The "Emission Reduction Innovation Act" empowers gas public utilities in New Jersey to develop and implement "utility innovation plans" aimed at reducing greenhouse gas emissions from natural gas usage. These plans may include innovative resources such as biogas, renewable natural gas, power-to-hydrogen, power-to-ammonia, and carbon capture and utilization. The act specifies that these plans must detail the innovative resources to be utilized, expected lifecycle greenhouse gas emissions reductions, cost-effectiveness analyses, and their impact on local job creation. The Board of Public Utilities (BPU) is tasked with reviewing and approving these plans to ensure they align with the state's greenhouse gas emissions reduction goals as established by the "Global Warming Response Act."

The bill also outlines specific requirements for the content of utility innovation plans, which must be submitted to the BPU for approval every five years. Utilities can recover costs associated with these plans through rates charged to ratepayers, while ensuring considerations for low- and moderate-income customers. The act allows for budget flexibility, permitting utilities to shift up to 25 percent of their total budget between projects with prior notice to the BPU and rate counsel. Additionally, the Department of Environmental Protection (DEP) is mandated to review the methodology for calculating lifecycle greenhouse gas reductions in consultation with the BPU, ensuring alignment with state standards and emissions reduction goals.