Government, private sector can tackle climate change together


Heat waves. Drought. Rising sea levels. Record hurricane seasons. Intense cold spells. Water shortages. The frequency and ferocity of these events prove that climate change is the defining crisis of our time — a crisis caused by a half-century of laissez-faire attitudes about the environment. Indeed, having passively waited for markets to solve our most pressing problems, we now see the “invisible hand” is woefully insufficient.

Meeting this moment does not require a battle between capitalism or socialism or free markets or no markets. Instead, a green industrial policy, like the Inflation Reduction Act and Illinois’ Climate and Equitable Jobs Act, or CEJA, will build a more robust, inclusive economy while saving our planet.

In short, industrial policy is a public-private partnership in which a government uses a coordinated strategy that employs tax policy, incentives, public purchasing power, research grants and public enterprises to encourage economic development. Often all at once, and when done well, it works on the supply and demand side simultaneously. For examples, look no further than satellite technology, the internet and the COVID-19 vaccine.

Today, Illinois is uniquely poised to show the world how thoughtful industrial policy can tackle climate change and create good middle-class jobs.

Case in point: Thanks to Gov. J.B. Pritzker, Illinois has invested heavily in the electrification of vehicles through the REV Act — giving manufacturers such as Rivian and Lion Electric financial incentives to produce electric cars and create jobs in our state while simultaneously providing consumers with tax incentives to purchase these vehicles. This is state-based industrial policy in action and a win-win-win: It incentivizes businesses to produce electric vehicles; helps consumers buy locally made cars, which boosts the manufacturers’ bottom line; and reduces carbon emissions at the same time.

Building on the REV Act, a recent Illinois task force on the Future of Work offered policy solutions across industries to modernize the state’s economy. Specifically, the report spotlighted CEJA, the nation-leading law signed by Pritzker last year, for its industrial policymaking potential through potent collaborations between the public and private sectors.

CEJA is remarkable in that it brings together every tool available to the state in one toolbox to drive a clean energy transition. It uses regulatory power to close fossil fuel plants, public policy to establish a transitional fund for fossil fuel workers; tax incentives and credits to bring more solar, wind and other clean energy projects online; and designates the Illinois Finance Authority as a climate bank to finance clean energy projects. And thanks to President Joe Biden’s leadership, the Inflation Reduction Act could turbocharge climate banks such as the IFA with startup funding and billions in loan guarantees.

But there’s more. CEJA also commits funds to help launch small businesses through a contractor incubation program that will create real pathways for wealth creation and job creation in historically underrepresented urban and rural communities.

The goal? Achieve a 100% carbon-free power sector by 2045 while building a more inclusive and equitable economy.

CEJA is a case study for modern industrial policy to solve complex challenges through an inclusive market-based approach. But industrial policy doesn’t have to just work for the climate. For example, state policymakers could launch a state-run real estate developer to boost the production of affordable housing or create a robust care economy in the state by using tax incentives, credits and other policy mechanisms for universal child care, a more powerful child tax credit and a public option for health care. In addition, Illinois could follow the state of California’s lead and produce insulin and other critical medicines.

While the U.S. Senate’s passage of the Inflation Reduction Act deserves high praise, critical pieces that would have benefited tens of millions of Americans were left on the chopping block because of partisan interests and the whims of one Democratic senator. Universal paid leave, child care, Medicare dental and vision coverage, more child tax credits, public housing and so much more may feel like faraway dreams. Yet, these transformational solutions are possible in Illinois if policymakers tap industrial policy.

Our window for these critical social programs has closed for now at the federal level, so states such as Illinois should step up to lead the way. Our state has all the building blocks to make it happen: a governor with a vision, top research institutions, robust transportation and logistics infrastructure, and most importantly, talent to tackle these issues. CEJA is just the start of what is possible.

Now, let’s get to work.

Kady McFadden is a political consultant and a former deputy director at Sierra Club whose work was instrumental in passing the Climate and Equitable Jobs Act. Ameya Pawar, a former Chicago alderman, is a director and senior adviser at a commercial real estate development firm. Both were involved in the state’s Future of Work task force and corresponding report.

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