New Jersey’s Plan for Investing RGGI Funds Intends to Put Equity at the Forefront

On March 11th, New Jersey participated in their first Regional Greenhouse Gas Initiative (RGGI) auction after formally rejoining the Northeast cap-and-invest program last year. This auction generated more than $20 million in funding for the state, and last Friday, New Jersey Governor Phil Murphy released a Strategic Funding Plan detailing the allocation of that revenue, which highlights investments in mitigation efforts, environmental justice communities, and clean energy opportunities. 

The Plan exemplifies how investments in green infrastructure can boost the economy — something that has received a lot of attention in recent weeks as we envision how responses to the coronavirus crisis can also serve long-term benefits to the climate crisis. It also critically shows that green stimulus plans can take into account the needs of disadvantaged communities while doing so. Regional carbon pricing programs like RGGI are an important way for states to be able to fund these much-needed  investments. 

Remind me — what is RGGI again? 

RGGI is a regional cap-and-invest program that regulates emissions strictly in the electric sector throughout ten Northeastern and Mid-Atlantic states. Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey New York, Rhode Island, and Vermont all currently participate in the program, with Virginia set to join starting in 2021.

Pennsylvania is also considering joining the RGGI, and despite the coronavirus pandemic, state agencies are working right now to create a draft of cap-and-trade regulations, aligned with RGGI, for the state to adopt. 

Read more about RGGI and other cap-and-invest initiatives in the US on our regional initiatives page.

Although New Jersey was a founding member of RGGI when it began in 2009, Republican Governor Chris Christie withdrew the state from the program in 2012 in a largely political move to appease the Republican party. Not only did leaving the program lose the state $343 million in revenue between 2012 and 2018, it also caused New Jersey ratepayers to lose money when they were denied the financial returns they had received through RGGI originally. 

When Gov. Murphy won his gubernatorial election in 2018, he began to take steps to bring New Jersey back into the program, understanding the massive benefits RGGI can provide for both the economy and the environment. The state was formally able to join with the passage of the state’s Global Warming Response Act in 2019.

According to that bill, New Jersey must allocate at least 60% of auction proceeds toward qualified mitigation projects determined by the Economic Development Authority, 20% by the Department of Environmental Protection, and the remaining 20% by the Board of Public Utilities, splitting most of the revenue allocation throughout different state departments.

What exactly does the Strategic Funding Plan do? 

The Strategic Funding Plan directs the New Jersey state agencies that are in charge of allocating RGGI revenue where to invest the funds, outlining a plan to do so from 2020 until 2022. Gov. Murphy created this plan with a target in mind — to reach 100% clean energy and to reduce all heat-trapping gas emissions 80% below 2006 levels by 2050.

There are four major initiatives that the money is directed towards, including: 

Catalyzing Clean, Equitable Transportation

In New Jersey, transportation accounts for 42% of total emissions, more than double the second highest emitting sector, the electrictric sector, which accounts for 19% of the state’s emissions. Modeling done by the state has found that in order to reach their emissions reduction targets, the majority of transportation in the state will have to be electric by 2050. 

These emissions disproportionately affect environmental justice communities. The Plan takes this into account, acknowledging that these communities rely more heavily on public transportation, resulting in polluting bus routes located in a higher capacity in these areas. Environmental justice neighborhoods are also located near New Jersey’s ports and airports, which generate additional pollution from cargo equipment, product-carrying trucks, and airplanes. 

To address this, the New Jersey Plan focuses on electrifying the transportation sector, especially public transportation vehicles, which could eliminate some of the inequalities that result in proximity to heavy transportation pollution. The Economic Development Authority is committed to dedicating 75-80% of their funding allocation towards this initiative, with an executive directive to focus their efforts on benefiting environmental justice communities. The Department of Environmental Protection will dedicate 10% of their revenue allocation towards this. 

Similarly, the Board of Public Utilities is planning on creating programming for low- and moderate-income communities, ensuring that they are benefiting from this initiative by subsidizing electric vehicles and charging infrastructure in their neighborhoods. 

Promoting Blue Carbon in Coastal Habitats

Blue Carbon — carbon stored in coastal marine systems such as salt marshes, tidal wetlands, and seagrass bed — stores much larger amounts of carbon than land forests. As a coastal state, New Jersey has massive blue carbon capacity; the state currently has 191,178 acres of blue carbon. Modeling has suggested that by 2050, 9-19% of these acres will be destroyed due to sea level rise. 

This second initiative in the Plan dedicates some of the RGGI funding toward protecting these ecosystems, which will be necessary to meet emissions reduction targets.

Enhancing Forests and Urban Forests

Currently, New Jersey forests sequester 8.1 million metric tons of carbon dioxide each year, which is about 8% of New Jersey’s total heat-trapping gas emissions. In order to reach emissions reduction targets, modeling has found that this level has to be either maintained or increased. Therefore, this initiative allocates some RGGI funding towards protecting forests and promoting carbon sequestration through an already existing Forest Stewardship Plan, and by funding third party grants towards projects that preserve forests and sponsor the creation of innovative urban forests.

Creating a New Jersey Green Bank

The last initiative in the Strategic Funding Plan is the creation of a Green Bank, which will help to fund clean energy projects, securing grants and low-cost loans for businesses poised to enter the clean energy market.  

The Green Bank is directed by the Governor’s plan to focus on equity, specifically by “improving capital access for those who have traditionally had more difficulty in accessing the benefits of participation in the green economy.” The bank is also required to give priority to projects that create jobs and provide training in low-income communities, and give environmental justice communities priority in the hiring process.

Although energy does not produce as much emissions as transportation in New Jersey, the sector still accounts for about 17% of the state’s emissions, and is essential to address in order to meet targets. 

The Economic Development Authority is instructed to allocate 20-25% of its RGGI revenue towards this initiative, and will help to spur a transition in the private sector to move towards clean energy projects in an economically feasible way.

A focus on equity in the midst of injustice

In the wake of the coronavirus pandemic, there has been a lot of evidence regarding the inequitable nature of crises. Data proves that low-income communities and communities of color have been the hardest hit by COVID-19, and in many ways, the climate crisis threatens these same communities. 

This is especially true considering that climate change is a massive public health risk, and experts expect that public health outbreaks similar to the coronavirus will be more and more frequent as the climate crisis worsens, harming disadvantaged communities the most.

Governor Murphy recognizes this, and his understanding of the inequitable impacts of crises is evident throughout the Strategic Funding Plan. Many of the initiatives in the Plan not only have the directive to reduce emissions, but are ordered to do so in a way that reduces inequalities in communities that face the most severe threats from climate change. 

“The RGGI Strategic Funding Plan demonstrates how our state agencies collaborate to help create a brighter future for all New Jerseyans, especially our environmental justice communities,” says the Governor in a press release. “As our State responds to COVID-19, we see up close the vital link between public health and economic development, the same relationship that drives our Administration’s efforts to reduce health risks from pollution and climate change through initiatives that also grow our clean energy economy. As we work to ensure that our economy recovers from this pandemic, the investments made under this Plan will promote health, equity, and environmental protection, helping us build a stronger and fairer New Jersey.”

Read our full report on creating a just transition through carbon pricing here

Carbon pollution pricing — an economic boost 

Gov. Murphy’s plan, and New Jersey’s decision to rejoin RGGI, is a great example to other states and U.S. regions for how beneficial carbon pricing can be, not only for the climate, but also for state economies. 

This is essential now, as our economy has been crushed by the COVID-19 pandemic, and lawmakers are considering different plans to re-stimulate the economy once we are able to return to work. New Jersey’s Plan proves that investments in green technology are one way to both revive the economy and simultaneously reduce emissions. 

“In the same way focusing on fairness makes New Jersey’s economy stronger, protecting our environment can be a path to increased economic growth. Clean energy and sustainability will be particularly important as engines powering New Jersey’s recovery from the unprecedented challenges posed by COVID-19,’ says New Jersey Economic Development Authority Chief Executive Officer Tim Sullivan, adding, ‘The RGGI Strategic Funding Plan incorporates a variety of strategies to not only preserve our environment for future generations but also spur innovation, job creation, and economic growth.”

Not only did New Jersey receive $20 million in revenue in just one quarter, but the state is able to use that funding to reinvest in the economy. Particularly, the Plan’s focus on clean energy initiatives will help to create skilled, well-paying jobs and reduce unemployment once it is safe to return to work. This will also help to boost the economy by allowing New Jersey to become more self-sufficient in its energy usage, and by catalyzing innovation in new sectors. 

“The projects spurred by this plan will create opportunities and job growth in green technologies that will help New Jersey emerge stronger from the economic impacts of the current COVID-19 crisis,” says New Jersey Department of Environmental Protection Commissioner Catherine R. McCabe. 

For other states that are considering carbon pricing, looking at what New Jersey will be able to do by rejoining RGGI makes a very compelling argument to adopt similar policies. When designed appropriately, carbon pricing can be an efficient way to reduce emissions, protect disadvantaged communities, and revitalize economies all at once. 

Featured Image: Photo by Peter Lloyd on Unsplash