May 11, 2021
Climate Change Initiatives Result in Big Impact to Business Operations
What was once a political and perhaps esoteric issue for many businesses, climate change initiatives in 2021 are now a mainstream topic that most companies are integrating into their business operations and budgets, which will have substantial financial impacts. Numerous banks are now evaluating the financial impact of climate change initiatives on loans, investment firms are analyzing the impact on the stock market, and auto companies are ramping up development of net-zero emission cars and trucks to reduce their contributions to greenhouse gas emissions.
Businesses are being forced to break from the traditional mold and address climate change and even embrace new opportunities. Leading the charge, Governor Phil Murphy announced a $100 million investment to clean, equitable transportation projects to improve air quality and achieve 100 percent clean energy by 2050. Governor Murphy also established the Office of Climate Action and the Green Economy, which will implement New Jersey’s climate change initiatives to ensure a clean energy future while prioritizing equity and environmental justice.
In formulating its environmental strategies, the New Jersey Department of Environmental Protection (“NJDEP”) is implementing the Protecting Against Climate Threats initiative (“NJ PACT”), drafting rules on: 1) flood control measures; 2) electric generating units; 3) commercial and industrial boilers; 4) liquid heavy fuels; 5) medium- and heavy-duty vehicles; and 6) cargo equipment. The NJDEP will be holding a virtual meeting on May 20, 2021, to hear public testimony regarding these proposed rules.
As part of the NJ PACT, the NJDEP seeks to amend the Resilient Environmental and Landscaped rule to address rises in sea levels, severe flooding and extreme weather. With this comes the establishment of the “Inundation Risk Zone,” which requires that the construction of new buildings in flood-risk zones be elevated to the new Climate Adjusted Flood Elevation (“CAFE”) plus one foot. Importantly, NJDEP seeks to adjust the FEMA 100-year floodplain, with a CAFE expanding tidal area by five feet to FEMA’s 100-year flood elevation. Moreover, NJDEP will amend its regulations to mirror the National Flood Insurance Program (“NFIP”), which will prevent the issuance of permits if they violate the minimum NFIP standards.
Governor Murphy also seeks to achieve 100% carbon neutral power generation by 2050, and proposes rules for Stationary Air Sources, which will limit existing and new fossil-fuel electric generation units. Moreover, the proposed rules for Mobile Air Sources seek to achieve an 80% reduction in greenhouse gas emissions by 2050 through “electrification” of New Jersey’s transportation system. As an enticement, the NJDEP is incentivizing the purchase of medium- and heavy-duty zero-emission vehicles by providing grants to the ultimate purchasers.
These changes will have a significant financial impact on all New Jersey businesses by increasing the costs of implementation, requiring numerous inspections, and halting business operations should these requirements not be met. It is critical that New Jersey businesses understand these new regulations to ensure compliance and take advantage of these growth opportunities.
DISCLAIMER: This Alert is designed to keep you aware of recent developments in the law. It is not intended to be legal advice, which can only be given after the attorney understands the facts of a particular matter and the goals of the client.