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Effective Planning to Meet New Jersey’s Energy Goals

Gov. James J. Florio | December 26, 2013

The Garden State has an Energy Master Plan in place, and a unique new initiative to help it raise the funding to achieve its targets

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Former Gov. Jim Florio, who served from 1990 to 1994, continues our year-end series of essays from some of our state's chief executives. NJ Spotlight’s invitation was that the former governors write about an issue they think is important as New Jersey enters 2014, any topic they chose. Florio, now back in private practice as an attorney, opted to write about the state’s long-term energy needs.

New Jersey’s Energy Master Plan (EMP), last revised in 2011, sets out the Garden State’s strategic vision for the use, management, and development of energy in our state over the next decade.

The EMP puts an emphasis on keeping energy costs down and continues to promote clean, alternative energy production and preparing for a challenging climate future.

The EMP has five major goals:

  • Driving down the cost of energy for all customers

  • Promoting a diverse portfolio of new, clean, in-state generation facilities

  • Rewarding energy efficiency, conservation and reducing peak demand

  • Capitalizing on emerging technologies for transportation and power production, and

  • Maintaining support for the renewable energy portfolio standard of 22.5 percent of energy from renewable sources by 2021

It has been proven that the single most cost-effective means to reducing both energy costs and consumption is to become more efficient in our use of energy. This is both good for the energy consumer and the environment. Energy efficiency is the “low-hanging fruit” of the clean energy industry -- reducing consumption lowers production costs and reduces pollution.

Americans are addicted to energy. We consume twice as much per capita than any other industrialized nation. The silver lining in that is that our massive consumption leaves a lot of room for cost-effective investment to lower energy costs, move to more renewable and more widely distributed energy generation, and increase the self-sufficiency of our businesses and communities while simultaneously strengthening the grid.

One of the major obstacles to these energy improvements, however, is the lack of upfront capital. We are living in an era of increasingly constrained public-sector budgets. Funding for energy efficiency and renewable energy installations from government sources is becoming harder and harder to come by. It is becoming more and more apparent that if we are to make progress as rapidly as is necessary simply to meet our stated strategic goals, let alone forestall global warming, more private capital will be needed.

There is encouraging news on this front from other states and one that is about to take off in a big way here in New Jersey. A relatively new program -- PACE, which stands for “Property Assessed Clean Energy” -- has taken hold in places like Connecticut, California, and Florida and is literally funding thousands of necessary energy efficiency and green energy projects with private capital. And a project in Livingston, New Jersey, is now in its early stages.

The essence of a PACE program is its use of a municipal special property tax assessment to attach the financing to the property, not the owner. This assessment mechanism uses a municipal-government power, but does not cost the municipality a dime. Typically, these projects more than pay for themselves through energy savings, and they provide greater self-sufficiency and reliability, as well as more comfortable and more resilient buildings.

In fact, more than 30 states have now adopted PACE legislation, and in several it has already resulted in significant private investment. Connecticut, which launched a state-funded program in January of 2013, already has $15 million of projects completed, and $100 million more in the pipeline -- in less than a year.

In New Jersey a new nonprofit - New Jersey PACE - is launching a state-wide initiative to offer a PACE program to each of the State’s 565 municipalities. NJPACE will bring together property owners, contractors, and investors to facilitate “deep retrofits,” as well as renewable energy systems, for commercial, industrial, and major nonprofit property owners such as hospitals and universities. The aim is to have projects pay for themselves with energy savings resulting in no out-of-pocket expense to the property owner -- an obvious win-win.

Recently NJPACE began exploring whether its unique financing mechanism has applicability to so-called resiliency projects that have become so necessary in the aftermath of superstorm Sandy. Legislation to permit that use is now making its way through the Legislature.

In these tough fiscal times for governments across the spectrum, we should be doing everything we can to encourage private investment in societal goals. PACE and programs like it offer hope.

James J. Florio, Esq. is a founding partner at Florio Perrucci Steinhardt & Fader, L.L.C. and former governor of New Jersey.

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