New Jersey to Devote Cap-and-Trade Revenue to Electrifying Transportation

April 21, 2020
New Jersey plans to devote about three-quarters of its revenue from cap and trade funds to electrifying the state’s transportation. This comes as industry observers note growing opportunity for microgrids from transportation electrification.

New Jersey plans to devote about three-quarters of its revenue from the Regional Greenhouse Gas Initiative (RGGI) to electrifying transportation, a sector opening up opportunity for microgrids.

The state this year rejoined RGGI, a 10-state cap-and-trade program for the power sector. By participating in RGGI’s quarterly greenhouse gas allowance auctions, New Jersey expects to earn $240 million over three years.

New Jersey intends to spend 75% of its RGGI revenue on transportation, 15% on a “green bank” and 10% on bolstering its coastal and forest habitats, according to a plan released April 17.

Transportation electrification may open up opportunities for microgrid developers, according to industry observers. Residential customers with rooftop solar, for example, may want to create a small microgrid when they install electric vehicle charging equipment in their homes. Also, it may make sense to create microgrids for remote EV charging complexes instead of building distribution facilities to provide them with power.

In part, New Jersey’s plan for its RGGI revenue is designed to support its aggressive EV goals. Legislation signed in January calls for the state to have 330,000 registered EVs by 2025 and 2 million by 2040. It also directs state agencies to support 400 fast charging stations at 200 locations along major highways and communities by 2025.

By 2040, 85% of light-duty vehicles sold or leased must be electric, up from 1.5% today.

The transportation sector accounts for 42% of New Jersey’s greenhouse gas emissions, making it the state’s top emissions source.

Agencies divvy up transportation sector

The New Jersey Economic Development Authority will dedicate about three-quarters of its RGGI funding to support industrial, commercial and institutional entities that electrify their medium- and heavy-duty fleets and build out charging infrastructure, according to the state’s plan.

“Programs are expected to use a cost-effective combination of grants and loans to fund actual vehicle purchases as well as the buildout of the high-capacity, fast-charging vehicle charging infrastructure that most of these establishments will require,” the state plan said.

The New Jersey Board of Public Utilities will focus its transportation programs on low- and moderate-income households, especially in environmental justice communities.

The board’s programs will complement existing state efforts to set up charging infrastructure around the state, including in urban areas and at multi-unit dwellings, according to the plan. 

The New Jersey Department of Environmental Protection intends to use its RGGI funds to bolster strategies introduced under the settlement agreement with Volkswagen, which skirted air emission testing. The department aims to help replace diesel-fueled medium- and heavy-duty vehicles, such as garbage trucks, and non-road equipment with those that are electric-powered in environmental justice communities.

Green bank to finance innovative projects

In a possible funding source for microgrid projects, New Jersey plans to create a green bank that could offer low-cost financing for clean energy projects in partnership with private lenders, according to the plan.

The bank’s investments will typically focus on greenhouses gas emissions reduction projects, such as clean energy generation, energy storage, energy efficiency and power management, the plan said. 

“Financing these projects will accelerate the deployment of clean energy across New Jersey and drive the evolution of the grid and energy infrastructure to be more flexible, resilient, and cost-effective,” the plan said.

Join us at the Microgrid Knowledge Virtual Conference for a special, free session on electrifying transportation June 2, 3 pm. See full agenda and free registration details here.

About the Author

Ethan Howland


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