Governor Christie Signs Bill Promoting Demand for Solar Energy

By Michael Babakitis, Legal Intern

Governor Chris Christie signed a bill on Monday, July 23^rd, that will require New Jersey’s utilities to procure 2.05% of their electricity from solar projects in 2014 (.5% more than would have otherwise been required) and to procure 4.1% of their electricity from solar projects by 2028. The bill is designed to offset the effects that oversupply of solar credits has had on the credits’ prices.

During the first quarter of 2012, New Jersey led the nation in newly installed photovoltaic capacity, installing 173.8 megwatts of capacity. This was the first time that New Jersey installed more capacity than California, which added 148.4 MW of capacity over the same period. Due to this expanding supply, solar credits in New Jersey have recently plummeted in price, from $600 per megawatt-hour (MWH) last year, to below $100 in April. These credits can drastically affect the solar industry because large scale solar projects take solar credit prices into account when deciding whether or not to move forward with construction. When prices fall too far, companies have no incentive to continue adding solar capacity, since they will see very little return when they sell credits to utilities attempting to meet their energy portfolio requirements.

Along with requiring an increased amount of solar to be procured, the bill also reduces the penalty for utilities who fail to meet the increased requirement, to $339 per MWH in 2014, down to $239 per MWH in 2028. This decreased penalty will serve as a de facto price ceiling on solar credits. Combined with the mandated demand increase, the bill should serve to stabilize the solar credit market and re-incentivize investment in New Jersey solar projects while also preventing significant rate increases from falling on households.

The bill fits well within New Jersey’s broader goal of producing 22.5% of its electricity from renewable sources by 2020.

Monica Molina

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Published April 9, 2021

April 2021 Updates to the Climate Case Charts

FEATURED CASE

Second Circuit Rejected New York City’s State Law Climate Claims Against Oil Companies

The Second Circuit Court of Appeals affirmed the dismissal of New York City’s lawsuit seeking climate change damages from oil companies. The Second Circuit’s decision largely followed the reasoning of the district court’s 2018 decision. First, the Second Circuit held that federal common law displaced the City’s state-law public nuisance, private nuisance, and trespass claims because the lawsuit would regulate cross-border greenhouse gas emissions, albeit “in an indirect and roundabout manner,” and because state law claims “would further risk upsetting the careful balance that has been struck between the prevention of global warming, a project that necessarily requires national standards and global participation, on the one hand, and energy production, economic growth, foreign policy, and national security, on the other.” The Second Circuit then held that the Clean Air Act, in turn, displaced federal common law claims related to domestic emissions. The Second Circuit cited American Electric Power Co. v. Connecticut, 564 U.S. 410 (2011), as establishing “beyond cavil” that the Clean Air Act displaced federal common law nuisance suits to abate domestic transboundary greenhouse gas emissions, and found that Native Village of Kivalina v. ExxonMobil Corp., 696 F.3d 849 (9th Cir. 2012), provided “sound reasoning” for determining that the Clean Air Act also displaced federal common law damages claims. The Second Circuit also rejected New York City’s contention that the Clean Air Act’s displacement of federal common law claims resuscitated its state law common law claims. Finally, the Second Circuit held that although the Clean Air Act did not displace New York’s federal common law claims addressing emissions outside the United States, foreign policy concerns foreclosed such claims. The Second Circuit said holding the oil companies liable for “purely foreign activity” would “sow confusion and needlessly complicate the nation’s foreign policy, while clearly infringing on the prerogatives of the political branches.” City of New York v. BP p.l.c., No. 18-2188 (2d Cir. Apr. 1, 2021).