Governor Phil Murphy took a groundbreaking step toward reducing greenhouse gas emissions and addressing climate change threats in New Jersey, when, on January 27, 2020, he simultaneously unveiled the final version of the updated Energy Master Plan (the “EMP”) and signed Executive Order No. 100 (“EO 100”). As discussed below, the EMP charts a course for achieving Murphy’s goal of 100% clean energy by 2050, while EO 100, among other things, directs the New Jersey Department of Environmental Protection (“NJDEP”) to immediately begin developing regulatory reforms to address sea level rise and other climate change threats under the banner, Protecting Against Climate Threats (“PACT”). The EMP and EO 100 represent long-term initiatives that will be implemented over a number of years and will have significant impacts on a wide variety of businesses within New Jersey.
The Energy Master Plan
Governor Murphy previously signed Executive Order No. 28, in May 2018, which directed the New Jersey Board of Public Utilities (“NJBPU”) to develop a comprehensive statewide energy plan—entitled the Energy Master Plan—in order to move the state away from energy sources that contribute to climate change. Now that it has been finalized, the EMP contains the tactical blueprint outlining how the state can work toward the goal of achieving 100% clean energy usage by 2050. This broad blueprint includes seven key strategies aimed at reaching the 2050 goal:
- Reducing energy consumption and emissions in the transportation sector by encouraging electric vehicles;
- Accelerating the use and development of renewable energy and distributed energy resources;
- Optimizing energy efficiency while reducing energy demands through new programs and strengthening building and energy codes;
- Reducing energy consumption and emissions from new and existing buildings;
- Decarbonizing and modernizing New Jersey’s energy system by reducing reliance on natural gas and increasing electrification;
- Supporting community energy planning and local renewable power generation in low-income and environmental justice communities; and
- Expanding the clean energy economy through investments in clean energy jobs and technological development.
As New Jersey continues to move towards clean energy pursuant to the EMP, specific issues will arise. For instance, the NJBPU recently approved a program to aid in the transition from the current Solar Renewable Energy Certificate (“SREC”) Program, which provides a financial incentive for energy generated by a solar facility. The transition program is intended to smooth the conversion from more-valuable, legacy SRECs to an as-yet-to-be determined successor incentive program, but the annual value of the Transition Renewable Energy Certificate (“TREC”) has yet to be fully and finally determined. As a result, it is not yet clear how the TREC program, or the other initiatives highlighted in the EMP, will impact the financing and development of renewable energy projects within the state.
The PACT Regulations
EO 100, in turn, addresses climate change threats on the regulatory front in several ways. Initially, EO 100 directs the NJDEP within two years to establish a monitoring and reporting program designed to identify all significant sources of greenhouse gas emissions in the state. In addition to addressing greenhouse gas emissions, EO 100 instructs the NJDEP to integrate climate change considerations into its existing regulatory and permitting programs, including land use permitting. EO 100 also requires the NJDEP Commissioner to issue and update periodically an administrative order within which the Department will identify the specific regulations it intends to modify to include climate change considerations. Pursuant to this directive, NJDEP Commissioner Catherine McCabe issued Administrative Order No. 2020-01 (the “AO”) on the same day as EO 100’s execution.
The AO describes the Department’s intent to prepare a report by June 30, 2020 that will recommend necessary regulatory measures to reduce greenhouse gas emissions and climate pollutants to meet the 2050 emissions reduction goal. In support of this goal, the NJDEP will propose regulations to establish a greenhouse gas monitoring and reporting program to identify and monitor all significant sources of statewide greenhouse gas emissions, and to incorporate climate change considerations, such as sea level rise, into land use regulatory programs within the next two years.
Specific programs named in the AO to be modified include the Coastal Zone Management Rules, Freshwater Wetlands Rules, Flood Hazard Control Act, and Stormwater Management Rules. The incorporation of these considerations into such programs will undoubtedly result in changes to permit applications and renewals for development projects that qualify under these programs, including projects located on coastal waterfront areas or near flood-prone areas further inland. The full extent of the changes to applicable regulations will not be known for some time, but the NJDEP has begun to schedule public hearings to discuss its plans.
As Governor Murphy’s administration begins implementing its strategies to confront climate threats in a multitude of areas ranging from technological changes in transportation to regulatory changes in land use permitting, the degree to which these strategies will impact New Jersey’s future is uncertain. However, the Garden State can certainly expect to see significant regulatory changes occurring rapidly in numerous areas in the coming months and years.