NJDEP Proposes Rules for the Reduction of CO2 Emissions – Update from Manko Gold Katcher Fox

January 6, 2022

Michael Dillon, Esq. and Michael Nines, P.E., LEED AP, Technical Consultant

MGKF Special Alert

On December 6, 2021, the New Jersey Department of Environmental Protection (“NJDEP” or “Department”) published proposed new rules and amendments to the Department’s Air Pollution Control Regulations at N.J.A.C. Chapter 7:27 for the control and prohibition of carbon dioxide (CO2) emissions (the “Proposed Rule”).  The Proposed Rule would reduce CO2 emissions from: (1) certain fossil fuel-fired electric generating units (EGUs) through the application of output-based emission limits, (2) certain commercial and industrial fossil fuel-fired boilers based upon an additional permit requirement, and (3) No. 4 and No. 6 fuel oil by banning its sale and use.  The Proposed Rule also would amend certain general provisions of the Department’s Air Pollution Control Regulations that could have far-reaching implications for all facilities that emit CO2, as further discussed below.

The Department developed the Proposed Rule as part of its implementation of relevant provisions of the Global Warming Response Act (GWRA), N.J.S.A. 26:2C-37 et seq., which requires New Jersey to reduce greenhouse gas (GHG) emissions to 80 percent of 2006 levels by 2050, the so-called “80×50 goal.”  The Department, however, has cautioned that the Proposed Rule not be viewed as the definitive step for reducing GHG emissions in accordance with the GRWA and has noted that NJDEP will be proposing additional rulemakings aimed at other stationary and mobile sources of GHG emissions.

The Department has proposed to add new Chapter N.J.A.C. 7:27F to the Department’s Air Pollution Control regulations to address CO2 emissions from the following categories of sources:  

Existing and New EGUs
New and existing EGUs with a nameplate capacity greater than or equal to 25 megawatt electric (MWe) are subject to the Proposed Rule’s CO2 emission limits.  EGUs are defined under the proposal as “a combustion or steam generating source used for generating electricity that delivers all or part of its power to the electric power distribution grid for commercial sale.”  Existing EGUs with 25 MWe nameplate capacity that supply 10 percent or more of their annual gross electric output to the grid are subject to three tiers of emission standards that become increasingly more stringent over time, as follows: 

  • Tier 1 Standards – effective January 1, 2024 and require existing EGUs to meet a CO2 output-based limit of 1700 lbs. CO2/MWh
  • Tier 2 Standards – effective January 1, 2027 and require existing EGUs to meet CO2 output-based limit of 1300 lbs. CO2/MWh
  • Tier 3 Standards – effective January 1, 2035 and require existing EGUs to meet CO2 output-based limit of 1000 lbs. CO2/MWh

New EGUs with 25 MWe nameplate capacity that supply 10 percent or more of their annual gross electric output to the grid will be required to meet a CO2 output-based limit of 860 lbs. CO2/MWh.

Additionally, new EGUs that have a nameplate capacity below 25 MWe will be subject to case-specific CO2 emission limits if they are located at an “EGU Facility,” a term defined in the Proposed Rule as a facility with one or more fossil-fuel fired EGUs with an aggregate nameplate capacity of 25 MWe or greater.

Commercial and Industrial Boilers
The Proposed Rule would add a series of requirements for facilities that are seeking to permit new fossil-fuel fired boilers with a maximum gross heat input rating equal to or greater than 1 MMBTU/hr and less than 5 MMBTU/hr.  Beginning on January 1, 2025, an applicant seeking a permit for such boilers would be required to demonstrate that a “fossil fuel free heating mechanism” is either technically infeasible or infeasible because of potential impacts to public health, life and safety.  Absent such a showing, the Department will deny the application.  The term “fossil fuel free heating mechanism” is defined as “any device that does not combust a fossil fuel to produce hot water or steam and does not cause the emission of an air contaminant at the site of the device” and NJDEP’s stated intent is to discourage the use of fossil-fuel fired boilers in favor of electric boilers or other technologies.

Examples of technical infeasibility in the Proposed Rule are infrastructure constraints that could jeopardize facility operations.  Examples of infeasibility based on human health or safety are facilities such as hospitals and first responder facilities.  Given the widespread use of fossil fuel fired boilers at residential, commercial, and educational facilities throughout the state, a wide range of industries are expected to be impacted by the Proposed Rule.

In addition, the Proposed Rule would impose an annual reporting requirement for any facility with a “boiler fleet,” defined as “a facility with 10 or more fossil fuel-fired boilers” where at least one of the boilers has a maximum gross heat input of equal to or greater than one MMBTU/hr.  The first boiler fleet report would be due on April 15, 2024 and annually thereafter.  Boiler fleet reports must include information about each boiler in the fleet including the potential CO2 emissions and actual CO2 emissions using the quantification methodology in the Proposed Rule.

No. 4 & No. 6 Fuel Oil
The Proposed Rule would prohibit the use, storage, sale, delivery, or trade of No. 4 fuel oil or No. 6 fuel oil within two years after the effective date of the rules.  The only exception is for ocean-going vessels.  The Department notes that as of 2018 there were no documented sales of No. 4 fuel oil, while only 75,000 gallons of No. 6 fuel oil were sold during that same year.  Although No. 4 and No. 6 fuel oil are not in widespread use throughout the state, facilities that are currently storing or intend to use such fuels should be mindful of the two-year phase out period in the Proposed Rule.

In addition to the new rules at N.J.A.C. 7:27F, the Department is proposing to amend certain provisions of NJDEP’s general Air Pollution Control Regulations, including through the addition of the definitions of “air contaminant” and “distillates of air” to N.J.A.C. 7:27-1.4, which the Department states is intended to make clear that CO2 is not considered a distillate of air.  NJDEP also has proposed to delete N.J.A.C. 7:27-1.36(b), which states that a facility’s CO2 emissions (actual or potential) are not a basis for, among other things, a requirement to include emission information in a permit application, a permit limitation, or a fee in a permit.  According to the Department, the combined effect of the removal of N.J.A.C. 7:27-1.36(b) and the addition of the definitions of “air contaminant” and “distillates of air” to N.J.A.C. 7:27-1.4 is to classify CO2 as an air contaminant that is subject to regulation.

Although the Proposed Rule is primarily intended to address CO2 emissions from the sources discussed above, it is not clear to what extent the proposed changes to the Department’s general Air Pollution Control Regulations, in particular the deletion of N.J.A.C. 7:27-1.36(b), has the potential to lead to restrictions on CO2 emissions from a much wider range of facility’s throughout the state.

NJDEP has announced that it will hold a virtual public hearing on the Proposed Rule on February 1, 2022.  Public comments are due to NJDEP no later than March 6, 2022.  For additional information please contact Michael Dillon or MGKF Technical Consultant Michael Nines, P.E., LEED AP.