Bill would require Illinois to cut the carbon intensity of road fuels 25% through a credit market

The Illinois Environmental Protection Agency would propose, and the Pollution Control Board would adopt, rules for a clean transportation standard that lowers the lifecycle carbon intensity of fuels for ground transportation. The goal is a 25% cut below the 2019 baseline. The standard would apply to all fuel providers in the state, and each provider's fuel would be scored on greenhouse gas emissions from production through use. The rules would be made to the extent federal law allows. After the 25% cut is reached, the Agency would propose further reductions for the next 10 years. Rules are due within 24 months of the effective date. The 25% cut is due within 10 years after the rules are adopted.

The standard would work as a credit marketplace watched by the Agency. Providers with cleaner fuel would earn credits, and providers whose fuel misses the standard would build up deficits. Providers with deficits would have to supply cleaner fuel or buy credits to cover them. Credits could be traded, sold, and saved for later, with a credit price cap. The Agency would verify credits and could contract with outside verifiers. Registered companies would have to share fuel data with the Agency and agree to audits, and the Agency generally could not share that data.

Companies that do not cover their deficits would face a civil penalty, and those that give false information would face penalties set by the Agency. For each deficit not offset, the penalty could not exceed 10 times the value of the credit needed. False information could lead to fines, lost credits, reversed trades, or removal after three violations. The Attorney General or a county State's Attorney could sue to collect penalties or get a court order. Penalties collected would first help pay program costs, and any extra would go to the Environmental Protection Trust Fund.

The standard would not apply to aviation fuel, locomotive fuel, ocean-going vessel fuel, or military vehicle and equipment fuel. The Agency would also forecast fuel supply and could delay the standard if credits will fall short. Providers of exempt fuels that are clean could choose to earn credits. A delay would be ordered if forecast credits fall below 100% of what companies need to comply. The Agency could lower the standard temporarily, hold companies to the prior standard, or pause deficit counting. A delay would last at least one quarter and no more than one compliance period. The Agency must order a delay at least 30 days before a compliance period starts, and finish its forecast at least 90 days before.

The rules would direct participating utilities and backstop aggregators to invest all revenue from trading credits into grid upgrades and other projects that support cleaner transportation. At least 50% of that revenue would have to support environmental justice communities as defined in state law. Workers paid with this money would have to be paid the prevailing wage.