The "Emission Reduction Innovation Act" empowers gas public utilities in New Jersey to develop "utility innovation plans" aimed at decreasing greenhouse gas emissions from natural gas usage. The bill defines key terms related to energy and emissions, such as "biogas" and "renewable natural gas," and specifies that these plans must include innovative resources, lifecycle emissions reductions, cost-effectiveness analyses, and benefits for low- and moderate-income customers. Additionally, a cost recovery mechanism for incurred expenses is mandated. The Board of Public Utilities (BPU) is tasked with reviewing and approving these plans to ensure they align with the state's greenhouse gas reduction goals set by the "Global Warming Response Act."

The bill outlines that each utility innovation plan will be valid for five years, with provisions for budget adjustments and annual reporting to the BPU on progress and costs. Gas public utilities must demonstrate the reasonableness of costs for implementing approved plans, which can be recovered through rates charged to customers. The Department of Environmental Protection (DEP) is also required to review the methodologies used in these plans to ensure they meet state emissions reduction goals, with a 180-day timeline for completion. The BPU's evaluation of cost-benefit analyses must follow existing guidelines for utility investment programs.