It’s not easy being green.

During NJBIZ’s latest virtual discussion, experts in the energy sector spoke on the various issues New Jersey faces, such as the overall transition to clean energy and challenges associated with it.

Moderated by NJBIZ Editor Jeff Kanige, the March 31 panel featured: Eric DeGesero, executive vice president of Fuel Merchants Association of New Jersey, a Cranford-based advocacy group representing more than 600 petroleum marketers and industry suppliers; Scott Eversman, managing director and practice leader, Energy, at Diversified Search Group, an executive search firm headquartered in Philadelphia; Laurie Wiegand-Jackson, president of Utility Advantage LLC, an energy consulting firm in Woodstown that works with utility companies, businesses, government agencies and institutional entities; and Michael Makarski, external affairs manager with Engineers Labor-Employer Cooperative 825, a Springfield-headquartered construction industry group.

During the 90-minute roundtable discussion, panelists dove into topics such as the market impact of the war in Ukraine, as well as Gov. Phil Murphy’s clean energy goals. They also discussed the push for electrification, the transition from gas-powered cars to electric vehicles, and the status of New Jersey’s energy infrastructure and grid capacity. The speakers weighed in with their thoughts on the potential for energy independence, along with preparing and retaining a workforce for the future, as well.

In February, Murphy expanded on and accelerated his already ambitious clean energy goals. The updated blueprint drew support from stakeholders such as the New Jersey Economic Development Authority, New Jersey Board of Public Utilities, New Jersey Department of Environmental Protection and New Jersey League of Conservation Voters.

But the move also raised concerns about the costs and logistics, particularly from the business community, with organizations such as the New Jersey Chamber of Commerce and the New Jersey Utilities Association weighing in.

‘No idea’ about cost

DeGesero – who believes the state needs to include all energy options, not just electrification, to fully achieve clean energy goals – has many other questions when it comes to the plan. “We still do not know what it costs in the building electrification sector and in the transportation sector … We are now entering what will be the fifth July that I have spent with the energy master plan and we still have no idea what it’s going to cost,” he said.

So far, the NJDEP has provided a ratepayer analysis but it has not offered an estimate for how much it would take to convert residences, commercial buildings and industrial facilities, DeGesero said.

The current energy master plan calls for the state to achieve a 100% clean energy economy by 2050 while meeting offshore wind development and energy storage goals through a least-cost pathway.

Murphy also recently announced that planning has begun on development of a new Energy Master Plan for the state and expects it will be released next year. The updated framework will reflect the state’s updated climate goals, as well as recent federal policies and funding through the Infrastructure Investment & Jobs Act and Inflation Reduction Act, according to the governor’s office.

After doing an analysis using economists from The Manhattan Institute for Policy Research, Makarski said the estimated cost of implementing New Jersey’s energy plan is around $1.4 trillion between 2020 and 2050, which includes a 5% inflationary component and encompasses the entire plan, from renewable generation upgrades and infrastructure for electric vehicles to grid updates.

‘What can I do today?’

Wiegand-Jackson said she believes pinpointing an exact cost is “nearly impossible” because “we still don’t know yet what technologies are going to end up being the winners that really bear out to be cost-effective.”

She went on to say it’s also unknown “where the dollars will go as we develop more solutions.” “That’s part of what money does – it prompts R&D and it gets businesses starting to invest and then we move to commercialization and things start to be affordable,” she said. “So, it’s really hard to say what the future is going to look like in 10, 15, 20 or 30 years from now,” Wiegand-Jackson said.

She went on to stress that there are steps businesses can take today. “Energy efficiency is an important part of the New Jersey Energy Master Plan. It’s also an important part of the Inflation Reduction Act – a lot of money is going into that,” she said. “Energy efficiency, or projects that replace less efficient equipment with more efficient equipment, upgrades that equipment to use less energy.”

“The impact that we can have on the demand for energy helps us to address things like how much it’s going to cost to build resources, to supply that energy. So, we should be doing everything we can to reduce demand, and then be looking on our supply side as to how to manage that.”

“One of the first things to do is look at how you’re using energy. How can you participate? And what kind of equipment do you have that could benefit from an upgrade and start spending money on that,” she said. “And then there’s programs that are bringing down the cost of that to give decent ROIs … Now is the time, because there is more money being put into giving you incentives to help buy more efficient equipment and then finance it.”

Wiegand-Jackson said, “I always bring it back to ‘What can I do today?’ As a business owner myself, I’m not paying attention to what’s going to happen 10, 15, 20, 30 years from now. I’m paying attention to what’s happening this year, maybe the next year and potentially the year after that in terms of my planning process – the commitments that I’m making, where I’m going to spend capital and where I’m going to invest in growing my business.

“We have to have policy people and have to be focused on the future – we can’t ignore it,” she said. “But as a business owner, we’re really focusing more on the near term than those long-term objectives.”

However, Wiegand-Jackson believes it’s just as important to “look at all of the costs – not just direct costs – but indirect costs and the cost to society overall.”

“That’s the thing that people are challenged with, which is—are we looking at this just from an economic standpoint of the lowest cost solution and limiting it just to like direct costs? Or are we looking at the indirect costs and applying those so the cost to the environment, the cost to society, the cost to health care—all of those things,” Wiegand-Jackson said.

“That also means, life cycle, cost, analysis of renewable energy as well as other sources of energy. So, what do we do with the solar panels when they stop producing, and we have to replace them? What are we going to do with these batteries when they end their useful life. These are really important questions and the costs associated with them have to be incorporated into our analysis,” she said.

“And again, the challenge in part is that technology is developing. We can come up with an analysis that looks at cost today. But then we have to make assumptions about what we think is going to happen in the future, and that’s not always easy, because we don’t have the crystal ball,” Wiegand-Jackson said.

Charging ahead

DeGesero and Makarski also spoke on the challenges of transitioning from a fleet of gas-powered trucks to electric ones.

“There’s two aspects of cost,” DeGesero said. “First and foremost is the cost of a truck. The cost of a new class 8 tractor trailer today is about $150,000. And the cost of an EV tractor trailer, if you can find it, is $450,000.”

“Then, there is the battery. A truck can only have about 80,000 pounds max weight. The truck, the cabin and the trailer can have about 35,000. So that gives you 45,000 of payload, but the battery configuration – you need about 4,000. So, now you’re looking at 8,000 or 9,000 of your total payload that you can operate with in heavy duty trucking because of batteries,” he said.

Another obstacle involves the amount of time it takes to charge heavy duty trucks, according to DeGesero. “You’d need the equivalent of anywhere from a couple of hundred to a couple of thousand homes, depending on the size of the charging array that you need to charge heavy duty vehicles quickly. That is such a massive undertaking,” he said.

“On top of everything else there are better answers today as relates to low carbon, liquid fuel and hydrogen, potentially as a long term answer … I don’t see how they’re going to do it electrically with big vehicles anytime soon, and if you run a passenger bus system like we have in New Jersey, and a pretty big one, an electric bus in cold weather, with the heat on, is going to get you 10, 15 miles until it needs to be recharged,” DeGesero said.

Makarski said, “When you look around the state of New Jersey, we are a populated, dense state with infrastructure that’s a little older, and because of the complications around that, the cost to repair our infrastructure is significantly higher than if you were building a road in Wyoming, where it’s less complicated.

“We never planned for having 90,000 electric vehicles in the State of New Jersey. They didn’t exist yet and we weren’t prepared for that, so our infrastructure, from a road and bridge standpoint, is just not necessarily ready for that,” he said.

Energy independence

Amid the backdrop of the ongoing war in Ukraine, panelists spoke about the idea of energy independence and whether it’s possible.

While in the U.S. Air Force, Eversman was stationed in Europe, where he served just after the Cold War ended. “There were those of us who immediately got involved in the opening of, or the opening up of, the Russian oil and gas industry. Being a speaker of Russian, I took many, many trips to the former Soviet Union, largely Russia, but also Central Asia, and Ukraine, as well. I got a sense of what their pitfalls were and what their vulnerabilities were. I got a chance to get kind of an upfront, front row view of what the last 20 years have been about in terms of energy, not only in the former Soviet Union, but in the rest of Europe, as well,” Eversman said.

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“Europe has to transition away from dependence on Russian oil and gas and the United States has a critical role to play in that process. So, our decisions in our energy mix are going to impact directly how quickly Europe can wean itself from Russian oil and gas. And it also has ramifications for us because we have our issues of, how do we invest in infrastructure? What kind of infrastructure? Where do we put our investment dollars?” he said.

He went on to note that the Inflation Reduction Act “had a profound impact on European thinking” because many large energy companies abroad – some of whom are active in New Jersey, such as offshore wind company Ørsted – “These companies began to discuss shifting capital to the United States because it had a more favorable investment environment, a quicker return on investment, and that prompted the EU to kind of try to get its arms around its legislation, which it hasn’t entirely done yet,” Eversman said.

“National security has always been closely interwoven with the energy policy, and so today, I’d love to see us take the necessary action to ensure that Europe can transition away from Russian dependency and that we can be the big swing producer in the transition and make sure that our European friends are able to continue with their industry as uninterrupted as possible,” he explained.

Eversman said, “Energy independence is a must-have because it gives us optionality and so many other things when it comes to our national life. That said, how does that calculus change? If we have another couple of frequent hurricanes here on the East Coast that bash New York, Philadelphia and New Jersey, and cost billions of dollars to rectify, that will certainly sober people’s views on it.”

Wiegand-Jackson said, “I’ve been talking to business owners and people in government about what’s going on in our energy markets right now and how that’s going to impact them. And one of the things is that we’ve had sort of a decade, very stable and fairly low natural gas prices, and that was really brought about by the technology that allowed us to go in and pull natural gas out of shale. And then what we’ve done is heavily invested in that, and we have a significant supply.”

Wiegand-Jackson said, “And so here we are with this great capacity and the idea of being energy independent. We’ve always understood that as being important for those of us that remember back in the ‘70s, the oil crisis, and waiting in line to fuel our cars. So, here we are again looking at ‘How do we become energy independent?’ and ‘And how do we help our allies be energy independent?’”

She went on to note that the public isn’t necessarily aware of how dependent Europe is on Russian oil and natural gas.

“So, we have the role to play. It’s a great opportunity. We’re already exporting natural gas out. This is a good way for us. Natural gas is a transition fuel. It’s not the ultimate fuel, but it’s a very important transition fuel while we figure out how to become more renewable and have reliable systems that are renewable based,” Wiegand-Jackson said.

Makarski said he believes a mix of sources would be needed to achieve energy independence. “There was a period of time where we were actually producing more power than we needed in this in this state,” he said. “We’ve decommissioned the nuclear power plant and we’re in the process of seeing some older plants shut down.”

“There was some talk of transitioning that into a natural gas plan. I think that’s now going to become a hub where potentially the offshore wind transmission is going to come on,” Makarski explained. “So, we were kind of there at one point. That’s some of the theory of the regional greenhouse gas initiative—if you were producing gas, you were producing power. In New Jersey, based on natural gas, we were selling that to a state that was maybe once using coal but is now buying ours to reduce emissions and we made a regional benefit on it.”

“If we’re talking about, can we get to a place where we are 100% energy independent from nonrenewable sources, I think it’s possible to get there, but it’s just going to be a matter of what are we referring to as the technology. If we’re going to include nuclear as part of that then that’s easy to get there. If we’re just talking wind and solar and battery based on the density of where we are, I don’t know if we can get there,” Makarski stated.

ESG policies

Eversman agreed that while the concept of corporate Environment, Social and Governance goals has received pushback in recent years, he still believes it can be an important part of a company’s identity. “It saddens me a little bit because I don’t know that the ESG thing needed to be dragged into the culture wars, which is where it’s now ended up, and it didn’t need to be there,” he said. “It remains something that every board of directors is looking at. With some embracing and going full throttle forward and others taking a more measured approach.”

Going forward, Eversman believes it would be beneficial for ESG reporting mechanisms to become “more standardized, more agreed and more transparent” in terms of measuring carbon footprints.

“I think hopefully ESG will be less political, less polarizing, and will be seen just for the common sense that it is in terms of moving forward,” he added.

It can also help with attracting a talented workforce.

Eversman noted that younger generations, like Gen X, millennials and Gen Z, “want to work for companies that embrace sustainability” and “align with their values.”

“That’s a decision on not only choosing what companies to go with, but it’s also a retention opportunity for companies as they become the majority of people in the workplace,” he said. “Addressing sustainability is an important component of retention and if you don’t have your arms around it, it’s a potential vulnerability.”

Market volatility

Panelists also discussed price increases in the energy market.

“When demand increases, it’s going to cause an increase in prices, and we saw that last year, with prices going up and being much more volatile than they have over the past decade. But for this kind of warm winter that we had, we’d be looking at kind of different picture on our utility bills. But we did see some of that in terms of going into the summer and fall of last year, and prices being higher,” Wiegand-Jackson said.

“As a business owner, I would say that you need to start paying more attention to your utility bills, and how to manage those costs more effectively, because we’ve come out of that period where things have been more stable and lower priced, which was great. Natural gas is also the driver for electric prices in the state of New Jersey, so, it’s impacting both your natural gas and your electric prices,” she explained.

New Jersey’s mild winter is just one of several factors in the price today of energy being lower than it was when Russia invaded Ukraine in February 2022, according to DeGesero. “But I think it’s the volatility that you are seeing in the market, and from a business owner’s perspective, the one thing that business owners, especially in energy-intensive industries, like to do is hedge their risk,” he said.

“One [component] is making sure you have the physical supply of your diesel, or natural gas, or heating oil, etc. And the other is to make sure that you can anticipate a reasonable cost that you can factor into your manufacturing and transportation and the challenges, while the price is lower because of the volatility in the market, the cost to hedge your exposure has dramatically increased,” DeGesero said.

“We’re in a good swing to the downside now, but that makes hedging your risk going forward more expensive because of the increased volatility in the marketplace.”