Image of a black car with a white electric charger plugged in to the rear left of it, next to the tail light.

VW Mitigation and Emissions Offset Funds Fuel NJ’s Clean Transportation Transformation

Image of Pdf cover reading 2019 New Jersey Energy Master Plan, Pathway to 2050. Behind the text is a wind turbine and a solar panel.
The 2019 Energy Master Plan, a guiding document for New Jersey’s clean transportation transformation. Courtesy State of New Jersey

In February of 2021, Governor Phil Murphy announced a historic $100 million investment in clean energy transportation vehicles and infrastructure, building on work laid out in the 2020 Energy Master Plan, which calls for a transition to 100 percent clean energy by 2050. In 2019, the State emitted 97 million metric tons (MMT) of carbon dioxide (CO2); with the implementation of the Energy Master Plan, annual emissions are projected to be dramatically reduced to 24.1 MMT of CO2. Several NJ State agencies are working to lay the foundation for this monumental transition. The $100 million commitment is only one aspect of a much larger, inter-agency undertaking.

The Energy Master Plan provided a blueprint for New Jersey’s greenhouse gas reduction goals, and the 2020 New Jersey Senate Bill 2252 (S2252), commonly referred to as the electric vehicle law, is the legislative impetus for such work. The New Jersey Department of Environmental Protection (NJDEP), the New Jersey Economic Development Agency (NJEDA), the New Jersey Department of Transportation (NJDOT), and NJ TRANSIT, among others, are now collaborating to achieve the transformation of the transportation sector, responsible for the largest share of the State’s net greenhouse gas emissions, to 100 percent carbon neutral.

Zero Emissions Vehicles (ZEVs) from Volkswagen Funds

The clean energy initiative is funded, in part, through a legal settlement negotiated between Volkswagen and the United States Environmental Protection Agency (USEPA) and the California Air Resources Board (CARB), after a court determined that the automaker had installed defeat devices that hid emissions of nitrogen (NOx) in certain vehicles models. From the resulting $3 billion settlement, New Jersey was allocated $72.2 million, which is now being administered by NJDEP for clean energy transportation projects.

Four men stand smiling in front of a trailer with two small white truck-like vehicles on them, the electric yard tractors that were just delivered to this facility.
Two new electric yard tractors delivered to Red Hook Terminals LLC in Port Newark. Courtesy NJDEP

The first and second rounds of New Jersey’s Volkswagen Mitigation Trust proceeds were awarded to select applicants for the purchase of ZEVs. For example, $1.9 million was given to a company in Trenton for five new electric school buses, and Jersey City received $2.4 million for five new electric garbage trucks. Red Hook Terminals LLC of Port Newark (pictured at right) recently received sufficient funding to purchase ten electric yard tractors.

Without sufficient charging infrastructure, the envisioned shift to EVs will prove impossible to achieve. One oft-cited reason hindering EV adoption is “range anxiety,” a fear of not being able to refuel for lack of nearby facilities. Currently, 95 percent of state residents live within 25 minutes of a DC Fast Charger, a distance that will only decrease as new chargers are built. Stations throughout the State can be located using NJDEP’s Public Electric Vehicle Charging Locator.

For Phase 1 of the Volkswagen Mitigation Fund disbursal, NJDEP allocated $3.2 million to pay for public fast chargers. In 2019, through the It Pay$ to Plug In program, VW funds have financed 827 new charging outlets, ranging from the City of Cape May, to Rutgers—New Brunswick, to the Village of Ridgewood.

Ongoing Initiatives

A screenshot of NJDEP's REGGi Climate Investments Dashboard. The Dashboard shows 19 projects funded, $22.25 million in funds awarded, an estimated 43,786.58 short tons of lifetime CO2 Emissions Avoided, and a map of projects across New Jersey, which shows a concentration in the northeastern section of the state.
The New Jersey RGGI Climate Investments Dashboard shows current clean energy investments from auction proceeds. Courtesy NJDEP

An important source of revenue for supporting Governor Murphy’s $100 million pledge is the Regional Greenhouse Gas Initiative (RGGI). RGGI is a multistate partnership that has set a regional cap on carbon dioxide emissions. Fossil-fueled power plants exceeding the limit must purchase extra capacity at an RGGI auction. In the first quarter of 2021, New Jersey received $27.1 million that will be invested to fight climate change according to a Strategic Funding Plan. The New Jersey RGGI Climate Investments Dashboard provides up-to-date, visual reports of progress on RGGI grants across the State. The initiative has awarded $22.2 million thus far to several municipalities, including for the purchase of two electric garbage trucks for the City of Trenton, and two electric shuttle buses for West New York.

The RGGI purchases coincide with Phase 2 of NJDEP’s Volkswagen settlement disbursal, announced in February, 2021. A further $31.7 million of funding for ZEVs from the settlement will be distributed across the state. As Passaic County receives RGGI funds for an electric shuttle bus, the City of Paterson has been allocated VW money for two electric garbage trucks. With VW funds and RGII auction proceeds, the City of Elizabeth School District purchased seven electric schoolbuses. Gradually, municipalities and companies across the state are beginning to grow their ZEV fleets.

Image of a row of Tesla Superchargers in a parking lot. The chargers are rectangular with plugs resembling gas pumps inside the hollow rectangle.
Tesla agreed to install V3 Superchargers at eight service areas on the New Jersey Turnpike. Courtesy Ank Kumar on Wikimedia Commons

To complement these 2021 ZEV additions, NJDEP has proposed spending an additional $5.4 million of Volkswagen funds for charging grants. For example, the agency selected an ACME grocery store in Woodbury, a Shell station in Wayne, and a hotel in Fort Lee, among others, for DC Fast Charger grants. The DC Chargers are being prioritized in this round because of their high efficiency: a twenty-minute charge can add 60 or 80 miles of driving range.

Emissions Mitigation for Heavy Transportation

In July, 2020, New Jersey and fourteen other states and the District of Columbia signed a Memorandum of Understanding (MOU) committing to collaborate on policies to convert medium and heavy-duty vehicle fleets, such as school buses and freight trucks, into ZEVS The MOU sets a goal of 30 percent electric share heavy and medium-duty vehicles sold in 2030, with a 100 percent share by 2050. The regional approach reflects an acknowledgement that transportation emissions are an interstate issue, and that interstate collaboration is necessary to meet such goals.

Image of a slide reading Proposed ZEV Sales Requirements, detailing how manufacturers in NJ will have to provide credits each year starting in 2024 to offset the emissions cost of the vehicles they are selling. By 2034, for example, they will have to sell (or purchase credits for) 50% of their vehicles as clean energy vehicles.
NJDEP’s proposed rules would follow California’s emissions credit/deficit system for medium and heavy vehicle sales. Courtesy NJDEP

To begin instituting this shift, NJDEP has started the rulemaking process for N.J.A.C. 7:27-31 and 33, two proposed regulations that would institute a credit/deficit program for manufacturers of trucks of over 8,500 pounds. Beginning in 2025, sellers of medium and heavy-duty vehicles would be required to generate or purchase credits to offset deficits from the sale of greenhouse gas-emitting vehicles. This offset could be accomplished by increasing sales of ZEVs, or by purchasing credits from another manufacturer. Deficits would increase every year through 2035, resulting in an increase in the number of commercial ZEVs sold in the state. This is modeled after the Advanced Clean Trucks (ACT) rule that California implemented in 2019.

For public transit, bus fleets must be converted as well. The state’s EV law, S2252, requires that NJ TRANSIT transition its new bus procurements to all-electric. New bus purchases must be 50 percent electric by the end of 2026, and 100 percent zero-emissions by the end of 2032. NJ TRANSIT, which received funds for eight new electric buses in Camden from VW Phase 1, will start testing these vehicles in service in the fall of 2021. One issue affecting the conversion is range; on certain routes, particularly in South Jersey, the required driving distance exceeds single charging capacity. NJ TRANSIT is currently exploring solutions such as building new chargers and making changes to operating routes.


Though $100 million is a significant investment, more resources will be needed to promote the transition from carbon-emitting vehicles. Further investment, as well as interagency and regional cooperation will be crucial to meet the Energy Master Plan’s goal of 330,000 ZEVs on New Jersey Roads by 2025.

NJDOT is working to support the efforts of agency partners to achieve the goals set out by the Energy Master Plan and mandated by the electric vehicle law. NJDOT has continued to invest in alternative mobility, increasing traffic efficiency, and the conversion of its fleet to ZEVs.  In a recent NJDOT newsletter, the Commissioner Diane Gutierrez-Scaccetti noted that the agency has worked with a team from Princeton University to determine an electric charging infrastructure implementation plan, the first step of which will be installation of equipment at the Ewing, New Jersey headquarters.

This infrastructure will be important not just for NJDOT but for the statewide fleet, which, as it transitions to ZEVs, needs centralized charging infrastructure. By law, the statewide fleet must be 25 percent electric by 2025, and 100 percent electric in 2035. NJDOT has already ordered 49 hybrid vehicles, progressing toward the department goal of 88 alternative fuel vehicles in service in the next three years.

Success will require not only committed public policy, but overwhelming public support to make use of the budding charging network, expanded subsidies, and soon-to-be converted fleets.


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How New Jersey is Using Funds from the Volkswagen Settlement to Expand Clean Transportation Infrastructure

In January 2020, the State of NJ’s Energy Master Plan (EMP) was released which communicates the state’s aim to achieve 100 percent clean energy, defined as “carbon-neutral electricity generation,” by 2050. The plan provides a roadmap of seven key strategies to achieve this goal across a range of state agencies that include the New Jersey Board of Public Utilities (NJBPU), the Department of Environmental Protection (NJDEP), the Department of Transportation (NJDOT), the Department of Community Affairs (NJDCA), the Department of Labor and Workforce Development (NJDOL), the Economic Development Authority (NJEDA), and NJ TRANSIT. The EMP focuses heavily on the transportation sector as it is the state’s largest source of net greenhouse gas (GHG) emissions at 42 percent.

Strategic Mapping For Electric Vehicle DC Fast Charging Station Locations. Photo Source: NJDEP, 2020.

Strategic Mapping For Electric Vehicle DC Fast Charging Station Locations. Photo Source: NJDEP, 2020.

As the state works to reduce emissions from the transportation sector, the Volkswagen Mitigation Trust has provided a key source of early funding. In fall 2015, the United States Environmental Protection Agency (USEPA) and the California Air Resources Board (CARB) alleged that Volkswagen had secretly installed defeat devices in select Volkswagen, Audi, and Porsche-branded turbocharged direct injection diesel vehicles. The default devices had software that was specifically designed to cheat federal and state regulator emission tests. This resulted in vehicles with the devices emitting pollutant oxides of nitrogen (NOx) at up to 40 times the limit set by USEPA. NOx contributes to the materialization of ground level ozone which in turn causes harm to the respiratory system and cardiovascular health. Following this allegation, two Partial Consent Decrees were approved by the United States, California, and the defendants which formed an Environmental Mitigation Trust that provided funds to the 50 states, Washington D.C., Puerto Rico, and federally recognized tribes to counteract the negative impacts of the excess NOx emissions. Of the approximately $3 billion settlement, New Jersey was allocated $72.2 million, based on a calculation of the number of affected vehicles in the state, according to the state’s Beneficiary Mitigation Plan.

The Beneficiary Mitigation Plan states that 80 percent of the funds must be spent by October 2027, ten years after the Trust Effective Date, with five additional years for the remaining 20 percent if necessary. The settlement agreement outlines nine categories of eligible projects, which can be found here on NJDEP’s FAQ page. Additionally, the settlement allows for up to 15 percent of the funding to be used for light duty zero emission vehicle fueling and charging infrastructure. In support of the state’s target to achieve 100 percent clean energy by 2050, New Jersey’s goals for the mitigation funds are to reduce NOx, benefit communities disproportionately impacted by emissions, and support the expansion of zero emission vehicle adoption across the state. Additionally, NJDEP has a strong interest in pilot projects that help increase access to electric transportation modes such as bus transit or ride share in disproportionately impacted communities.

NJDEP is the lead agency assigned to prepare the state’s Mitigation Plan and authorize funds for approved projects with assistance from NJDOT, NJBPU, and NJ TRANSIT. According to Peg Hanna, Assistant Director of Air Monitoring and Mobile Sources at NJDEP and the lead for the Volkswagen Mitigation Trust at the agency, most states have appointed their environmental agency as the lead, with a few appointing their energy agency or governor’s office instead. Additionally, partner organizations outside the government include electric vehicle (EV) charging/fueling infrastructure providers, EV manufacturers, trade associations, and Environmental Justice (EJ) organizations.

Environmental Justice is a core component of the state’s goals in distributing the mitigation trust funds. Ms. Hanna explained that the primary way NJDEP has engaged with stakeholders in the EJ community is the agency’s EJ Advisory Council, using their meetings and subgroups to inform and seek feedback on the Volkswagen Mitigation Trust.

Currently, EJ communities are identified at the agency using several criteria, including whether it is an urban area, if it is a low- or moderate-income community, and whether it has been disproportionately impacted by air pollution. She mentioned this approach could change in the near-future with current state legislation S232, which would require NJDEP to evaluate environmental and public health impacts when reviewing permits for certain projects in overburdened communities. The bill provides a precise definition of an overburdened community which includes: 35 percent of the households qualify as low-income according to the U.S. Census, 40 percent of households are minority, or 40 percent of households have limited English proficiency. This definition is expected to be helpful moving forward to provide a clear map and list of municipalities that meet these criteria.

NJ VW Mitigation Trust Phase 1 Awards Map. Photo Source: NJDEP, 2020.

NJ VW Mitigation Trust Phase 1 Awards Map. Photo Source: NJDEP, 2020.

So far, NJDEP has allocated Volkswagen Mitigation Trust funding through two rounds in 2019, for a total of $27.2 million. In February 2019, the agency announced that $8 million would be used to purchase 8 new electric NJ Transit buses for the City of Camden and $3.2 million in grants were awarded for roughly 827 charging outlets at 533 charging stations across the state, which more than doubles the number of non-residential charging outlets across New Jersey.

The funding to expand chargers is distributed under NJDEP’s It Pay$ to Plug In grant program which aims to expand the state’s network of electric vehicle infrastructure in order to encourage residents, businesses, and government agencies to purchase electric vehicles.

A second round of funding was awarded in June 2019, when NJDEP announced $16 million would fund electric heavy-duty garbage trucks, school buses, and port-related vehicles. In the press release, NJDEP Commissioner Catherine R. McCabe said “The projects to be funded by this second round of grants will improve air quality in environmental justice communities that have for too long have had to bear a disproportionate burden of air pollution and its health consequences.” A breakdown of the projects awarded and dollar amounts disbursed so far can be found here.

Reflecting on these first two rounds of funding, NJDEP’s Peg Hanna saw the breadth of awardee projects which ranged from school buses to charging infrastructure as a positive, since it would help provide a range of information and lessons learned across different sectors. In contrast, some of the other states had plans focused solely on one type of transportation. For example, in Washington and Rhode Island, both states chose to spend their full amount on electric buses and charging infrastructure.

Currently, NJDEP is soliciting project proposals to allocate the remaining funding, with the application deadline on July 22. Of the remaining funds, $37.2 million will be used to convert old diesel trucks, buses, port equipment, marine vessels, and trains to electric power and $7.6 million will be allocated to charging infrastructure with priority for fast charging stations. Expanding fast charging infrastructure is supported by legislation signed into law in January 2020 which aimed to address “range anxiety” by expanding the network of electric vehicle chargers across the state. Additionally, this round of funding has a special project solicitation form for eMobility projects, which would expand electric car sharing or ride hailing in low and moderate income communities that have been disproportionally impacted by air pollution.

As New Jersey works towards the goal of 100 percent clean energy by 2050 as outlined in the Energy Master Plan, the VW Mitigation Trust serves as a key source of funding to help achieve this and address the large impact the transportation sector has on air pollution in the state.


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