New York, New York (Platts)--22Jun2007

The New Jersey Legislature passed the Global Warming Response Act late
Thursday evening, requiring mandatory reductions of greenhouse gas emissions
to below 1990 levels by 2020, and to 80% below 2006 levels by 2050.

     The state Department of Environmental Protection will determine how far
below 1990 levels emissions will fall when it implements the measure, which
would apply to all sectors of the economy in the state. 

     The legislation, which is supported by Governor John Corzine and utility
Public Service Enterprise Group, is aimed at preventing carbon dioxide
"leakage" stemming from the state's participation in the Regional Greenhouse
Gas Initiative.

     RGGI is a CO2 cap-and-trade program for roughly 300 power plants in 10
northeastern and Mid-Atlantic states stretching from Maine to Maryland. Under
the effort, power companies must cut their emissions by 10% below 2000 levels
by 2019. But RGGI is not designed to address leakage -- the fact that states
bordering those in the cap-and-trade program would increase their CO2 by
exporting more coal-fired power into states with the cap. Studies carried out
for the RGGI states show leakage means the net CO2 cut from the program would
be 5% instead of 10%.

     The legislation, A.B. 3301 in the House and S. 2114 in the Senate,
requires the state to adopt a CO2 standard that would negate any emissions
increase resulting from "state, regional or interstate" trading. 

     New Jersey lawmakers passed the bill with strong bipartisan support on
the last day of voting before their summer recess. 

     The law resembles California's Global Warming Solutions Act, which
requires that state to cut GHG emissions to 1990 levels by 2020, but the New
Jersey measure is more aggressive because it requires reductions below 1990
levels by 2020, and it also sets the 80% reduction target for 2050, said
Suzanne Leta Liou, global warming and clean energy advocate for Environment
New Jersey. She predicted the state will reap "tremendous economic growth
benefits of spurred investment in our growing renewable energy industry and
protection from rising energy prices."

     Democratic Assembly Sponsor Linda Stender said the law will make a
significant difference on a global scale because of New Jersey's high energy
demand. She added that the act can serve as "an example for other states and
the nation to follow." 

     The state DEP will implement the act, working with other state agencies,
including the Board of Public Utilities, the Department of Transportation and
the Department of Agriculture. Under the law, DEP must develop a plan by June
2008 to achieve the 2020 limit and a plan to achieve the 2050 limit no later
than June 2010. It must also finalize a pollution monitoring and reporting
program by January 2009. The act applies to all sectors of the economy,
including electric generation, industry, transportation and housing.

     Democratic Governor Jon Corzine has expressed his support for the bill,
and PSEG stated its support on June 14, saying "PSEG intends to be a leading
participant in New Jersey in working to reduce CO2 emissions," by developing
energy efficiency programs and renewable energy resources.