1. STATE CLIMATE POLICY OPTIONS Meeting of the Illinois Climate Change Advisory Group Michael A. Bilandic Building, 160 N. LaSalle St., Room C500 Chicago, IL February 14, 2007 Governor Rod R. Blagojevich Climate Change Advisory Group

2. 2 General points about options list: Any policy affecting energy could be climate policy Framing a single policy for discussion can be challenging Policies overlap and can be redundant or complementary Long list intended to be illustrative and inclusive, not exhaustive; developed from several sources: -policies and programs in place in Illinois -existing lists maintained by IL EPA and WRI -other state climate action plans -Illinois Energy Plan

3. Governor Rod R. Blagojevich Climate Change Advisory Group3 Points about suggested priorities: Intended to facilitate discussion Process needs to move quickly to narrow the field Informed by several criteria: -state and national policy trends -Illinois state-level policy considerations -potential impact on GHG emissions -balance among sectors / emissions sources -implementation costs and revenue implications -environmental co-benefits -Illinois Energy Plan

4. Governor Rod R. Blagojevich Climate Change Advisory Group4 Suggested priorities: Multi-Sector: -Carbon offset requirements for existing and/or new large stationary combustion sources -Establish residential and commercial energy efficiency construction codes beyond international standards -Incentives for CHP and boiler construction and upgrades -Incentives for water conservation appliances and equipment -State-level cap-and-trade (including options to join RGGI or other systems)

5. Governor Rod R. Blagojevich Climate Change Advisory Group5 Electric Power: -Carbon performance standards for electricity generation and/or procurement -De-couple electric and natural gas utility revenues from sales -Distributed generation regulatory reform (real-time pricing, net metering, interconnection, standby rates) -Energy efficiency standards for appliances and equipment -IGCC with carbon capture & storage portfolio standard -Require utilities to factor CO2 into procurement and planning Suggested priorities:

6. Governor Rod R. Blagojevich Climate Change Advisory Group6 Transport: -Develop and finance "smart growth" initiatives and expand/improve alternative modes of transport -GHG emission standards for automobiles -Incentives for fuel efficient vehicles -Renewable fuels standard (RFS) and/or low- carbon fuels standard Suggested priorities:

7. Governor Rod R. Blagojevich Climate Change Advisory Group7 Agriculture: -Incentives to reduce nitrogen application in crop fertilization -Programs to encourage forest management, reforestation, tree- and grass-planting Suggested priorities:

8. Governor Rod R. Blagojevich Climate Change Advisory Group8 Commercial / Industrial: -Encourage or require reductions in emissions of high GWP gases (N 2 O, HFCs, PFCs, SF 6 ) -Energy efficiency standards for commercial and industrial generators Fugitive / Waste: -Encourage or require capture of methane from landfills, wastewater treatment plants, and/or coal mines Suggested priorities:

9. Governor Rod R. Blagojevich Climate Change Advisory Group9 Discussion: Which policies deserve further consideration? How can these policies work together to achieve the GHG reduction goal for Illinois? Are policies missing from the list? Which policies are complementary or redundant? How should the CCAG further refine a set of policies for consideration by the Governor?