New Jersey’s Aggressive Efforts Related to Climate Change Will Have Significant Effects on Businesses in the State
In the coming months and years, governments are likely to take some action on the issue of climate change, and this will likely have profound impacts on business in all sectors of the economy.
New Jersey borders the Atlantic Ocean to the east and has numerous marshlands and wetlands throughout the state. That makes the state especially vulnerable to sea level rise, one of the potential consequences of climate change. The federal government has been relatively quiet regarding any national policy on climate change, and New Jersey has become one of the foremost states in the country to enact state-level regulations to address the issue.
New Jersey’s Previous Efforts
New Jersey has a history of creating ambitious goals and enacting aggressive policies related to climate change and has prided itself on this fact. In 2007, then-Governor Jon Corzine signed the Global Warming Response Act, which requires the state to reduce greenhouse gas emissions to 80 percent below 2006 levels by the year 2050. Recently, a bill was introduced in the Assembly that would permit municipalities to deny permits for any new construction that would have a natural-gas connection.
Governor Phil Murphy has continued this pattern in his two years in office. In fact, one of his first acts was to return the state to the Regional Greenhouse Gas Initiative, a multistate compact created to cap and reduce carbon emissions from power plants.
In May 2018, Governor Murphy signed Executive Order No. 28, which required the President of the Board of Public Utilities, along with the heads of other state agencies, to form the Energy Master Plan Committee (the “Committee”). The Committee was tasked with developing the 2019 Energy Master Plan (the “Plan”), one of the goals of which is to convert the state’s energy production profile to 100 percent clean energy by 2050.
Executive Order 100 and PACT
The Plan was unveiled earlier this year, and with it, Governor Murphy issued Executive Order 100. The goal of this Order is to implement changes to help the state achieve the emissions-reduction and clean-energy goals set by the Global Warming Response Act and the Plan.
Executive Order 100 requires the Department of Environmental Protection (“DEP”) to undertake drastic regulatory reforms, entitled Protecting Against Climate Threats (“PACT”). These reforms include the requirement that DEP:
Integrate climate change considerations, such as sea level rise, into its regulatory and permitting programs, including but not limited to, land use permitting, water supply, stormwater and wastewater permitting and planning, air quality, and solid waste and site remediation permitting.
The Order also requires DEP to identify, from time to time, all of its regulations it plans to update to integrate climate-change considerations. The first of these updates was due 30 days from the date of the Order (or on February 26, 2020).
The 2019 Master Plan itself defines the goal of 100 percent clean energy by 2050 as “100% carbon-neutral electricity generation and maximum electrification of the transportation and building sectors.” To achieve this goal, the Plan sets out strategies to, among other things, reduce consumption and emissions, improve efficiency and conservation, and expand renewables.
In short, the state has set an ambitious goal to fundamentally change the way that the energy is produced, transported, and used in an effort to reduce the potential effects of climate change. These changes will have a wide array of effects throughout the state.
What This Means for Businesses in New Jersey
The Plan and PACT reforms are poised to affect a variety of sectors in the state economy. Entities seeking permitting for virtually any type of building, renovation, or remediation project will have to start taking climate change into consideration for its projects, as the state agencies in charge of evaluating permit applications will no doubt be required to judge the applications in part on their climate-change effects. The permitting process for these projects can already be long, and the addition of climate change as a consideration will no doubt make the process longer. Businesses should take this into account now so they have the systems in place to deal with these impending changes.
The transportation and building industries will also be greatly affected, as they will be forced to adopt carbon-neutral means of electricity generation. But the industry that stands to be affected the most is the energy sector. As New Jersey attempts to move toward its goal of 100 percent carbon-neutral energy generation, the energy sector will have to adopt new practices across the board, including expanding reliance on renewable energy and increasing energy efficiency and storage capacity.
While these changes will no doubt adversely affect certain businesses, they also create opportunities for businesses in the renewable energy sector. The state’s energy needs will increasingly rely on other sources, such as wind and solar. These sectors of the economy will have to expand greatly to meet this need. Businesses planning to enter this sector or expand their existing presence there should consider taking those steps soon, as the state’s ambitious goals will likely cause the industry to expand.
Regardless of how you view climate change, any government action will have a profound effect on many industries. This is especially true in New Jersey. For that reason, businesses should act now in response to changes in the regulatory environment and to new opportunities to expand business operations.