New Jersey is looking to broaden the portfolio on which it will spend hundreds of millions of dollars from the Regional Greenhouse Gas Initiative (RGGI) to include electrifying multifamily housing and accelerating investment in wind and solar infrastructure.
The state’s draft investment plan for 2026 to 2028 — known as the “Auction Proceeds Scoping Document” — also calls for investment to boost energy storage capacity and to provide incentives for development of the clean energy supply chain and manufacturing facilities.
The proposal outlines how the state, which has received a total of $922.9 million for two funding plans since it rejoined RGGI in 2020, could use its third tranche of funds. The final plan will be shaped by stakeholder input from four public hearings and other comments. The first hearing took place Aug. 21. Three more are scheduled.
Under the RGGI system, which includes New Jersey and 10 other states, the coalition sets a steadily declining regional cap on carbon dioxide emissions. Certain plants that exceed the cap must pay for a “RGGI CO2 allowance” for every short ton of CO2 emitted, and the proceeds are distributed among the participating states for use in combating climate change emissions.
New Jersey’s two earlier funding plans focused on projects to cut emissions in the transportation sector, the largest emitting category with 34% of the state’s emissions, and building electrification. While electricity generation is the second-largest category, with 17%, the three components of the building sector — residential, commercial and industrial buildings — account for 32% of the state’s emissions.
Innovation Sought
The new elements in the latest plan seek to cut that pollution, Sean Sonnemann, manager of clean energy for the New Jersey Economic Development Authority (EDA), said at the first hearing to gather input on the plan. The agency administers about 60% of the RGGI funds, while the New Jersey Board of Public Utilities (BPU) and Department of Environmental Protection each administer 20% of the funds.
“We are considering supporting multifamily buildings in the state, especially those that may not be covered by other state programs, such as corporate or cooperatively owned buildings, senior housing and public housing,” he said.
The agency also is considering “other ways to encourage the development of zero-energy new construction buildings, rather than continue with business as usual, older technologies that may be more damaging to the environment,” he said.
The BPU, meanwhile, intends to support programs such as commercial-scale geothermal projects. It also plans to support income-qualified customers who use existing energy efficiency programs to implement additional decarbonization efforts such as heat pumps, he said.
New Jersey’s emphasis on using RGGI funds to address transportation emissions continues as a key element of the third plan. The plan says the state’s number of non-private charging stations, which now stands at 4,400, increased 30 to 40% between 2023 and 2024. It proposes for the first time to fund the installation of EV workplace charging stations and the creation of “charging depots” for medium- and heavy-duty vehicles.
Other new elements include providing support for “managed charging programs and other capacity limiting measures” that help cut ratepayer bills by reducing energy use in peak hours. The plan also looks to “promote electric micro-transit and community mobility, public-serving vehicles and related infrastructure.”
Alternative Energy
The public airing of the plan drew a handful of speakers. One asked if the state planned to look beyond “wind, solar and batteries” to “more innovative clean energy technologies — for example, “waste heat to power.” He noted that the federal government provides a tax credit to support such projects, but the state does not.
Sonnemann, of the EDA, said the state wants to dedicate funds for non-traditional “emerging renewable and clean technologies” but has not yet put together a list of what the endorsed technologies might be. He said the intent can be found in a section of the plan that says the state could invest in technologies such as “fusion, tidal.” The section also calls for investment to create “innovation hubs and related clean energy technology accelerators” and to strengthen the clean energy supply chain.
“New Jersey has the potential to be a leader and clean energy technology exporter, by developing innovative technologies” that could be used to “decarbonize other economies across the globe,” the plan says.
Another speaker, Matt Polsky, said that given the change in attitude toward clean energy in the federal government, he felt New Jersey’s plan was insufficient.
“They have gone from being a partner to actually part of the problem,” he said of the current administration. “And therefore you really, really need to be thinking out of the box a lot more than I’ve ever seen you do over the decades.”
‘Leakage’ Concerns
The plan comes amid criticism that RGGI, having successfully pushed New Jersey to reduce or eliminate emissions from fossil fuel generators, may be hampering the state as it searches for ways to address the expected significant shortfall of generation.
Data center expansion amid fossil fuel generator retirements is exacerbated by the slow pace that new energy sources are coming online. Emissions restrictions imposed by RGGI may limit the development of some of those new sources.
Liam Baker, senior vice president for regulatory affairs at Alpha Generation, a Connecticut-based electric generation company, expressed concern at an Aug. 5 resource adequacy conference held by the BPU that while RGGI had been “very successful” at cutting emissions, it now is “increasing PJM-wide emissions by millions of tons while costing New Jersey ratepayers hundreds of millions of dollars annually.”
Baker and other critics, among them Fred DeSanti, executive director of the New Jersey Solar Energy Coalition, argue that the RGGI system causes “leakage.”
“Leakage means it’s cheaper to operate coal-fired generation in Pennsylvania and export it to New Jersey,” Baker said at the Aug. 5 conference. “It’s cheaper to do that than operate our clean in-state combined-cycle fleet.”
