Illinois General Assembly - Full Text of HB3115
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Full Text of HB3115  102nd General Assembly




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1    AN ACT concerning regulation.
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
4    Section 1. Short title. This Act may be cited as the
5Renewable Gas and Low-Carbon Fuels Act.
6    Section 5. Findings. The General Assembly finds the
8        (1) Natural gas provides the citizens and businesses
9    of the State a safe, reliable, and affordable source of
10    energy.
11        (2) As Illinois transitions to a low-carbon energy
12    economy, alternative low-carbon energy carriers that can
13    support the needs of energy storage, resiliency, and
14    emissions reductions are essential.
15        (3) Hydrogen, or its derivatives, has significant
16    potential as a low-carbon energy carrier. Hydrogen is a
17    storable gas with high energy density and zero CO2
18    emissions at the point of use. Hydrogen can be produced in
19    a variety of low-carbon or no-carbon methods.
20        (4) Methane emissions from organic waste are a
21    powerful greenhouse gas with approximately 25 times the
22    global warming potential of carbon dioxide.
23        (5) These methane emissions that would otherwise enter



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1    the Earth's atmosphere, or non-beneficially flared, can be
2    captured and converted to renewable gas to create a fuel
3    compatible with natural gas utility systems that is
4    considered carbon-neutral and under certain circumstances
5    can be carbon-negative.
6        (7) Constructing a renewable gas production facility
7    to capture this methane from organic waste or other
8    renewable resources for use by the utility or its
9    customers has the added benefit of displacing geologic
10    natural gas, thus integrating and beneficially using what
11    would otherwise be waste methane and reducing the State's
12    carbon footprint, among other environmental benefits.
13        (8) Encouraging the gas utility industry to undertake
14    certain physical plant investments will promote the
15    development of the renewable gas and other low-carbon
16    fuels industry which, in turn, will create economic
17    activity and jobs in this State while also improving the
18    environment.
19        (9) Including renewable gas and other low-carbon fuels
20    resources in a natural gas utility's supply portfolio is a
21    cost effective way to provide beneficial environmental
22    impacts utilizing the natural gas utility infrastructure.
23        (10) The development of renewable gas and other
24    low-carbon fuels resources serves the public interest and
25    should be encouraged to leverage the natural gas system to
26    reduce greenhouse gas emissions and support a smooth



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1    transition to a low-carbon energy economy in Illinois.
2    Section 10. Definitions. As used in this Act:
3    "Biogas" means a mixture consisting of primarily methane
4and carbon dioxide that is released from the biological
5decomposition or conversion of organic materials, including,
6without limitation, biomass, manure, plant material, sewage,
7and landfill waste.
8    "Biomass" has the meaning given that term in subsection
9(d) of Section 16-127 of the Public Utilities Act.
10    "Commission" means the Illinois Commerce Commission.
11    "Environmental commodities" means non-tangible energy
12credits, and any and all current and future rights, credits,
13benefits, air quality credits, methane capture credits,
14renewable energy credits, emission reductions, offsets, and
15allowances, howsoever referred to, associated with the
16capture, production, generation, transportation, use, and
17environmental characteristics of biogas and low-carbon fuels,
18the displacement of fossil-based natural gas for any use
19(including, without limitation, thermal use, electricity
20generation, and use as a transportation fuel), the reduction
21of air pollutants or the avoidance of the emission of any gas,
22chemical or other substance, including, without limitation,
23any similar commodities, whether arising out of international,
24federal, State, or local laws or regulations.
25    "Facility" means a facility or any part of the equipment



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1located at a facility that is used to create biogas, hydrogen,
2low-carbon fuels, methanate hydrogen, or other fuels, gather
3biogas, gather hydrogen, gather low-carbon fuels or other
4sources to make low-carbon fuels, process biogas or other
5sources into low-carbon fuels, inject low-carbon fuels into a
6natural gas pipeline or distribution system or determine the
7constituents of low-carbon fuels before the injection of the
8low-carbon Fuels into a natural gas pipeline or distribution
10    "Low-carbon fuels" means renewable gas and other
11low-carbon fuels, collectively or interchangeably.
12    "Natural gas utility" means a public utility that provides
13natural gas distribution services in Illinois.
14    "Other low-carbon fuels" means any of the following
15products processed to meet pipeline quality standards or
16transportation fuel grade requirements:
17        (1) hydrogen or other fuels derived from zero-carbon
18    or low-carbon energy sources or from other sources where
19    the CO2 produced is capture and stored; or
20        (2) methane gas derived from hydrogen or other fuels
21    derived from zero-carbon or low-carbon energy sources or
22    from other sources where the CO2 produced is capture and
23    stored.
24    "Renewable energy sources" means hydroelectric,
25geothermal, solar photovoltaic, wind, tidal, wave, biomass, or
26biogas energy sources.



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1    "Renewable gas" means any of the following products
2processed to meet pipeline quality standards or transportation
3fuel grade requirements:
4        (1) biogas;
5        (2) hydrogen derived from renewable energy sources; or
6        (3) methane gas derived from any combination of:
7            (A) biogas;
8            (B) hydrogen derived from renewable energy
9        sources; or
10            (C) carbon dioxide.
11    Section 15. Renewable gas and low-carbon fuels programs.
12    (a) A natural gas utility shall incorporate low-carbon
13fuels into its natural gas supply portfolio. The goals for the
14total amount of renewable gas and other low-carbon fuels
15incorporated by the natural gas utility shall be as follows:
16        (1) by January 1, 2030, not less than 2% of the natural
17    gas utility's total gas supply portfolio (by volume);
18        (2) by January 1, 2035, not less than 3% of the natural
19    gas utility's total gas supply portfolio (by volume).
20    The calculation of the share of the supply portfolio shall
21not include the volume of gas of any type delivered but not
22sold by the natural gas utility.
23    (b) The natural gas utility shall make progress towards
24the goals set forth in this Section prior to the first
25milestone set forth in paragraph (1) of subsection (a). Within



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12 years after the effective date of this Act, the natural gas
2utility shall submit a plan setting forth, as of the date of
3the plan, how it expects to achieve the goals set forth in
4paragraphs (1) and (2) of subsection (a). This plan shall also
5include a description of the natural gas utility's progress
6towards the goals set forth in paragraphs (1) and (2) of
7subsection (a).
8    (c) For purposes of meeting the goals set forth in
9subsection (a), low-carbon fuels that are purchased by the
10natural gas utility must include environmental commodities
11associated with the gas. Nothing in this Section shall be
12interpreted as preventing the gas utility from purchasing
13low-carbon fuels without environmental commodities, although
14such purchases shall not be applicable to meeting the goals
15set forth in subsection (a) of this Section.
16    (d) A natural gas utility may seek authorization from the
17Commission under this Section to engage in low-carbon fuels
18activities, including, without limitation:
19        (1) making a financial investment in a low-carbon
20    fuels facility, including, but not limited to, owning, in
21    whole or in part, and operating a low-carbon fuels
22    facility connected to its distribution system;
23        (2) contracting with a producer of low-carbon fuels to
24    purchase gas supply from a low-carbon fuels facility;
25        (3) extending the transmission or distribution system
26    of the natural gas utility to interconnect with a



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1    low-carbon fuels facility;
2        (4) purchasing gas produced from a low-carbon fuels
3    facility, whether or not the gas has environmental
4    commodities:
5            (A) to incorporate the gas produced from a
6        low-carbon fuels facility into the supply portfolio of
7        the natural gas utility; or
8            (B) to sell the gas produced from a low-carbon
9        fuels facility directly to the customers of the
10        natural gas utility;
11        (5) participating in a State or federal renewable
12    energy program or project if participation in the program
13    or project by the natural gas utility:
14            (A) consists of the purchase or sale of gas
15        produced by a low-carbon fuels facility or
16        environmental commodities by the natural gas utility;
17        and
18            (B) results in a reduction of the cost of gas
19        produced from a low-carbon fuels facility to the
20        customers of the natural gas utility;
21        (6) providing customers of the natural gas utility
22    with the option to purchase gas produced from a low-carbon
23    fuels facility, with or without environmental commodities,
24    directly from the natural gas utility;
25        (7) any other activity which develops sources of
26    low-carbon fuels in this State for the purpose of



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1    providing the environmental benefits to this State noted
2    in subsection (e), creating jobs through the construction
3    and operation of low-carbon fuels facilities in this State
4    or diversifying the supply of energy in this State; or
5        (8) any other prudently incurred investments made by a
6    natural gas utility that contribute to the natural gas
7    utility meeting the targets set forth in subsection (a).
8    (e) The Commission shall approve a low-carbon fuels
9activity pursuant to subsection (d) if it determines the
10low-carbon fuels activity investment and expenses are: (1)
11consistent with the provisions of this Section; and (2) the
12natural gas utility has demonstrated that the low-carbon fuels
13activity provides one or more of the following environmental
14benefits to this State:
15        (1) the reduction or avoidance of emissions of any air
16    pollutant or greenhouse gas in this State;
17        (2) the displacement of geologic natural gas with
18    low-carbon fuels; or
19        (3) the reduction or avoidance of any pollutant that
20    could have an adverse impact on the waters of this State.
21    Investments and costs incurred pursuant to this Section
22shall be deemed prudent and reasonable if the Commission
23determines that the natural gas utility's expenditures are
24consistent with the provisions of this Section. The Commission
25shall make determinations as to whether the execution of the
26investments and the costs incurred pursuant to this Section



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1are reasonable and prudent in the natural gas utility's next
2rate proceeding.
3    (f) The Commission shall review and, by order, approve, or
4approve as modified, the natural gas utility's low-carbon
5fuels activity proposal within 180 days after the date on
6which it is filed. In the event the Commission approves the
7proposed natural gas activity with modifications, the
8Commission's order shall not become a final order subject to
9petitions for rehearing until 15 days after service of same by
10the Commission. The utility shall have 14 days following the
11date of service of the order to notify the Commission in
12writing whether it will accept any modifications so identified
13in the order or whether it has elected not to proceed with the
14proposal. If the utility notifies the Commission that it will
15accept such modifications, the Commission shall issue an
16amended order, without further hearing, within 14 days
17following such notification, approving the proposal as
18modified and such order shall be considered to be a final order
19of the Commission subject to petitions for rehearing and
20appellate procedures.
21    (g) All environmental commodities from low-carbon fuels
22resulting from the purchase of low-carbon fuels for gas supply
23or the ownership of a low-carbon fuels facility shall be
24applied to the benefit of gas customers by reducing greenhouse
25gas emissions in the State of Illinois through: (1) where
26possible given the nature of the applicable environmental



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1commodities, by offsetting direct greenhouse gas emissions
2from gas utility operations, including methane emissions, and
3(2) replacing customer consumption of conventional natural gas
4with low-carbon fuels, or another application that will reduce
5greenhouse gas emissions in the State of Illinois.
6    (h) The cumulative amount of estimated rate impact of the
7low-carbon fuels activities, measured beginning with the date
8of the natural gas utility's most recent delivery service rate
9order, shall not exceed an annual average 2% per year of the
10utility's delivery base rate revenues. Each natural gas
11utility request for authorization from the Commission under
12subsection (d) shall include an estimate of the rate impacts
13associated with the proposed low-carbon fuels activities. If
14the natural gas utility estimates that the incremental rate
15impact of a proposed low-carbon fuels natural gas activity
16causes the natural gas utility to exceed the rate impact
17limits contained in this subsection, the natural gas utility's
18filing shall provide for a curtailment or delay the proposed
19implementation of the low-carbon fuels activity as required to
20maintain rate impacts below the limits set forth in this
22    (i) The Commission shall adopt rules governing filing
23requirements, reporting requirements, and the process for
24natural gas utilities to fully recover prudently incurred
25costs associated with low-carbon fuels activity described in
26subsection (d). Rules adopted by the Commission under this



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1Section may not prohibit an affiliated interest of a natural
2gas utility from making a capital investment in a low-carbon
3fuels production project if the affiliated interest, as
4defined in Section 7-101 of the Public Utilities Act is not a
5public utility. The Commission shall adopt rules pursuant to
6this subsection not later than December 31, 2021.
7    Section 90. The Illinois Administrative Procedure Act is
8amended by adding Section 5-45.8 as follows:
9    (5 ILCS 100/5-45.8 new)
10    Sec. 5-45.8. Emergency rulemaking; Renewable Gas and
11Low-Carbon Fuels Act. To provide for the expeditious and
12timely implementation of the Renewable Gas and Low-Carbon
13Fuels Act, emergency rules implementing the Renewable Gas and
14Low-Carbon Fuels Act may be adopted in accordance with Section
155-45 by the Illinois Commerce Commission. The adoption of
16emergency rules authorized by Section 5-45 and this Section is
17deemed to be necessary for the public interest, safety, and
19    This Section is repealed on January 1, 2027.
20    Section 99. Effective date. This Act takes effect upon
21becoming law.