WRI’s fact sheet series, How States Can Meet Their Clean Power Plan Targets, examines the ways states can meet or even exceed their standards under the Clean Power Plan while minimizing compliance costs, ensuring reliability and harnessing economic opportunities. This post explores these opportunities in Illinois, the fifth state in the series.
While the U.S. Supreme Court temporarily halted implementation of the Clean Power Plan (CPP) while the courts consider legal challenges, it’s in states’ own best interests to continue moving forward with renewable energy and efficiency. Illinois is no exception.
Under the CPP, Illinois must reduce its power sector emissions by 34-35 percent below 2012 levels by 2030. New WRI analysis shows that the state’s existing clean energy policies and opportunities to make better use of existing power plants can reduce power plant carbon dioxide emissions 27 percent below 2012 levels by 2030, getting it more than 75 percent of the way to its target. And getting the rest of the way there is both achievable and cost-effective.
Achieving Illinois’s CPP Target
Illinois’s power plants have reduced their carbon dioxide emissions by 3 percent between 2005 and 2012, mostly by using more natural gas and renewables and less coal. However, demand for electricity is expected to grow, with power sector emissions projected to increase by 10 percent between 2012 and 2030.
The good news is that Illinois can take three steps to decrease its emissions to meet or exceed its CPP targets:
Follow through on existing clean energy policies, despite current barriers. Under the state’s existing efficiency standard, utilities were required to implement programs that help customers reduce energy use by 0.2 percent annually starting in 2008, ramping up to 2 percent annually by 2015. However, these savings are subject to a spending cap, and utilities were recently authorized to achieve an average 1.4 percent of their previous year’s sales as opposed to the 2 percent standard. Illinois has a renewable energy standard in place requiring 25 percent of the electricity sold by its investor-owned utilities to come from renewables by 2025. Other electric suppliers in the state must meet half of the requirement by paying fees, which are supposed to go toward purchasing renewable energy or credits, but this is not occurring. If the state’s utilities meet the current clean energy standards, Illinois can reduce its emissions by 18 percent below 2012 levels by 2030.
Use existing fossil plants more efficiently. Natural gas combined cycle plants ran at 18 percent capacity in 2013, well below what they’re capable of. Running existing combined cycle plants at 75 percent in addition to implementing low-cost operational improvements and best practices–such as operations and maintenance improvements; replacing worn seals and valves; and cleaning equipment--—would allow Illinois to reduce its emissions by 27 percent below 2012 levels by 2030 (in addition to step 1, above).
Expand its clean energy policies and remove current barriers. Illinois could meet or exceed its emissions targets by adjusting or removing the spending cap on efficiency programs while increasing its existing efficiency target to achieve about 20 percent cumulative energy savings by the end of 2025 and increasing the state’s renewable energy standard to 35 percent of the state’s sales by 2030. Doing so would cut CO2 emissions by 76 percent below 2012 levels by 2030.
CPP’s Economic Benefits
These reductions are also cost-effective. Consider the following:
- The Natural Resources Defense Council estimates that the Illinois energy efficiency standard will save customers $500 million per year starting in 2015, ramping up to over $1 billion per year in 2025.
- The state’s Illinois Energy Now program—which is available to public facilities and low-income entities located within the Ameren and ComEd electrical service areas—created more than 17,000 jobs between 2008–14, leading to $585 million in energy cost savings over the lifetime of the efficient equipment installed.
- Illinois State University’s Center for Renewable Energy found that the 23 largest wind farms in the state (totaling 3,335 megawatts of capacity) will generate a total economic benefit of almost $6 billion during the construction and 25-year operational lives of the projects.
- If Illinois surpasses its CPP emissions-reduction target using the three steps above, it can sell its unused emissions allowances to other states. These sales could generate more than $300 million on average per year between 2022 and 2030 (assuming a $10 per ton allowance price).
Building on Illinois’s Progress
Even with the stay on the CPP, Illinois has every reason to move forward with its transition to a low-carbon power sector. By expanding its clean energy policies and addressing current barriers, Illinois would put itself in a position to be ahead of the game when EPA is able to move forward with regulating carbon pollution from power plants, which experts expect it to. At the same time, the state would be able to scale up the benefits from these policies, reduce the need to invest in other states’ power sectors, and achieve deeper carbon emissions reductions more cost-effectively.