Illinois Climate Asset Plan

Illinois is the sixth-largest emitter of global warming pollution in the United States. The state also faces severe financial distress from a number of sources. A flagging economy and structural flaws in the state’s tax and budget code have created annual budget shortfalls as large as $5 billion.

For the past several years, the state has been able to balance its budget only through a combination of deep cuts in education, health care, and other services along with borrowing from the public pension fund, which is now $38 billion in the red.

How it Works

The CAP combines a market-based incentive to reduce global warming pollution emissions with a fixed charge for every ton of carbon dioxide and related pollutants emitted. This so-called “cap-and-trade” system:

• Caps global warming pollution by requiring industry to obtain permits for each ton of carbon released, with a fixed annual number of total permits available.

• Creates an annual auction for the sale of permits.

• Sets total allowable emissions for each year to hit either a pollution reduction target or a revenue target.

Illinois’ CAP is based on these principles:

• Combine market-based incentives with technology-promoting regulations to encourage energy efficiency and renewables.

• Protect competitiveness by covering emissions associated with products consumed in Illinois, rather than emissions associated with products produced in Illinois.

• Dedicate a revenue stream to provide for investment in clean energy technologies, offset negative impacts on the bottom 40% of households, and help energy-intensive industries and their workers transition to a low-carbon economic future.

Economic Impacts

In addition to the environmental benefit of reducing global warming pollution (as well as other pollutants often emitted at the same time), the system can:

• Restore funding for investments in infrastructure, education, and other critical needs.

• Reduce the state pension gap and the need for future tax increases.

• Provide incentives and direct investment for emerging and growing industries.

• Stabilize state finances, creating a better business climate for the state as a whole.

Get Involved

For more information or to get involved, contact Redefining Progress’s Executive Director Jim Barrett or
J. Andrew Hoerner, Director of the Sustainable Economics Program.

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Photo courtesy Reiner Kraft