,
showing how they plan to drive EV adoption.


The Illinois Environmental Protection Agency will rebate up to 80
percent of the cost of EV infrastructure projects that pay
prevailing wages. Forty-five percent of those rebates will be
channeled to projects in low-income and marginalized communities.


Labor and equity standards


All utility-scale renewable energy projects that qualify under
the state’s RPS must use project-labor agreements; all
non-residential clean-energy projects must pay prevailing wages.
All projects must demonstrate through diversity hiring reports
that they have recruited qualified BIPOC candidates and
apprentices.


As far as I know, this gives Illinois the most stringent labor
and equity requirements of any state clean energy program.
Similar policies tying renewable energy projects to labor
standards have passed in Connecticut, New York, and Washington,
but no other state’s energy policy has as comprehensive a package
of labor, diversity, and equity standards.


Workforce development and transition assistance


The bill will create an $80 million-a-year Clean Jobs Workforce
Network Hubs Program, which will create 13 hubs around the state
to deliver workforce-development programs to low-income and
underserved populations. Resources will be put toward outreach,
recruitment, training, and placement.


The Department of Commerce and Economic Opportunity and the
Illinois Department of Employment Security will work together to
develop a “displaced worker bill of rights,” with $40 million a
year to go toward transition assistance for areas dependent on
fossil fuel production or generation.


There will be two green bank–style programs. The Clean Energy
Jobs and Justice Fund will provide financing and low-interest
lending to clean-energy projects in low-income and marginalized
communities. The Illinois Finance Authority Climate Bank, more
like a conventional green bank, will provide seed funding and
develop public-private partnerships to draw more private capital
to clean energy projects.


A clean energy incubator program will offer support and
low-interest capital to small energy businesses and contractors,
to the tune of over $35 million a year. There will be a program
to train and place soon-to-be-released incarcerated people in
clean-energy fields. And there will be a program meant to
encourage the development of solar and storage on the site of
closed fossil-fuel plants, to help employ laid-off workers.


An Energy Transition Workforce Commission will report on the
workforce needs of a decarbonizing economy and recommend further
changes to workforce policies.


The Department of Commerce and Economic Opportunity will create a
program to reduce energy transition barriers, a grant program to
promote economic development in transitioning communities, and a
scholarship fund for children in families of laid-off workers.


Notably, companies intending to shut down fossil fuel plants will
be required to give affected communities two years’ notice, so
that such communities can be identified and receive transition
assistance.


Consumer protections


For low-income ratepayers, the bill eliminates deposit
requirements and late fees; it eliminates online payment fees for
all ratepayers.


Utilities will be required to report their monthly shutoffs and
reconnections to the ICC, and the ICC will conduct a
comprehensive study of the level and design of low-income rates
to ensure that they are working effectively.


Utilities will be required to fund the participation of nonprofit
representatives in ICC proceedings, to increase community
participation.


Finally, munis and co-ops will be prohibited from charging
discriminatory fees to ratepayers that self-generate solar
electricity (as investor-owned utilities already are).


Utility ethics and rate reforms


Some of these details get technical, but the gist is that the
bill contains a range of specific ethics reforms — for example,
public officials must declare if any of their relatives work for
utilities — and creates a Public Utility Ethics and Compliance
Monitor to make sure utilities are implementing those reforms. In
addition, each utility must appoint a Chief Ethics and Compliance
Officer who reports to the ICC.


ComEd is prohibited from forcing ratepayers to pay any criminal
penalties or fines associated with its ongoing federal corruption
probe.


Excitingly for us utility nerds, the bill will end “formula
ratemaking” — an opaque process whereby rates are automatically
increased based on how much utilities are spending, with no need
for approval from regulators — in favor of “performance-based
ratemaking,” which ties utility compensation to a series of
performance metrics such as “reliability and resiliency, peak
load reductions attributable to demand response programs,
supplier diversity expansion, affordability, interconnection
response time, and customer service performance.” This is good
stuff.


An independent auditor will assess the state of the Illinois grid
and the money spent on it over the last decade.


Utilities will be required to file a Multi-Year Integrated Grid
Plan that supports the state’s renewable energy targets. They
will undergo yearly performance evaluations to track how well
they are meeting their planning goals.


Finally, and intriguingly, ICC will create a Division of
Integrated Distribution Planning, meant to increase public input
in local distribution grid decisions.


Illinois is showing how democracy should work


Over the last three years, climate hawks, environmental justice
advocates, renewable energy developers, and labor gathered around
a table and worked through their differences about the future of
Illinois’ energy system, freed from the usual odious influence of
utilities.


It was an anxious, fractious, and often white-knuckle process,
right up until the very end. No constituency got everything it
wanted; each made sacrifices. I expect there’s still quite a bit
of residual frustration and some fresh bruises that will take a
while to heal.


But to my outside eye, representatives from each of these groups
can return to their constituents with heads held high. The bill
is a model of non-zero-sum cooperation: every group gave a little
to get a lot.


A special shout-out goes to the environmental-justice community
in Illinois, which used three years of relentless grassroots
organizing to build an incredible political force, without which
the bill couldn’t have passed and wouldn’t have been as
equity-focused.


For all the disputes at the margins, the resulting bill is
momentous, a historic inflection point for Illinois. The state is
now a national leader — and a challenge to the rest of the
Midwest — in how to transition to clean energy while creating
good jobs and lifting up those often left behind.


An aggressive transition to clean energy can be good for the
economy, good for workers, good for historically marginalized
communities, good for the air, and good for the atmosphere. We
can have nice things. More and more states are figuring that out.


Congratulations to Illinois, particularly to its new generation
of political leaders, for figuring it out with such populist
flair.


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