New Jersey’s three-year, $150 million program to promote energy efficiency and building decarbonization incentive programs should be bigger and bolder to achieve the state’s ambitious clean energy goals, several speakers said at two public hearings last week.

Yet the proposal also ran into criticism from fossil fuel supporters and others who said the plan focused too much on transforming the state to make electricity the dominant — perhaps only — fuel used for building heat and hot water systems, and they questioned whether the plans would secure enough public support to achieve the goal.

The two online hearings, in the afternoon and evening of June 20, drew more than a dozen speakers and provided the first display of public, environmentalist and industry response to the straw proposal, known as Triennium 2, which aims to provide a strategy for reducing emissions through energy efficiency and shifting the state to increased electricity use. The Board of Public Utilities plans to have the completed program in place in July.

The three-part plan, which follows a similar three-year strategy enacted in 2020, sets out general goals and incentive mechanisms and details demand response proposals. A third part of the proposal outlines a series of possible building decarbonization (BD) startup programs that target single and multifamily residential buildings, as well as commercial buildings, an already contentious issue in the state and one that provoked some of the most vigorous discussion at the hearings. (See NJ BPU Outlines $150M Building Decarbonization Plan.)

Eric Miller, New Jersey energy policy director at the Natural Resources Defense Council (NRDC), said at the hearing that the demand response and building decarbonization plans “are critical in meeting our climate targets while lowering customer bills, and providing more options for how customers interact with the grid to cool and heat their homes.”

Still, he added, “we are concerned with the straw proposal placing a $50 million-a-year program budget.” The NRDC “has concerns that it’s insufficient to meet the scale required to hit the targets” set out by Gov. Phil Murphy in a recent executive order, he said. The order set a goal of electrifying 400,000 additional dwelling units and 20,000 commercial or public buildings by December 2030.

Susanna Chiu, senior director of operational services for PSE&G, said that although the utility “generally agrees” with the building decarbonization guidelines, which place much of the responsibility for implementing the strategy on utility run programs, the company has reservations about the size.

“We feel that the $50 million-per-year proposal for the second Triennium is not enough to make an impact,” especially if the BPU expects to meet Murphy’s building decarbonization goals, she said.

“Huge Burden”

The Triennium 2 proposal is the state’s latest initiative seeking to cut building emissions, which account for 17% of the state’s greenhouse gases, following the governor’s executive order and the creation of a Clean Buildings Working Group to study the issue. Business and fossil fuel interests have pushed back on the effort, and in January, the New Jersey Department of Environmental Protection held off enacting a rule that would have banned the installation of new commercial-size fossil fuel boilers after Jan. 1, 2025, after protests from business and fuel groups. (See NJ Backs off Ban on Commercial-size Fossil Fuel Boilers.)

Opponents say switching to electricity will be extremely expensive, and they decry the use of a “mandate” to require the switch. But state officials say they instead will implement the switch from fossil fuel to electricity by offering consumers and property owners incentives and public education on the benefits of electric appliances.

Steven S. Goldenberg, representing the New Jersey Large Energy Users Coalition, said at the first hearing that the proposed budget, when coupled with the state’s other clean energy initiatives in the state Energy Masterplan, is a “huge burden on ratepayers.”

He questioned the effectiveness of offering subsidies to encourage property owners to switch from fossil fuels, and cited insights gathered when he worked on a clean energy study for then-Gov. Chris Christie.

“I still recall very clearly their consistent testimony that it’s very difficult to incent people to upgrade their equipment if their current equipment was operable,” he said. “So that if someone had an operating furnace, even though it may be low efficiency and a nice offer is made to upgrade it to a more efficient unit, those offers were being rejected.”

Anne-Marie Peracchio, managing director marketing and energy efficiency at New Jersey Natural Gas, said the utility was the only one in the state “that had an electrification pilot approved.” She noted that “at the halfway point of this triennial, there was only one reported participant.”

Peracchio urged the BPU to consider including “low- and zero-carbon fuels like clean hydrogen and renewable natural gas” in the straw proposal.

“It is critical that the state policy does not limit broader opportunities for cost-effective decarbonization by placing an over-reliance on electrification when that is just one of the available strategies to building decarbonization,” she said.

Heat Pump Incentives

Andrew McNally, a lobbyist for South Jersey Industries, which represents two gas companies among other businesses, said electrification is no easy task. He said he expected electricity rates to increase as demand grew, and urged the BPU to “maintain its focus on affordability,” because the cost increases will affect low- and moderate-income households the most.

In addition, he said, “electrification stands to increase overall emissions” because the increase in demand will force the state to use power that is not generated by clean energy sources.

“Our current electric generation mix continues to rely on fossil in substantial part,” he said. “Until the state realizes its emissions-free generation goals, or at least makes substantial progress towards it, increased reliance on electricity will produce more carbon emissions.”

But Allison McLeod, policy director for the New Jersey League of Conservation Voters, urged the BPU focus on encouraging people to switch from delivered fuels, such as oil, and natural gas, to electrification, and not to provide support for people interested in switching from delivered fuels to natural gas even if it reduces emissions.

“We would not support incentivizing or installing fossil fuel equipment as part of the straw proposal,” she said. “The building decarbonization efforts should focus exactly on that — decarbonization — not committing our state to additional fossil fuel infrastructure.”

Representatives of two geothermal heat pump companies, Dandelion Energy of Mount Kisco, N.Y., and Princeton Air Conditioning of central New Jersey, urged the BPU to emphasize the use of the appliances more, saying they are efficient and can be cost effective.

Heather Deese, director of policy and regulatory affairs at Dandelion Energy, said the widespread installation of pumps in other states has shown how to shape an effective building decarbonization program.

“The overall framing around a three-year program of ‘try and then scale’ is too cautious,” she said. “The focus of the building decarbonization plan in New Jersey should be on quickly establishing and scaling programs. We really don’t have time for a wait-and-see approach.”

The program should prioritize switching customers from natural gas to electric heat pumps, she said, noting that the 15- to 20-year life of a gas furnace means 5 to 7% of natural gas-heated homes would replace their existing furnaces every year.

“We also recommend that the BD program should direct the utilities and state-run programs to include ground-source heat-pump rebates alongside air-source heat-pump rebates as a core part” of the state’s building decarbonization and energy efficiency programs, she said.

Deese and Scott Needham, president of Princeton Air Conditioning, each noted that New York has a program that provides incentives for the installation of heat pumps, and a tax credit benefit as well.

“It’s amazing how little mention in the state of New Jersey geothermal heat-pump systems get,” Needham said.