New Jersey has been slow to spend Regional Greenhouse Gas Initiative (RGGI) funds since returning to the program, but it is taking steps to accelerate the process, state officials said last week as they solicited public input on how to use the money over the next three years.

Speaking Tuesday at the second of four public hearings into future priorities for RGGI funds, Paul Baldauf, assistant commissioner for air, energy and materials sustainability at the state’s Department of Environmental Protection, said “there’s a lot of lessons learned” in the state’s handling of the $372 million allocated to the state over the past three years.

Baldauf spoke nearly two weeks after the state announced the expenditure of $70 million — about 30% of the funds expended so far, mostly on electric school buses and other battery-powered heavy-duty vehicles. The state still must spend about $100 million of the RGGI funds allocated in the three-year period. State officials said they expect the funding plan, with public comments incorporated, will be released in the next two months, by which time more RGGI funds should be available and investment in projects will begin.

“We’re going to make a commitment in the second three-year period to, quite honestly, do a little better job on our end,” Baldauf said, referring to the need to spend the funds sooner.

“We want that money flow to be constant so we can see the results out in the street versus the money sitting in an account somewhere,” he said. “We’ve changed a lot of internal processes along the way to help with that, but we still have steps to go … So it’s really more seamless than anything else, and as the money comes in every quarter, that money [should go] out every quarter with the right things.”

He added that the state will continue the strategy of “almost solely” focusing spending on environmental justice communities.

Shifting Perspectives

Yet the hearings showed clear potential for shifting the state’s priorities elsewhere, depending on public response. Although a founding member of RGGI in 2005, New Jersey left the program in 2012 at the direction of then-Gov. Chris Christie (R), then reentered in 2020 under current Gov. Phil Murphy (D).

While the first three years’ worth of funds were allocated to transportation, the state’s largest source of emissions at 37%, the state is looking to broaden that focus, officials said. (See NJ Allocates $70M in RGGI Funds for Heavy-duty EVs.)

Some of the funding will shift to building electrification, one of the “primary areas” for which the state’s Board of Public Utilities is seeking input, BPU Chief of Staff Taryn Boland said.

One reason is that 73% of New Jersey homes are heated by natural gas, with another 10% heated with delivered fuels such as heating oil and propane — about 30% higher than the national average, Boland said. Meanwhile, just 16% of the state’s residence are heated by electricity, compared with a national average of 41%, she said.

“As the country is beginning to shift to electric air and water heating, it’s important to know that New Jersey is also way behind in the pack,” she said. “We know that building electrification will lead to cost savings and yield beneficial health outcomes. We know strategically and equitably designed programs to help drive … this transition is critical.”

That perspective, embraced by Gov. Murphy, has proven controversial in the past. The DEP in December dropped a plan to prohibit the installation of fossil fuel-fired commercial boilers amid vigorous opposition from business groups, who say electric boilers are vastly more expensive to install. (See NJ Backs off Ban on Commercial-size Fossil Fuel Boilers.)  But Murphy in February signed executive orders establishing a goal to install electric heating and cooling equipment in 400,000 homes and 20,000 commercial properties by 2030.

Speaking after the Newark meeting, Boland said the state has not determined the priorities, but that building electrification is one competing priority among several. The state’s RGGI spending is divided among the BPU and DEP, each of which is allocated 20%, and the Economic Development Authority (EDA), which spends 60% of the funds. State officials said part of their effort to accelerate the spending has been to smooth the coordination and decision making among the three agencies.

Together they have crafted five main priorities for guiding RGGI investments: to strengthen the grid and promote “healthy homes”; stimulate “clean and equitable” transportation; “strengthen” the state’s forests; promote carbon capture in coastal areas; and reduce the use of “high warming refrigerants.”

Improving Efficiency

The BPU also thinks the state should put greater emphasis on the agency’s pilot “whole house” program, in which properties in low-income areas of the state capital, Trenton, are evaluated for health and safety hazards and efficiency, and remediated where necessary, Boland said.

“We’re looking to utilize funding in this strategic round to really bring that program to scale statewide,” she said. “We’re looking to build a strong portfolio of electrification and energy efficiency programs that leverage the federal incentives that are now available and drive down the cost of building [decarbonization] efforts.”

Peg Hanna, DEP assistant director of air monitoring and mobile sources, said the agency wants to continue investing RGGI money on EV projects, such as fleets of electric municipal school buses and garbage trucks, and to help put EV chargers in multi-unit dwellings, where residents have difficulty installing their own chargers. (See NJ RGGI Spending Focuses on Transportation.)

“We also know that the statistics show a lot of our ride hailing drivers live in multi-unit dwellings,” she said. “So providing charging hubs for those residents will also enable ride hailing to become electric.”

In a similar vein, the DEP is looking to pursue more programs such as the Go Trenton pilot program, still under development. The pilot will use RGGI funds to address the likelihood that EVs will struggle to take hold in the city because of low incomes and the fact that 30% of households don’t have a car, while 21% of residents report using car-sharing to get to work. Go Trenton would provide EV options such as a car-sharing, ridesharing and shuttle services.

During last week’s hearing, an audience member questioned whether RGGI funds could be used to help residents in environmental justice areas who can’t afford to buy an EV to repair their internal combustion engine vehicle.

Hanna said the issue clearly needs to be addressed, given that the state won’t replace all of its 6 million ICE vehicles in the near future but needs to minimize emissions from those cars.

“Making sure that the existing fleet is well-maintained is a core focus of our statewide inspection and maintenance program,” she said. “Are there ways to identify high emitters and to make sure the vehicles are repaired more quickly? Sure. We would need our friends at motor vehicle commission to be in on that discussion with us. But that’s something that we have looked at in the past — doing things like remote sensing in high traffic corridors to try to identify the highest emitters and get them pulled in for an inspection.”

The state also is working on adopting California vehicle rules to “ratchet down on the emissions from new internal combustion engines that can be sold and registered in the state,” she said.

Combating Super Pollutants 

The third hearing on Thursday focused on “buildings, [the] grid and refrigerants,” highlighting potential projects that weren’t funded by RGGI money in the first phase.

For the EDA, key candidates for RGGI expenditures include improving grid resiliency to reduce electrical outages in overburdened communities and financing for “beneficial electrification, renewable energy distributed energy resources or energy efficiency projects in commercial buildings,” said Marta Cabral, senior project officer for clean energy programs at the EDA. The money could also be used to finance improvements that reduce emissions from commercial and industrial buildings, she said.

A DEP official said RGGI funds could additionally be used to reduce the use of refrigerants in low-income communities.

Hydrofluorocarbons account for 6% of the state’s greenhouse gas emissions and are “considered a climate super pollutant,” said Ky Asral, bureau chief of the DEP’s Bureau of Sustainability. That means that any reduction in their use would have a big impact, but businesses in low-income areas may balk at installing more expensive ultra-low commercial refrigeration system chillers, he said, suggesting that incentives funded by the RGGI program could get the job done.

“Funding the incremental cost from the installation of new refrigeration systems to ultra-low systems will accelerate the adoption of these systems and have immediate impact on reducing the global warming pollutants from this sector,” he said. “Creating similar incentives in overburdened communities for retrofitting or replacing high [global warming potential] refrigeration systems or chillers will keep much needed commercial facilities like supermarkets in neighborhoods that may otherwise not be able to afford the transition on their own.”