Flooding in Cambridge. Photo from the University of Maryland Center for Environmental Science.
An obscure but influential commission has begun to tackle a multibillion-dollar problem for the state of Maryland: How to pay for government’s ambitious climate goals.
As state leaders tout Maryland’s tough standards for reducing carbon emissions — Gov. Wes Moore (D) earlier this month issued an executive order to advance certain climate initiatives — they have yet to identify ways to fund the various programs necessary to fully meet them. A comprehensive report issued late last year by the Maryland Department of the Environment on meeting the state’s climate goals suggested that an additional $1 billion a year in government funding over the course of a decade would be necessary.
Moore this year released $90 million that had been sitting in a reserve clean energy fund toward meeting the state’s climate goals, but he and environmental advocates called it a “downpayment” and acknowledged that the amount was woefully inadequate. But Moore and legislative leaders during this year’s General Assembly session offered no proposals for generating additional revenues for climate, and at least three bills that would have started to bring in extra money were laid aside in various committees.
Now, the Maryland Commission on Climate Change, whose members come from an array of backgrounds, is determined to offer recommendations on funding later this year. And the commission’s Mitigation Workgroup started the assignment Thursday, by listening to four proposals for how to generate revenue for climate solutions during a two-hour online hearing.
“The funding issue is complicated and difficult,” said Michael Powell, the workgroup’s co-chair.
Powell is a veteran lawyer and State House lobbyist who represents manufacturers, building interests and energy companies. Reflecting the diversity of the workgroup, his co-chair is Kim Coble, executive director of the Maryland League of Conservation Voters — who is also a co-chair of the overall climate commission, which is staffed by employees of the state Environment Department.
Commission members, policymakers and environmental advocates agree that more than one funding stream will be needed to pay for state climate programs, and most believe that polluters, rather than consumers or small businesses, ought to bear most of the burden. But whether political leaders will show the political will to do what is necessary is very much an open question, especially as Maryland grapples with projected budget deficits over the next five years.
“A lot of hard work ahead,” Coble said.
Workgroup members on Thursday were briefed by policy experts on four funding proposals that have been discussed to varying degrees over the past few years:
A cap-and-invest initiative
The concept is to set limitations on carbon emissions and make emitters pay for pollution by making them buy credits from the government, which are usually sold at auction. The proceeds would then be used to pay for climate mitigation, consumer reimbursements and clean energy programs.
The system “catches all the low-hanging fruit” from polluters and buttresses various state climate and renewable energy regulations, said Dallas Burtraw, a senior researcher at Resources for the Future, a national nonprofit that studies energy economic and regulatory policy.
Maryland already participates in the Regional Greenhouse Gas Initiative, a multistate alliance in the Northeast that auctions carbon credits quarterly from power plant operators and uses the proceeds for a clean energy fund. So a broader cap-and-invest program would seek similar funding from other sectors of the economy that produce carbon emissions.
The state of Washington already has a cap-and-invest program, and California and the province of Quebec in Canada jointly auction carbon credits. The state of New York is also scheduled to do so soon. Burtraw suggested that Maryland try to enlist as many partners as possible in a cap-and-invest scheme to maximize flexibility and profits.
“Linking is really important,” he said. “We can’t accomplish this just by doing it in Maryland.”
The Climate Crisis and Environmental Justice Act
Lawmakers this year, and in the 2022 legislative session, considered a measure that would have imposed fees on companies that bring natural gas, coal and petroleum into the state. It came with a provision that the additional costs would not be passed on to consumers, and would generate about $1.25 billion a year when fully implemented, according to Wandra Ashley-Williams, regional director of the group Climate XChange Maryland.
The bill as written would have established two funds, one to help households and energy-intensive businesses, the other targeted to mitigate climate damage in poor communities that have been particularly vulnerable to the ravages of climate change.
“The Climate Crisis and Environmental Justice Act is predictable — predictable for the fossil fuel companies as well as the state of Maryland,” Ashley-Williams said. “It provides new, essential revenues that the state of Maryland will depend on.”
Asked whether the measure could stand up to a court challenge, Ashley-Williams said her group received guidance from the state attorney general’s office that it can.
The Climate Reduction Act
During the most recent legislative session, Del. Dana Stein (D-Baltimore County) introduced a climate bill that many environmental groups saw as a solid first step for generating revenues. Specifically, the bill was designed to tax the transportation of coal and natural gas into the state and would have generated an estimated $250 million to $300 million a year. The bill was nicknamed the “coal train” bill during the legislative session.
The state already taxes oil that is transported into the state, and that funding goes into an oil disaster containment, cleanup and contingency fund.
Stein told members of the mitigation workgroup that he plans to reintroduce the bill next year with a few amendments, including one that specifies that utilities are exempt from the legislation, unless they are the first carrier of coal or gas into the state. He predicted that the legislation could result in about a 50-cent per month addition to a household’s electric bill, and a higher average gas bill of $1.88 per month.
The funding could be used for a range of climate mitigation programs, Stein said. He said the bill would be similar to a law in New Jersey that taxes companies for the transportation and laws in several states that tax companies for energy extraction.
Responding to Emergency Needs from Extreme Weather (RENEW) Act
One of the most high-profile climate bills in the last session would have essentially imposed fines on close to 40 large fossil fuel companies responsible for the greatest amount of carbon emissions in Maryland. Jamie DeMarco, the Maryland director of the Chesapeake Climate Action Network, noted that taxpayers are already footing the bill to repair climate damage, and the fines essentially amount to “free money” for the state.
“There’s no option of not paying these costs,” he said. “It takes that financial burden off the shoulders of Maryland residents and puts it on international fossil fuel companies that knew and lied about the climate crisis.”
Vermont just passed similar legislation and Republican Gov. Phil Scott allowed it to become law without his signature. The New York legislature has also passed such a measure, but it remains on Democratic Gov. Kathy Hochul’s desk.
Maryland advocates have suggested that the legislation could generate in the neighborhood of about $900 billion in one-time collections from the fossil fuel companies for 20-plus years of climate damage. But they’ve also acknowledged that states that enact this legislation are almost certainly going to be sued.
DeMarco said the money from the RENEW Act could be used to pay for the state’s new disaster relief fund — which was created two years ago without any funding — clean-energy programs, flood mitigation, minority health disparities initiatives and more staffers at environmental agencies.
After the presentations, two business leaders representing the Maryland Chamber of Commerce pushed back gently on some of the proposals. While conceding that the state needs to do more to address climate change, they warned against programs that could be too costly to businesses or taxpayers, especially with certain mandates and timetables, including a carbon-neutral building industry by 2040, a rule already in place.
“Almost every service provided in Maryland can be migrated into other states,” said Tom Ballentine, vice president for policy and government relations at NAIOP Maryland, a trade association for commercial real estate developers.
The mitigation workgroup plans to meet in July and August and draft recommendations in September. They would then go to the full climate commission, which would finalize them in the late fall. What policymakers decide to do with the recommendations is anyone’s guess.
“It is some very hard decisions and conversations that we’re going to have to have,” Powell said.
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