State panel votes to study, rather than recommend, ways to pay for climate plan

One year after a state environmental agency calculated that it would cost Maryland at least $10 billion to meet the government’s ambitious climate mandates, the Maryland Commission on Climate Change took baby steps Thursday toward considering how to pay for them — but the panel didn’t go nearly as far as some members originally intended.

Following intense negotiations Wednesday between officials from Gov. Wes Moore’s administration and environmental leaders, the climate commission adopted amendments to original recommendations for generating revenues that instead call for studies on how those proposals could be implemented.

The move is a nod to the state’s worsening fiscal condition, and reflects the reluctance of Moore (D) and some state legislative leaders to adopt measures that could wind up raising taxes or boosting energy costs for Maryland consumers.

“Before we decide on the path forward, it’s really important that we take a step back and really determine what the impact [of proposals to raise revenues for climate programs] is on Maryland’s economy,” Maryland Environment Secretary Serena McIlwain said at Thursday’s virtual meeting. McIlwain chairs  the climate commission.

She added that taking extra time would let state officials gauge the impact of the incoming Trump administration on federal funding opportunities for climate and clean energy programs and on the state’s ability to impose aggressive environmental regulations.

The work of the climate commission is strictly advisory, but the panel includes several members of the governor’s Cabinet, and it carries weight with the governor and state lawmakers — especially when the state is wrestling with how to pay for the numerous mandates laid out in the Climate Solutions Now Act of 2022.

As the commission prepared its annual year-end report, members were weighing three recommendations from an internal workgroup to generate revenues for the state’s climate plan: One would have created a cap-and-invest program to make the transportation and building sectors pay for carbon emissions; another would have established a fossil fuel transportation fee and mitigation fund, aimed mostly at freight railroads that move coal through the state; and the third would have assessed huge fines on 40 large fossil fuel companies to compensate the state for historic climate emissions and associated environmental damage.

All three measures had been introduced as bills in the last legislative session but stalled.

At the climate commission’s November meeting, following pointed behind-the-scenes conversations among Moore administration officials, McIlwain proposed tabling the discussion for a month. So Thursday’s meeting was the final opportunity for the commission members to consider whether to include the proposals in their annual report.

Three other states — California, Washington and New York — have installed cap-and-invest plans that essentially make carbon emitters pay for greenhouse gas emissions by auctioning off pollution credits. It’s similar to the Regional Greenhouse Gas Initiative a multistate program that includes Maryland, which collects revenues from fossil fuel-driven power plants.

But instead of recommending a cap-and-invest program Thursday, the climate commissioners unanimously accepted an amendment proposed by McIlwain that would instead urge the legislature to authorize a study of how a cap-and-invest program would be implemented in Maryland, how it would impact consumers, and how much revenue it might be expected to generate.

The recommendation also suggests the legislature direct the Maryland Department of the Environment to establish a rule that would require fossil fuel companies doing business in the state to annually report their greenhouse gas emissions, beginning in 2027.

“These amendments do reflect a compromise,” said Kim Coble, executive director of the Maryland League of Conservation Voters and a co-chair of the climate commission, saying they would direct policymakers to “design and move to implement an equitable strategy” for the state to sell carbon credits in all sectors of the economy.

“The steps we need to develop a cap-and-invest program are moving forward,” she said. “I think it’s important to note that this represents progress.”

With Trump presidency looming, state, federal leaders renew commitment to Bay cleanup

During the debate, there was some pushback from commission members that the panel had been studying how to set up a cap-and-invest system all along, but McIlwain asserted that more detail is necessary before policymakers can fashion a proposal.

“We never did a full-blown study that could look at the economics of this,” she said. “There’s more important information that we all need, that the General Assembly needs, before we can go further down this road.”

The commission also voted 21-2 to amend the proposal to make the biggest fossil fuel companies pay for environmental degradation. Instead of recommending imposing fines on big carbon emitters in the short term, the commission embraced a plan from climate advocate Jamie DeMarco to identify how much climate change is costing the state of Maryland for the purpose of making the major polluters pay for those damages, and assessing precise amounts for how much each of the biggest fossil fuel companies should compensate the state.

DeMarco, one of the most vocal proponents of the Responding to Emergency Needs From Extreme Weather (RENEW) Act — the legislation in the 2024 session that would have unilaterally imposed the fines — said the study proposal would be introduced as a bill in the 2025 session. The prior version of the bill anticipated a $9 billion windfall for the state — almost enough to pay for the Department of the Environment’s recommendations for implementing the Climate Solutions Now Act. Those figures will be sharpened with the additional study, DeMarco said.

“Somebody has to pay for the rising floods and storms and droughts that are harming Marylanders almost every day,” Mike Tidwell, executive director of the Chesapeake Climate Action Network Action Fund, said in a statement after the vote. “Either taxpayers will foot the bill for washed-out roads and destroyed farm infrastructure – or the fossil fuel companies that caused the problems will pay their share.”

Vermont is the only state to have adopted a similar proposal, though officials there are only in the early stages of determining how much they want to fine fossil fuel companies and how to collect the damages. The New York legislature has adopted a similar bill but it has yet to be signed by Gov. Kathy Hochul (D) and the legislative term is about to end.

It is widely expected that the fossil fuel companies will sue to prevent the fines from taking place. Michael Powell, a climate commission member and attorney for energy and manufacturing companies, said studies have shown it could cost the state about $1 million a year to defend itself against industry lawsuits. Other skeptics of the plan have suggested that the fossil fuel companies would attempt to pass along any fines they have to pay to consumers.

Meanwhile, the proposal to recommend taxing the transportation of fossil fuels through Maryland was pulled by the climate commission Thursday at the request of state Del. Dana Stein (D-Baltimore County), who had introduced legislation for the policy during the 2024 legislative session.

“Over the past few days it’s become clear that there wasn’t a consensus on whether the coal transport fee should be implemented or studied,” Stein said. He added that he would still introduce the legislation in some form during the upcoming session, which begins Jan. 8.

Earlier this year, the Moore administration freed up $90 million from a state clean energy fund and redirected it for climate programs. The governor and his allies in the environmental movement at the time called it a “downpayment” on the deeper funding needed to attain the climate mandates.

Moore this week announced that $17 million of the downpayment would be made available for a program that will enable school districts to apply for grants from the Maryland Energy Administration to buy electric school buses.

“Electrifying our school bus fleet isn’t just the responsible choice for our environment — it’s also the smart thing for our state’s economic competitiveness and our children’s health,” the governor said in a statement.

Downpayments eventually require further payments — principal and interest. How and when policymakers can make those vast sums of money available, as the state is staring down the barrel of a fiscal crisis, still seems like an unanswerable question.