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 benefits for low- and moderate-income residential customers. Additionally, a cost recovery mechanism for incurred expenses is required. 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 utility innovation plans will be valid for five years, with provisions for cost recovery through rates charged to ratepayers. Utilities can shift up to 25 percent of their total budget between projects with prior notice, while larger shifts require BPU approval. Annual reporting on the status of the plans, including costs and greenhouse gas reductions, is mandated. Furthermore, the Department of Environmental Protection (DEP) must collaborate with the BPU to review the methodology for calculating lifecycle greenhouse gas reductions, ensuring alignment with state standards and goals. The BPU's evaluation of cost-benefit analyses for these plans must adhere to existing guidelines for utility investment programs.