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The
Illinois Climate Change Advisory
Group
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A little
over a year ago, Governor Blagojevich issued an Executive Order
creating the Illinois Climate Change Advisory Group. His October 5,
2007 press release announcing the group stated it would “consider a
full range of policies and strategies to reduce GHG [greenhouse gas]
emissions in Illinois and make recommendations to the Governor.” The
Governor’s release also stated “the Advisory Group has broad
representation including business leaders, labor unions, the energy
and agricultural industries, scientists, economists, and
environmental groups from throughout the state.”
As with so
many of Governor Blagojevich’s initiatives, the reality of this
group’s make up, work process and recommendations is far different
from the perception the administration presents.
Governor
Blagojevich appointed Doug Scott, Director of the Illinois
Environmental Protection Agency, to chair the group and hand pick
the members. While touted as having “broad representation” the
panel’s membership is unquestionably weighted toward environmental
groups with agendas that are difficult for employers.
From
the outset, it appeared the Governor was prepared to discount the
knowledge and practical experience of industry experts responsible
for managing and complying with state and national environmental
laws and regulations. Industry experts such as those represented by
the Illinois Environmental Regulatory Group (IERG) have long
appreciated the reasonableness and practicality of balancing
sustained economic growth through modernization and investment with
ensuring healthy environmental outcomes. Yet, requests from
Illinois’ business and industry organizations to have a seat at the
table were summarily dismissed.
Before the Advisory group’s
first meeting, Governor Blagojevich issued a February 13 news
release announcing his goal to “slash” greenhouse gas productions to
1990 levels by 2020, and 60% below 1990 levels by 2050. These goals
weren’t part of the executive order establishing the group; advisory
group members were also not told of the planned announcement or his
goals before the news release.
Thus, Advisory group members
discovered a critical component of their expected recommendations
was pre-determined before they even began their work.
Furthermore, ground rules provided at their February 22
first meeting limited them to comment and debate on “how to best
meet the Governor’s GHG reduction targets” from a pre-defined list
of suggested state climate policy options. Ground rules regarding
parameters for the group’s agenda determined there would be no
discussion or consideration of any federal approaches to the issue.
No doubt some of the appointees must have been wondering
even then when the “advisory” capacity of this group would be
honored since two major elements of any climate change report were
pre-empted.
It is thought the IEPA staff is preparing a
draft of the Advisory group’s recommendations for the Governor. This
draft report has not been circulated among group members. Although
expected at any time, there is no announced time or location for the
report’s release, the next advisory group meeting, or any public
hearings or input prior to adoption of a final report. Yet the
website proclaims “Final Recommendations to the Governor” as
approved at the July 10 and September 6 meetings.
Interestingly, at the July 10 meeting, five issues on the
list were NOT approved, but tabled for a future vote because they
were controversial -- controversial because, as recommended, they
did not make good business sense to those Advisory group members
representing labor and industry.
One recommendation called
for a state level cap & trade program for emissions reductions.
In a cap & trade system, carbon dioxide sources are allocated a
number of credits and a limit on emissions. If a source exceeds the
limit, fines or penalties could punish the producer. To avoid
sanctions, a producer could purchase credits from other producers
with emission levels below their allocated cap, who would be allowed
to sell their excess credits. This could cost the utility industry
and rate payers $1 to 2 billion annually. While this recommendation
is primarily aimed at coal-fired electric generating facilities, it
is readily applicable to industry boilers, manufacturing or any
employer with on-site generation capacity.
Another
recommendation would mandate automobiles sold in Illinois meet
emission standards similar to those imposed in California.
California has the most stringent auto emission standards in the
nation, and is unique because the state adopted emission standards
for cars in 1966, four years prior to the adoption of the federal
Clean Air Act. IEPA recognizes adopting California standards could
add from $1,000 to $3,000 to the price of a new car purchased in
Illinois.
Another recommendation would mandate that
automobiles sold in Illinois meet CO2 reduction levels similar to
those proposed and being litigated in California. California already
has the most stringent auto emission standards in the nation, and is
unique because the state adopted emission standards for cars in
1966, four years prior to adoption of the federal Clean Air Act.
The latest California proposal to reduce carbon dioxide is
synonymous with increasing fuel economy. The California fuel economy
regulation has not yet been implemented in any state because only
the federal government can set fuel economy standards. Toyota,
Mitsubishi, Ford, Chrysler, General Motors, Volkswagen, Mazda,
Porsche, and BMW have all testified that implementation of this fuel
economy proposal is too aggressive and not achievable in the given
timeframe. Compliance with this fuel economy regulation will
therefore be realized through significant reductions in vehicle
choice and capability in Illinois. Expert economists have predicted
that Illinois consumers can also expect an average increase of at
least $3,000 to the cost of new vehicles sold in the state if the
advisory group’s recommendation is implemented.
The three
remaining controversial issues include recommendations for CO2
emission performance standards for new electricity generation,
carbon offsets for new fossil fuel power generation, and carbon
capture and storage standards.
These recommendations
represent a slap in the face to Illinois coal, a valuable and
bountiful Illinois natural resource. Emissions standards proposed by
the group would not only negate the market for Illinois coal to be
burned in the state, but could well result in shutdowns of existing
Illinois power plants. Today’s future of energy generation from coal
is closely tied to investment in clean coal technologies such as
coal gasification and carbon sequestration. Yet the group’s
recommendations demonstrate little patience for the transition and
survival of an industry that is extremely important to the state’s
energy future.
The advisory groups’ recommendations were
about as surprising as election results for Venezuelan President
Hugo Chavez. When the vote on the five controversial recommendations
was offered, each was pushed through along interest group lines:
environmentalists and government representatives voted in favor,
while business and labor interests against. You have to hand it to
the Governor, he is a uniter: business and labor are united in
opposition to these recommendations because, if implemented, they
will severely and adversely affect energy costs, business investment
and employment opportunity in Illinois.
While cap &
trade programs and auto emissions standards -- if adopted in a truly
reasonable and achievable approach -- are laudable ideas, the
obvious problem is these recommendations (as presented by the group
and championed by the Governor) would apply to Illinois only. Yet
the key word in this important public policy debate is “global”.
Whatever you think of global climate change, most rational
people would recognize the actions of one state won’t make a dent in
global emissions in spite of the compliance burden and billions in
costs this will cause Illinois’ employers to bear.
Carbon
dioxide does not have a zip code. But economic leakage will
undoubtedly occur if Illinois unilaterally chooses to regulate
industry to the point that the cost of doing business leaves owners
and investors with little choice but to pursue enterprises in a less
costly, more business-friendly location. The consulting firm hired
by the IEPA reported to the Advisory group that the results of an
Illinois-only solution will bring no significant change in GHG
emissions. Its conclusion was that electric generation and commerce
will continue to occur … just not in Illinois. Other states will
reap economic activity as trucking, electric generation or
manufacturing shift investments while Illinois consumers would
assume higher costs for no benefit.
Although advisory group
members were forbidden from even whispering of federal efforts, let
alone consider such initiatives, there are several significant
federal efforts underway aimed at addressing climate change. Because
Illinois is not an island, it’s obvious much greater impact on GHGs
could be derived from nationwide and international efforts than from
a patchwork approach pursued by a handful of states.
The US
Climate Action Partnership (USCAP) is a group of businesses and
environmental organizations supporting strong national legislation
on greenhouse gas emissions. Their market-based approach includes a
set of principles and recommendations addressing the need for a
framework for policy change, and their first principle touches on
the global impact of climate change.
The US Congress is
considering several measures, including Senate Bill 2191 from
Senators Warner and Lieberman addressing greenhouse gas emission
reductions for the entire US. We elect federal lawmakers for good
reason. Public policy issues like climate change warrant national
and international debate and solutions.
As serious as the
issue of climate change is, it is unfortunate this advisory group’s
plan is an economic Trojan horse for Illinois. It is Governor
Blagojevich’s latest venture in a long running pursuit of national
issues that garner headlines but fail to yield real value for
Illinois. Like these recommendations, previous initiatives to buy
foreign drugs, import flu vaccine, provide universal healthcare,
prohibit violent video games and impose a gross receipts tax on
employers result in unnecessary, costly outlays of taxpayer dollars
while simultaneously sending a message that is anti-business and
anti-growth.
Sadly, the governor continues to demonstrate a
lack of interest in real input or dialog with informed parties who
have valuable perspectives to offer. Even if their viewpoint may be
counter to his pre-determined objectives, the most valued advisors
are not sycophants who are expected to simply tell you what you want
to hear.
The Governor’s advisory
group members are listed on the Illinois EPA’s web site. You can
also find background on the issue, documents produced for and by the
group and its sub-groups, and information on their meetings and
conference calls, as well as their recommendations when they are
formally released, online at http://wwwepa.state.il.us/air/climatechange/index.html.
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