The Regional Greenhouse Gas Initiative (RGGI) is back in New Jersey.
The Regional Greenhouse Gas Initiative is part of Governor Murphy's goal to achieve 100% clean energy by 2050. The Governor sees that shifting to clean and renewable energy sources reduces greenhouse gas emissions that are already causing climate impacts in New Jersey, particularly in economically disadvantaged communities.
On June 17, 2019, the NJDEP adopted its rules related to rejoining RGGI. The two rules govern New Jersey’s reentry into the RGGI auction and distribution of the RGGI auction proceeds. The NJDEP is adopting new rules and amendments to establish the New Jersey Carbon Dioxide (CO2) Budget Trading Program, which is designed to reduce anthropogenic emissions of carbon dioxide (CO2), a greenhouse gas, in an economically efficient manner, from large fossil fuel-fired electricity generating units in New Jersey.
RGGI is a regional, cooperative program to cap and reduce CO2 emissions from fossil fuel fired units producing 25 or more megawatts of power in the participating states to address the significant challenge of climate change. The CO2 Budget Trading Program is a cap-and-trade program, which is a market-based approach used to control pollution by providing economic incentives for achieving reductions in CO2 emissions from the electric generating sector. The RGGI participating states establish a regional CO2 budget allowance cap, which represents the sum total of the participating state’s CO2 emissions annual base budgets.
Each year, each participating state issues CO2 allowances in an amount equivalent to its annual base budget. Each allowance represents the limited authorization to emit or discharge one ton of CO2. CO2 budget sources in the participating states are required to hold allowances equivalent to their emissions. The vast majority of the allowances are distributed through quarterly, regional CO2 allowance auctions, which are the main platform for CO2 budget sources to purchase CO2 allowances.
Quarterly auctions are held on behalf of the states as a single auction, administered by RGGI, Inc. The CO2 Budget Trading Program is designed to facilitate the auction or sale of the majority of the CO2 allowances. New Jersey will share in these proceeds, and in the months ahead, state agencies will develop specific plans for investing New Jersey’s share of RGGI proceeds to maximize the program’s benefits and accelerate the clean energy transition statewide.
Many of the comments on the rules were aimed at the need to extend this type of approach beyond the fossil fuel-fired electricity generating plants recognizing that mobile sources of CO2 (autos) are also a significant contributor to the state’s CO2 emissions.
NJ businesses will continue to see reasons to enhance their Sustainability Programs with a specific focus on reducing CO2 emissions - Baron can help you with that internal assessment and strategy.