By Dan Johnson

Illinois pollutes more than California.

And Indiana pollutes more than Illinois.

Those two pieces of data floored me. 

Here's the list, by state, of greenhouse gas pollution:

By Dan Johnson

This is pretty awesome. I'd like to know who the biggest carbon polluters are in Illinois to get an idea how much money we are wasting by letting these companies pollute for free.

Turns out the federal government keeps such a list.

The biggest polluter in Illinois is a huge coal power plant owned by a Texas utility Dynegy. The Baldwin Plant alone pollutes 12 million tons of carbon (out of a statewide total of 91 million). Most of the 91 million is from coal power plants. And we don't charge them anything for that pollution. 


The market price for a ton of carbon pollution is apparently about $12/ton. If Illinois decided to quit subsidizing these polluters and had them pay the market price for their pollution, we'd generate more than a billion dollars -- annually. (91 million tons times $12/ton). 


To put that in context, all the debate over lowering the state income tax from 5% to 3.75% will cost about $3 billion. We could lower the income tax even more down to 3.25% with the money we could raise from charging polluters a market price. 


Thanks to the feds compiling this data (which is only about half the total carbon emissions), we're in a place to sketch out what a fee on carbon pollution might actually generate. That's very helpful.

In most places, an oil refinery or a massive manufacturing plant that creates tens of thousands of metric tons of carbon pollution doesn't have to pay for that pollution. Since it's free to the company, they keep on spewing out the climate change causing carbon like dumping toxic sludge directly into a sewer: no filters, no caps, no nothing.

Some states are figuring out they ought to charge those companies a fee for their pollution to not only get them to figure out how to pollute less (since now it's getting expensive) but also to pay for other parts of the public sector. The latest initiative is from Washington Governor Jay Inslee - his cap-and-trade proposal would charge 130 or so big companies and generate about a billion dollars a year. 

Washington State could join California which has been charging carbon polluters in a quarterly auction to set the price for years. 

Illinois should do the same thing. If we charged our oil refineries and major manufacturers a fair price for their pollution, we'd not only quit subsidizing our polluters but we'd be able to help pay for the backbone of our low-pollution economy: the CTA and Metra. These trains carry 2 million people every day but the backlog for maintenance is far larger than what we're budgeted to pay for. Makes sense to pay for the maintenance (and expansion) of low-pollution public transportation by finally kicking the polluters off the free ride bus.

If Washington State could generate a billion and we're about twice their size....we might be able to solve our transit funding shortfalls in an elegant policy combination. 

Lower oil prices are great, especially for parts of the world (like the Midwest) that don't have a lot of oil but use a lot of it. 

The Wall Street Journal reported:


Lower prices at the pump, down about 60 cents a gallon from a year ago, will have the equivalent effect of cutting taxes in the U.S. by between $100 billion and $125 billion,Goldman Sachs economists said Wednesday. Americans spent $370 billion on gasoline last year.



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So for every penny the cost of gasoline falls, American consumers save about $2 billion (a rough projection from the Goldman Sachs calculation). That's a lot of money.

The best way to lower oil prices is to lower consumption. So reducing oil consumption should be a core economic development objective of every local and state government (that isn't a massive oil producer). 

We tend not to put reducing oil consumption into the economic development box. Economic development in practice usually means chasing after larger companies that are setting up a bidding war of tax breaks among different cities or states. That's a pretty dumb way to do economic development. Much better to come up with a universal strategy for reducing costs for all residents and businesses (like lowering energy costs) and spend time, energy and staff resources on advancing that strategy.

We could use more economic research on the impact of lowering oil prices. For example, if one state reduces oil consumption by a million barrels of year, what sort of impact on the global price of crude oil can be reasonably expect? If we can figure that out, at least ballpark, we can more easily justify the investment in reducing that oil consumption, because we can see the economic return in the form of lower prices for all. 

The California High Speed Rail project expects to save 12.7 million barrels of oil every year (since it runs on electricity, not oil). What's the impact of saving all that imported oil? We need more research!