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. The bill defines key terms related to energy and emissions, such as "biogas," "carbon capture and utilization," and "renewable natural gas." It specifies that these plans must include innovative resources, lifecycle greenhouse gas emissions reductions, cost-effectiveness analyses, and local job impacts, while also addressing support for low- and moderate-income residential customers. A cost recovery mechanism for incurred expenses is also mandated. The Board of Public Utilities (BPU) is tasked with reviewing and approving these plans to ensure alignment with the state's greenhouse gas reduction goals, with the authority to modify or deny plans based on their impact on ratepayers.

Additionally, the bill outlines specific requirements for the content of utility innovation plans, which must be submitted to the BPU for approval every five years. Gas public utilities can recover reasonable costs associated with these plans through rates charged to ratepayers. The legislation allows for budget flexibility, permitting utilities to shift up to 25 percent of their total budget between projects with prior notice, while larger shifts require BPU approval. The Department of Environmental Protection (DEP) is also involved, tasked with reviewing the methodology for calculating lifecycle greenhouse gas reductions to ensure compliance with state standards. The BPU must evaluate cost-benefit analyses of the plans according to existing guidelines for utility investment programs.