New Jersey is set to receive $80 million each year to spend on a cleaner and a healthier environment, and state officials hope that new investment will help lift the state in its economic recovery from the coronavirus.

The money is coming to the Garden State through the Regional Greenhouse Gas Initiative, and the state will spend that money on projects to boost clean energy and tackle tailpipe emissions, according to a new spending plan unveiled on Friday morning.

RGGI — pronounced “reggie” — is a regional cap-and-trade agreement among 10 Northeastern states, from Maine to Maryland. Through the arrangement, power plant operators in each state bid for “emissions credits” on a quarterly basis; the credits are essentially allowances to release carbon into the atmosphere. Proceeds from those auctions are then split between the participating states to fund local clean energy and climate change mitigation projects.

RGGI’s goal is to reduce greenhouse gas emissions in the participating states, thus reducing the contributions that those states make to ongoing climate change. Lowering greenhouse gases has the added effect of reducing other types of air pollution — like particle pollution or low-level ozone — because the pollutants typically come from the same sources.

“As our state responds to COVID-19, we see up close the vital link between public health and economic development, the same relationship that drives our administration’s efforts to reduce health risks from pollution and climate change through initiatives that also grow our clean energy economy," Governor Phil Murphy said in a statement Friday morning. "As we work to ensure that our economy recovers from this pandemic, the investments made under this plan will promote health, equity, and environmental protection, helping us build a stronger and fairer New Jersey.”

Tim Sullivan, the CEO of the New Jersey Economic Development Authority, said that developing clean energy in the state — from offshore wind to electric vehicles — will be a big part of the state’s economic recovery.

“We don’t know yet what kind of recovery we’re going to have here and when that starts, but we do have a reasonable expectation as we go industry-to-industry that the bet the Governor placed on clean energy looks smarter and smarter,” Sullivan said. “There’s really no particular reason why a clean energy sector and why offshore wind, which all of us are working so hard on, should be long-term impacted."

New Jersey was among the first members of RGGI when the effort was launched in 2005. Gov. Chris Christie ended the state’s participation in 2011, after criticizing RGGI as “gimmicky.” New Jersey lost about $300 million in clean energy funding while the state was not part of RGGI, according to NJ Spotlight.

Murphy made rejoining the compact a priority, and signed an executive order directing the state to do so in 2018. New Jersey formally rejoined RGGI earlier this year; the state previously projected that reentering the program will cost the average New Jersey ratepayer about $1 per month.

In March, New Jersey participated in a RGGI auction for the first time since rejoining the initiative. The total proceeds from the March auction were $91.6 million, according to NJ Spotlight. New Jersey brought in $20 million from that auction, according to the DEP.

The $80 million that the state expects to get through RGGI each year is based on the trading prices for emission allowances at the quarterly auction, according to Catherine McCabe, the commissioner of the New Jersey Department of Environmental Protection. She added that those prices have been steady, and she doesn’t expect much variation in terms of revenue from auction-to-auction.

“It’s hard to foresee the future in these very strange economic times, but we shouldn’t expect to see, I don’t think, a lot of volatility in the electric markets,” McCabe said.

The new spending plan covers a three-year period from 2020 to 2022. Under the state’s Global Warming Response Act, the EDA is responsible for 60% of RGGI proceeds. The DEP and the New Jersey Board of Public Utilities are both responsible for 20%.

All three of the agencies plan to focus their spending of RGGI money on transportation projects. The transportation sector are currently New Jersey’s largest source of air pollution and greenhouse gas emissions

“The spending plan will be focused heavily on the goal of electrifying New Jersey’s transportation sector, because as we all know, the transportation sector is the single largest source of greenhouse gas emissions in the state," McCabe told NJ Advance Media.

Environmental justice communities — places that have historically faced a disproportionate amount of pollution in the state — will be a focus for the all of the agencies’ new spending, McCabe said.

The EDA will use the new funding to help create a New Jersey Green Bank. Sullivan told NJ Advance Media such a bank will stimulate clean energy development in the state and will be similar to the existing New Jersey Infrastructure Bank, which provides funding to municipalities for drinking water, sewer and transportation projects.

Sullivan said that the specifics of what the New Jersey Green Bank will look like and how it will operate are still being worked out.

“The RGGI money is great, and we want to accomplish all of the goals outlined in that plan, but what we want to do is make sure we’re stretching that funding and bringing in as much private capital on top of it,” Sullivan said of the green bank.

Joseph Fiordaliso, the president of the BPU, told NJ Advance Media the new funding will help boost a clean energy economy in the state as New Jersey works to recover from the fallout of the COVID-19 pandemic.

“When we come out of this one of the engines that is going to enhance our economy is going to be the clean energy revolution,” Fiordaliso said.

McCabe said that the DEP will also use the money to restore forests and wetlands, both of which pull carbon dioxide out of the air. Urban forests have the added benefit of reducing the urban heat island effect and help to lower energy use, while wetlands can serve as a buffer for communities against flooding and storm surge.

Jeff Tittel, the director of the New Jersey Sierra Club, praised the new spending plan.

“In the past, RGGI worked to create jobs and reduce pollution in New Jersey," Tittel said. "Now that we are back in, RGGI will help drive us to reduce greenhouse gases and move us toward a green economy.”

Read New Jersey’s full spending plan for RGGI funds here.

Michael Sol Warren may be reached at mwarren@njadvancemedia.com. Follow him on Twitter @MSolDub. Find NJ.com on Facebook.

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