A4559

An Act concerning the reduction of carbon dioxide emissions, and supplementing Title 26 of the Revised Statutes.

Be It Enacted by the Senate and General Assembly of the State of New Jersey:

1. This act shall be known and may be cited as the “New Jersey Regional Greenhouse Gas Initiative Act.”

2. As used in this act:

“Allowance” means the number of carbon dioxide emissions allowances to be credited to a carbon dioxide budget unit or to the general account of the sponsor of an approved carbon dioxide emissions offset project.

“Carbon dioxide budget unit” means a fossil fuel fired electrical generating unit that serves a generator with a nameplate capacity equal to or greater than 25 megawatts of electrical output.

“Carbon dioxide budget unit compliance obligation account” means the account established by rules and regulations to be adopted by the department pursuant to section 4 of this act wherein carbon dioxide budget units deposit carbon dioxide emissions allowances.

“Carbon dioxide emissions allowance” means a limited authorization by the department for the emission of up to one ton of carbon dioxide.

“Carbon dioxide emissions budget” means the total amount of carbon dioxide emissions allowances allocated by the State on an annual basis.

“Carbon dioxide emissions offset project” means a project that reduces or avoids loading of carbon dioxide and other greenhouse gases in the atmosphere and is demonstrated to qualify as real, additional, verifiable, enforceable and permanent as those terms are defined in rules and regulations to be adopted by the department.

“Carbon dioxide offset project allowance” means a carbon dioxide emissions allowance awarded to the sponsor of a carbon dioxide emissions offset project.

“Department” means the Department of Environmental Protection.

“Fossil fuel fired” means combustion of fossil fuel when the fossil fuel combusted constitutes, or is projected to constitute, more than 50 percent of the annual heat input on a British Thermal Unit basis.

“Generator” means a device that produces electricity and is required to be reported as a generating unit pursuant to the United States Department of Energy Form 860.

“Greenhouse gas” means that term as defined in section 3 of P.L.2007, c.112 (C.26:2C-39).

“Gross electrical generation” means the electrical output in megawatts at the terminals of a generator.

“Nameplate capacity” means the maximum electrical generating output, expressed in megawatts, that a generator can sustain over a specified period of time when not restricted by seasonal or other deratings.

“Regional Greenhouse Gas Initiative” means the cooperative effort to reduce carbon dioxide emissions entered into by the governors of nine states through a Memorandum of Understanding signed on December 20, 2005.

3. a. There is established in the department a carbon dioxide cap-and-trade program for the purpose of reducing carbon dioxide emissions in the State in accordance with the provisions of the “Global Warming Response Act,” P.L.2007, c.112 (C.26:2C-37 et seq.). Any carbon dioxide budget unit shall be subject to the cap-and-trade program, except that a carbon dioxide budget unit shall be exempt from the program if:

1) it is incapable of producing enough energy to generate 25 megawatts or more of electrical output;

2) its sale of electricity to any power distribution system is less than 10 percent of its gross electrical generation on an annual basis. In calculating this percentage, all electricity transmitted to the regional grid over the facilities of a transmission and distribution utility as a result of verifiable conservation and demand-side management initiatives or any emergency mandate of the regional transmission organization or lawful order of a governmental authority shall not be included in the calculation of annual sales; or

3) 50 percent or more of its annual heat input comes from the combustion of fuels other than fossil fuels.

b. In implementing the program established pursuant to this section, the department shall allocate 100 percent of the annual carbon dioxide emissions allowances for public benefit to produce funds for carbon reduction, energy conservation, as well as other projects that benefit electric users.

4. a. No later than January 1, 2009, the department, in consultation with the Board of Public Utilities, shall adopt, pursuant to the “Administrative Procedure Act,” P.L.1968, c.410 (C.52:14B-1 et seq.), any rules and regulations necessary to implement the cap-and-trade program established pursuant to section 3 of this act.

b. The rules and regulations to be adopted by the department pursuant to subsection a. of this section shall include but need not be limited to:

(1) the establishment of a system for the annual assignment, sale, and distribution of carbon dioxide emissions allowances consistent with the carbon dioxide emissions budget;

(2) the establishment of carbon dioxide budget unit compliance obligation accounts;

(3) the establishment of carbon dioxide offset project allowance categories and requirements;

(4) the implementation of a licensing process for carbon dioxide budget units;

(5) the establishment of a carbon dioxide emissions allowance tracking program; and

(6) the management of the carbon dioxide allowance auction developed in coordination with other states and jurisdictions in the Regional Greenhouse Gas Initiative.

5. This act shall take effect immediately.

STATEMENT

This bill would establish in the Department of Environmental Protection (DEP) a carbon dioxide cap-and-trade program for the purpose of reducing carbon dioxide emissions in the State in accordance with the provisions of the “Global Warming Response Act,” P.L.2007, c.112. In implementing the program, the DEP would allocate 100 percent of the annual carbon dioxide emissions allowances for public benefit to produce funds for carbon reduction, energy conservation, as well as other projects that benefit electric users.

The bill would require the DEP, no later than January 1, 2009, to adopt rules and regulations to implement the cap-and-trade program. The rules and regulations would include but need not be limited to (1) the establishment of a system for the annual assignment, sale, and distribution of carbon dioxide emissions allowances consistent with the carbon dioxide emissions budget; (2) the establishment of carbon dioxide budget unit compliance obligation accounts; (3) the establishment of carbon dioxide offset project allowance categories and requirements; (4) the implementation of a licensing process for carbon dioxide budget units; (5) the establishment of a carbon dioxide emissions allowance tracking program; and (6) the management of the carbon dioxide allowance auction developed in coordination with other states and jurisdictions in the Regional Greenhouse Gas Initiative.

New Jersey recently enacted the “Global Warming Response Act,” which establishes that by January 1, 2020, the level of greenhouse gas emissions in the State shall be reduced to the 1990 level of emissions or below, and that by January 1, 2050, the greenhouse gas emissions shall not exceed 80 percent of the 2006 level of emissions. The act further requires the DEP to establish, on or before January 1, 2009, a greenhouse gas emissions monitoring and reporting program to monitor and report on Statewide greenhouse gas emissions levels.