On 17 June 2019 the New Jersey Department of Environmental Protection (NJ DEP) adopted final regulations to establish an emissions trading system (ETS) in the state and rejoin the Regional Greenhouse Gas Initiative (RGGI) in January 2020.

Adoption of the CO2 Budget Trading Program regulation and the Global Warming Solutions Fund rule comes after the release of final draft regulations in December 2018, a public comment period, a public meeting in January and February 2019, and the final review by the DEP. While the CO2 Budget Trading Program contains the design elements of New Jersey’s ETS, the Global Warming Solutions Fund establishes details on the distribution of auction revenue raised under RGGI.

Both regulations are based on the 2018 final drafts that already contained design elements consistent with those of the RGGI Model Rule, a prerequisite to join RGGI. The regulation establishes an emissions cap of 18 million short tons CO2e for 2020 for the power sector only, with an annual reduction factor of 3%. Like most RGGI states, New Jersey’s ETS will feature a supply-curbing emissions containment reserve (ECR) from 2021, a price-managing cost containment reserve (CCR), and an allowance bank adjustment between 2021 and 2025. The only changes between the final drafts and the versions approved by DEP concern further minor alignments with RGGI Model Rule language.

New Jersey’s cap-and-trade program is one component of the state’s Energy Master Plan (EMP) to reduce greenhouse gas emissions 80% below 2006 levels by 2050 as foreseen under the state’s Global Warming Response Act.

New Jersey was a founding member of RGGI but in 2011 left the program and scrapped its ETS under former Governor Chris Christie. Current Governor Phil Murphy issued an executive order after taking office in January 2018 to begin the process of rejoining RGGI.

New Jersey’s first auction as a rejoined member will be March 2020.