3. a. (1) The department shall establish a greenhouse gas emissions allowance trading program consistent with the RGGI Model Rule and associated guidance documents, in order to participate in the Regional Greenhouse Gas Initiative for the purposes of reducing or preventing emissions of greenhouse gases. The department shall adopt rules and regulations, pursuant to the “Administrative Procedure Act,” P.L.1968, c.410 (C. 52:14B-1 et seq.), to implement this greenhouse gas emissions allowance trading program, and shall take into consideration the principles and goals of the New Jersey Energy Master Plan in the rule making process. The department shall cooperate and coordinate with other states or countries that are participating in regional, national, or international carbon dioxide emissions trading programs with the same or similar purpose. In doing so, the department shall exclude from the requirement to purchase or acquire any allowances under any greenhouse gas emissions trading program any cogeneration facility or combined heat and power facility that is an “on-site generation facility” as that term is defined in section 3 of P.L.1999, c.23 (C. 48:3-51) and sells less than 10 percent of its annual gross electrical generation.

(2) Approval and notice by the department of specific procedures and requirements for any auction or other sale of allowances which are formulated by a for-profit or non-profit corporation, association or organization which the department and the board participate in pursuant to section 11 of P.L.2007, c.340 (C. 26:2C-55) shall not be subject to the “Administrative Procedure Act,” P.L.1968, c.410 (C. 52:14B-1 et seq.), provided that the specific procedures and requirements are consistent with the process and general requirements outlined in rules and regulations adopted by the department, and the public is afforded an opportunity for review and comment on such specific procedures and requirements.

b. Any auction to convey allowances:

(1) shall be conducted based on the schedule and frequency adopted by the department in consultation with other entities participating in a regional program;

(2) shall include auction design elements that minimize allowance price volatility, guard against bidder collusion, and mitigate the potential for market manipulation;

(3) shall include provisions to ensure the continued market availability of allowances to entities regulated under a greenhouse gas emissions allowance trading program, taking into account the outcomes of auctions and monitoring of the allowance market, which may include the adoption of a flexible process that allows for ongoing modification of auction design and procedures in response to allowance market conditions and allowance market monitoring data, provided that the process allows for public comment and input; and

(4) may be open to all qualified participants, and all qualified participants may sell or otherwise agree to transfer any or all allowances to any eligible entity.

c. The department shall review its position with the Regional Greenhouse Gas Initiative, or any subsequent regional auction, on an annual basis, including the amount of allowances that should be included in a regional auction. This annual review shall include consideration of the environmental and economic impact of the auction, leakage impacts, and the impact on electric generation facilities and ratepayers in the State. The department shall submit a written report of this review to the Governor and to the Legislature pursuant to section 2 of P.L.1991, c.164 (C. 52:14-19.1). The report shall also be posted on the department’s website.

L.2007, c.340, s.3; amended 2019, c.328, s.2.