Chemicals, Energy, Sustainability

NJ Proposes Significant CO2 Emissions Reductions

In response to measures to meet New Jersey Governor Phil Murphy’s climate change goals that were outlined in Executive Order (EO) 100, on December 6, 2021, the New Jersey Department of Environmental Protection (NJDEP) published a proposed new rule regarding the control and prohibition of carbon dioxide (CO2) emissions.

Murphy’s initiative, known as the New Jersey—Protecting Against Climate Threats (NJ PACT), previously called for an 80% reduction in the state’s greenhouse gas (GHG) emissions by 2050. However, on November 10, 2021, Murphy issued EO 274, which calls for 50% reduced GHG emissions below 2006 levels by 2030.

The NJPED’s proposed new rule primarily focuses on emissions from stationary sources and is divided into three areas of regulations.

Continued Lowering Of Co2 Emissions Limits From EGUs

The proposed rule sets CO2 emissions limits that continue to lower over time for large fossil fuel-fired electric generating units (EGUs). These are defined as EGUs with a nameplate capacity equal to or greater than 25-megawatt electric (MWe).

There are three proposed tiers existing EGUs must meet:

  • With a proposed compliance date of January 1, 2024, the rule sets the first-tier emissions limit at 1,700 pounds (lb) of CO2 per megawatt hour (MWh) of the EGU’s gross energy output (1,700 lb/MWh).
  • The second-tier compliance date of January 1, 2027, sets an emissions limit of 1,300 lb/MWh.
  • The final tier sets the emissions limit at 1,000 lb/MWh, with a proposed compliance date of 2035.

“The deadlines for compliance with each tier are not absolute,” states a Lexology article by the Environmental Law Group at Riker Danzig Scherer Hyland & Perretti LLP. “The proposed rule allows extensions where the New Jersey Board of Utilities, PJM, or NYISO, the grid operator in New York State that fulfills the same role as PJM in New Jersey, designates an EGU as necessary for reliable provision of electricity, or if the EGU is obligated to provide power under a power purchase agreement that was entered into before 2002.

“The proposed rule also imposes emissions limits for new EGUs. Where the new EGU has a nameplate capacity greater than or equal to 25 MWe, its emissions limit for CO2 would be 860 lb/MWh. NJDEP states in the rule proposal that the most efficient natural gas fired combined cycle units installed in New Jersey after 2010 could satisfy this emissions limit. For a smaller new EGU with a nameplate capacity less than 25 MWe, the proposed rule imposes a CO2 emissions limit if the unit is located at an ‘EGU Facility,’ which is a facility with more than one EGU where the aggregate capacity of all EGUs at the facility exceeds 25 MWe. These EGUs will be required to meet a ‘case-specific’ CO2 emissions limit which must be based on technology ‘that will provide the greatest emission reductions that are technologically and economically feasible’; in addition, these EGUs cannot derive more than 50% of their heat input from coal or fuel oil, unless the EGU meets the emission standard for larger new EGUs, i.e., 860 lb./MWh.”

Replacing Fossil Fuel-Fired Boilers With Electric Units

The proposed rule presumes new large commercial and industrial boilers with a maximum gross heat input rating equal to or greater than 1 million British thermal units (BTU) per hour (MMBTU/hr) and less than 5 MMBTU/hr installed after 2025 will be electric rather than fired by natural gas.

These types of boilers are typically utilized in large manufacturing facilities, hospitals, schools, office buildings, and apartment buildings.

After this date, installation of new fossil fuel-fired boilers in this size range will not be allowed unless (1) an electric boiler is “technically infeasible” or (2) an electric boiler is infeasible for the particular facility because “any interruption in boiler operations caused by an electrical outage could jeopardize public health, life, or safety.”

“The language of the rule proposal suggests a narrow exemption, but it is also open to a broader interpretation that could result in more exemptions,” the Riker Danzig article says. “NJDEP makes clear in the proposed rule that existing permits, including general permits, for such equipment and renewals of those permits will not be affected by the proposed rule, so that the replacement of functioning fossil fuel fired boilers will not be required. Where the cost of maintaining an old boiler is less than the costs associated with a new, electric boiler, the proposed rule likely will lock in older infrastructure for some period, but eventually it will lead to the electrification of non-residential heating at the end of existing boilers’ life cycle.

“Finally, the proposed rule imposes new reporting requirements on approximately 100 ‘boiler fleet’ facilities, which have ten or more fossil fuel fired boilers, at least one of which has a heat input rating greater than one MMBTU/hr and at least one of which has a heat input rating less than five MMBTU/hr. Beginning in 2024, operators of boiler fleets must submit annual emissions statements to include, among other information, the potential to emit and actual emissions of CO2 from each boiler.”

Goodbye To Fuel Oils No. 4 And 6

According to the proposed rule, No. 4 and No. 6 fuel oils “have two of the highest CO2 emissions factors among all fuel oils.”

“Given the high amount of CO2 that No. 4 and No. 6 fuel oils emit when burned, as well as the widespread availability of alternative fuels with a lower CO2 emissions factor, proposed N.J.A.C. 7:27F-3.2 bans the storage, offering for sale, sale, delivery, and exchange in trade, for use in New Jersey, of No. 4 and No. 6 fuel oils on or after the operative date of this rulemaking,” states the proposed rule. “However, the proposed rules include a grace period to allow facilities that stored No. 4 or No. 6 fuel oils prior to the operative date of this rulemaking to use, sell, or otherwise dispose of that fuel oil within two years after the operative date of this rulemaking. Based on the available sales data from the EIA and the limited number of sources listing this type of fuel oil in their permits, the Department anticipates that any No. 4 or No. 6 fuel oil in storage at the time of the operative date of this rulemaking will be minimal.”

Industry Takeaway

The NJDEP will hold a virtual public meeting on the proposed rule on February 1, 2022, and comments on the rulemaking can be made through March 6, 2022.

“Those considering a court challenge to the proposed rule would be well-advised to submit public comments, as New Jersey courts typically disfavor challenges mounted by parties who did not participate in the rulemaking process,” the Riker Danzig article adds. “Following the close of the comment period, NJDEP will publish its responses to the public’s comments and any modifications it made to the proposed rule and promulgate the final rule. Assuming the proposed rule survives any court challenges, operators of EGUs and large boilers and users of the soon-to-be proscribed heavy fuel oils now have several years to prepare for the operational changes that will be mandated by this NJ PACT rule.”