Maryland's Climate Pathway

Report

Maryland has set a bold and ambitious vision for its future: thriving communities, a clean and vibrant economy powered by the jobs of the 21st Century, enhanced health, and other benefits shared by all. As part of this vision, the State of Maryland has committed in statute to reshaping our economy towards delivering highly ambitious and forward-looking climate goals. The Climate Solutions Now Act (CSNA) sets Maryland’s sights high—in fact, the highest in the United States—with a goal of a 60% reduction in greenhouse gas (GHG) emissions by 2031 relative to 2006 levels, and a net-zero emissions economy by 2045.

The rapid, clean, affordable, and just energy and economic transition needed to achieve these goals will be challenging but it is possible. This report, Maryland’s Climate Pathway, sets forth a pathway towards meeting the CSNA goal through an all-of-society approach combined with a suite of actions across all economic sectors and GHGs, and realize additional economic, health, and environmental benefits for Marylanders. Such actions include those from the Maryland General Assembly and the executive branch; counties, cities, tribal governments, and communities; industries and businesses, universities, and other organizations; and critically, partnership with the federal government. In achieving this pathway, Maryland can also serve as a global example of an all-of-society approach on climate that integrates these pieces for enabling bold action to mitigate GHG emissions, prepare for the heightened impacts of climate change, and transition to a sustainable and low-carbon economy.

Maryland has consistently maintained its strong commitment to investing in its people, vibrant economy, diverse communities, and natural environment. It is one of the nation's most densely populated states, with over 6 million residents. The State boasts a tapestry of landscapes from the Appalachian Mountains to the Chesapeake Bay and the Atlantic Ocean coastline. The economic mix comprises cutting-edge biotechnology, advanced healthcare, bustling government institutions, renowned educational establishments, and robust manufacturing. However, amid this prosperity, the unfolding threat of climate change casts a shadow over Maryland's people and ecosystems. Rising sea levels and extreme weather events like heavy rainfall, heat waves, and floods are causing substantial property damage, disrupting transportation and utilities, and endangering public health.

These burdens are not endured equally. Vulnerable communities, including low-income populations, people of color, and those residing in flood-prone areas, face the brunt of these impacts. Their safety, health, and economic well-being are at heightened risk as they contend with the intersections of heat, air pollution, and limited access to vital infrastructure. And beyond these most vulnerable groups, all Marylanders can be impacted, through poor air quality, real health dangers for even healthy individuals, substantial amounts of lost work days and school days, curtailed recreational opportunities, and more. Maryland will need to navigate these challenges, and more, to deliver the necessary rapid, clean, affordable, and just energy and economic transition to ensure these vulnerable communities are protected.

Key Findings

Introduction

Key Findings

The Maryland’s Climate Pathway report demonstrates how Maryland can meet its ambitious climate goals of 60% reduction of greenhouse gas emissions by 2031 relative to 2006 levels, and attain a net-zero economy by 2045, all while realizing health and economic benefits for Marylanders, including improved air quality, new jobs, and household cost savings.
Maryland can do this through the coordinated implementation of current and new policies across each sector of the economy, combined with a strong federal partnership, and a broader all-of-society approach that integrates actions from cities, counties, local jurisdictions, business and industry leaders, community organizations, and more.
The first step is fully implementing the policies already in place in Maryland. As of 2020, Maryland had already achieved half of the reductions needed—36.7 MMTCO2e of the 73.3 MMTCO2e to meet the 2031 target. Full implementation of existing policies can achieve another 26.0 MMTCO2e by 2031, leaving one-fifth of the reductions left—a gap of 10.6 MMTCO2e that must be filled by new policy action.
This analysis offers a pathway to success to fill this gap and achieve the economy-wide 60% goal, illustrating potential actions across all sectors with additional reductions including 3.6 MMTCO2e from transportation, 2.3 MMTCO2e from electricity generation, and 1.6 MMTCO2e from buildings.
Additional policies from the agriculture, waste, and industrial sectors, including critical reductions in methane, are needed to achieve the 2031 target and support broad economic, social, and environmental benefits for Marylanders. Taking these steps now to achieve the 2031 goals will also place Maryland on a pathway toward its 2045 goal of net-zero emissions.
At its full potential, this pathway delivers substantial health, employment, and economic benefits to Maryland’s people, and further bolsters the leadership and ability of our economy to be globally competitive. New policy action will deliver even more health benefits through improved air quality and reduced respiratory ailments, especially for vulnerable populations—the equivalent of $1.09-$2.44 billion in health benefits by 2031. These benefits extend to the economy with the projected cumulative creation of more than 16,000 new jobs and increased personal income by nearly $1.5 billion by 2031.
Maryland can also draw from the substantial resources being generated through federal partnerships, including the Inflation Reduction Act of 2022, which catalyzes and funds critical actions at state and local levels. With these actions, the State of Maryland can achieve its goals—and build a better future for Maryland by extending resources, cost-savings, new jobs, cleaner air, safer homes and roads, food security, and more.

Chapter One - Introduction

To realize its vision for thriving communities, a clean and vibrant economy with jobs for the future, enhanced health, and other benefits shared by all, the State of Maryland has committed in statute to achieving ambitious climate goals. The Climate Solutions Now Act (CSNA) sets Maryland’s sights high—in fact, the highest in the United States—with a 60% reduction in climate pollutants by 2031 relative to 2006 levels, and a net-zero emissions economy by 2045. Realizing these goals will not only benefit Marylanders directly but will also put the state on a path to do its part to help the nation and the world address the critical challenges of climate change.

The rapid, clean, affordable, and just energy and economic transition needed to achieve these goals will be challenging but it is possible. This report sets forth a pathway that demonstrates how a suite of actions can be taken, across all economic sectors and all greenhouse gases (GHGs), to reach the goals set forth in the CSNA—and also highlights the many benefits of achieving them for Maryland’s people and economy. It shows an all-of-society approach, with policies and actions across the entire state contributing to success. Such actions include those from the Maryland General Assembly and the executive branch; counties, cities, tribal governments, and communities; industries, businesses, institutions, and other organizations; and critically, those in partnership with the federal government.

1.1 The critical challenge of climate change for Maryland

Located in the Mid-Atlantic region of the United States, Maryland is a diverse state known for its rich history, vibrant cities, and varied landscapes from the Appalachian Mountains to the Chesapeake Bay to the Atlantic Ocean. Maryland is home to approximately 6 million residents, which because of its small size, makes it one of the most densely populated states in the country. The State's economy is also diverse, encompassing sectors such as biotechnology, healthcare, government, education, and manufacturing.

Maryland’s people and economy face significant threats due to climate change, with many communities located in places that are vulnerable to climate impacts such as sea level rise, heat waves, floods, and droughts that often interact with other stresses such as air pollution. Ecosystems and the parts of the economy dependent on them are also facing pressures. The State's extensive shoreline, including the Chesapeake Bay, makes the State particularly susceptible to coastal flooding, storm surges, and erosion. Rising sea levels intensify the risk of inundation, endangering coastal communities, critical infrastructure, private buildings, and valuable ecosystems. Furthermore, increased frequency and intensity of extreme weather events, such as flooding, heavy rainfall, and heat waves, can lead to costly property damage, disruptions to transportation and utilities, and public health risks. Vulnerable communities, including low-income populations, people of color, and those living in areas prone to flooding or the intersections of heat, air pollution, and lack of access to infrastructure, bear the brunt of these impacts. These individuals also face heightened risks to their safety, health, and economic well-being because of the impacts of climate change. And beyond these most vulnerable groups, all Marylanders can be impacted, through poor air quality, real health dangers for even healthy individuals, substantial amounts of lost work days and school days, curtailed recreational opportunities, and more. A comprehensive pathway to achieve Maryland’s GHG reduction goals will prioritize the resilience and mitigation efforts needed to protect these vulnerable communities and ensure a safe, sustainable, and equitable future for all Marylanders.

1.2 Achieving a better future in Maryland through partnership on climate action

The State’s commitment to climate leadership sets the bar high both nationally and globally. Maryland has established the most aggressive state-level GHG emissions reduction goals in the United States to date, including a 60% reduction in gross emissions by 2031 and net-zero emissions by 2045. Maryland can achieve this goal through an all-of-society approach that elevates climate considerations into all relevant decisions across government, business, industry, and partner organizations, and charts a path towards a sustainable and resilient future.

Maryland’s leadership on climate, and Maryland’s ability to reach its goals, is rooted in already-strong actions taken by the State Legislature and the Executive Branch, as well as counties, cities, universities and research institutions, investors, health organizations, faith groups, and more. However, achieving the new 2031 and 2045 goals requires an even stronger set of actions across the economy. This climate action pathway will further accelerate progress towards emissions reductions, drive economic growth in diverse communities, protect Maryland’s fragile ecosystems and the communities dependent on them, and ensure a better world for generations to come.

Timeline to Achieve Maryland'as Climate Goals

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Figure 1.1. Timeline with milestones set by Maryland for achieving climate goals.

Achieving these climate goals will be good for Maryland—including its communities, health, and economy. However, these goals also support a larger set of actions across the United States and world to accelerate the transition of the national and global economy toward a new, cleaner, and better future. The transformed economy will grow in different ways than in the past and with different technologies and industrial strategies. Maryland’s leadership on climate will therefore support economic growth and transformation here at home to equip the State’s economy to thrive and compete effectively in the future.

Maryland will undertake these actions in partnership with the U.S. federal government, and will both benefit from and support the ambitious national climate strategy and goals of the United States. The United States has set a goal of reducing its emissions by 50-52% from 2005 levels by 2030, and to net zero by 2050. Achieving these national goals will be possible through a combination of existing policies, including recent comprehensive legislation from the federal government, plus new and accelerated actions from states, cities, businesses, federal regulatory agencies, and civil society across the United States. In addition, the substantial federal funding enabled by legislation and other forms of partnership with the federal government will be a strong and essential pillar supporting Maryland’s ability to achieve its goals. In 2022, Maryland set the most ambitious state-level climate targets in the country—making Maryland a prime example of how leadership on climate change at the state and local levels can support broader action.

Benefits of Maryland's Climate Pathway - 2031

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Figure 1.2. Summary of climate, health, and economic benefits to Marylanders.

Achieving the State's climate goals requires a holistic approach that considers the interconnection between the economy, environment, and health and social well-being of Maryland. Environmental benefits, such as reducing GHG emissions, conserving natural resources, and preserving ecosystems, are crucial for safeguarding Maryland's unique biodiversity and ensuring a sustainable future for generations to come. At the same time, it is essential to foster economic prosperity by capitalizing on clean energy investments, promoting sustainable industries, and creating green jobs. These commitments not only drive economic growth but also enhance the quality of life for Marylanders through increased employment opportunities, innovation, and technological advancements. Moreover, prioritizing health and social benefits is essential to ensure that climate action is inclusive and equitable, addressing the needs and vulnerabilities of marginalized communities, promoting social justice, fostering community resilience, and improving access to clean air and water.

The pathway presented here draws from these diverse and mutually reinforcing climate solutions. And through this combined, interconnected pathway of sectors and actors, the State can deliver benefits to its own residents and also develop and enhance best practices to shape a sustainable future for the planet.

1.3 Maryland’s Climate Pathway

Maryland's current policies already position it as a climate leader, with key measures already primed to contribute significant emissions reductions. Additional policies will help achieve the 2031 goal and put the State on track to reach net-zero emissions by 2045.

Maryland's Net-Zero Pathway

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Figure 1.3. Emissions trajectory to reach Maryland’s net-zero target in 2045.

Built on a multi-stage process and quantitative strategy to understand the opportunities for action, this report modeled how those opportunities would evolve within Maryland in the context of the national and global economy, and assess the impacts of those actions in 2031 in terms of emissions reductions and other benefits to the State. First, the analytical team engaged in an iterative, consultative process with the Maryland Department of the Environment (MDE), and other State agencies and stakeholders, to scope the set of potential federal, state, and local policies in Maryland and to identify those policies that may be most effective and feasible given Maryland’s specific situation. Encompassing a new policy platform, these policies are analyzed to project emissions reductions and determine the most efficient pathway to meet the GHG reduction targets in the law.

This strategy couples a United States-wide 50-state version of the well-known, vetted, and open-source global integrated assessment model GCAM (Global Change Analysis Model) with a set of bottom-up analyses to account for potential additional emissions reductions driven by U.S. states and sub-state actions and to ensure consistency with the State of Maryland’s GHG inventory methodologies. Such a modeling approach, by integrating bottom-up aggregation tools and data analysis into a global model with national and state resolution, enables a robust evaluation of individual policies and climate actions within specific sectors (for further elaboration, see, for example, Hultman et al 2019, Zhao et al 2021, Zhao et al 2022).1–4

The Maryland’s Climate Pathway analysis applies an all-of-society approach to help the State of Maryland identify a pathway to achieve Maryland’s 2031 and 2045 goals. The analysis integrates all major climate-related policies across each sector at both federal and non-federal levels, along with existing, currently in-force policies by Maryland’s State government—and considers implementation barriers and opportunities from local governments, community organizations, and the private sector. We present two scenarios. One quantifying the impact of existing policies in the “Current Policies” scenario, and one that includes the additional effects of a suite of potential new policies across all-of-society in the “Maryland Climate Pathway” scenario.

The Current Policies scenario models all existing federal and state-level actions contributing to Maryland’s emissions reductions, including the climate-smart application of the federal Inflation Reduction Act (IRA). In addition, this scenario models Maryland’s key policies contributing to major emissions reductions, which include Maryland’s Renewable Portfolio Standard (RPS), the forthcoming adoption of the Advanced Clean Cars (ACC) II rule, Building Energy Performance Standards (BEPS), and more (see Section 2, Pathways to State Targets). However, Current Policies only achieve 51% GHG reductions by 2031 relative to 2006, leaving a gap to reach the State’s 60% reduction goal.
The Maryland’s Climate Pathway scenario incorporates an all-of-society approach to achieving 60% reductions by 2031 from 2006 levels with a comprehensive suite of actions and reductions from best practices across every sector of the economy. It includes all modeled policies from the Current Policies scenario, as well as additional policies that enable the State to meet its climate targets. (See the technical appendix for more detailed information on the modeling and analysis).

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Figure 1.4. Key mitigation strategies and policies to achieve Maryland’s Climate Pathway.

This pathway would enable Maryland to achieve 60% reductions below 2006 levels in GHG emissions by 2031—and put the State on a trajectory to meet its 2045 net-zero goal. Through 2031, most reductions occur from the electricity, transportation, buildings, and industry sectors. Additional policies would also be needed in the agriculture and waste sectors to realize the reductions needed. To ensure progress towards net-zero by 2045, ongoing investment in the protection, management, and expansion of Maryland’s natural and working lands is also critical. This report presents the climate pathway to 2031 by breaking down each sector’s contribution to reductions, key policies needed, and any sub-sector actions necessary for implementation. Following the sector breakdowns is a description of the benefits associated with the pathway, including job growth, improvement in air quality, health benefits, and cost savings.

This analysis was led by the Center for Global Sustainability (CGS) at the University of Maryland, in partnership with MDE. As a next step, MDE and CGS will convene a series of public workshops and provide other methods for interested parties to comment on the proposed pathway. Following the open comment period, MDE will deliver a final policy framework and plan at the end of 2023.

Chapter Two - Pathway to State Targets

This report analyzes greenhouse gas (GHG) emissions reductions in two modeled scenarios for the State of Maryland - reductions under Current Policies and reductions under Maryland’s Climate Pathway. Maryland’s Climate Pathway includes additional policies necessary to meet the requirements for the State’s ambitious goals established in the Climate Solutions Now Act (CSNA) of 60% GHG emissions reduction by 2031 and net-zero GHG emissions by 2045.

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Figure 2.1. Economy-wide GHG emissions and removals broken down by sector under Current Policies and Maryland’s Climate Pathway scenario.

Full implementation of Current Policies puts Maryland on track to reduce emissions by 51% in 2031 relative to the 2006 baseline, leaving a gap of 10.6 MMTCO2e (million metric tons of CO2 equivalents) to reach the 2031 target. Historical efforts had already achieved 36.7 MMTCO2e of reductions as of the most recent State emissions inventory in 2020. However, under Current Policies, emissions stop declining by 2040 and resume growth through mid-century. This occurs because many existing policies at both the state and federal levels expire before 2040, and as policy support is withdrawn emissions reductions slow or reverse in many sectors, and because the demand for energy services continues to increase. To meet the State’s goals, Maryland’s Climate Pathway involves both the extension and expansion of existing policies to avoid this reversal in the Current Policies scenario, as well as the introduction of new policies that lead to deeper reductions. Natural and technological CO2 removal approaches are not a part of the pathway to the 2031 goal because the 60% reduction target applies to gross emissions, and therefore does not include any negative emissions. Removal approaches are included in later years to support achievement of the 2045 net-zero target.

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Figure 2.2. Remaining gross emissions by sector in 2031 under the Current Policies and Maryland’s Climate Pathway scenarios.

The largest contributions to reductions in Maryland’s Climate Pathway come from the electricity sector (Section 2.1) and the transportation sector (Section 2.2), but this Pathway requires action across all sectors of the Maryland economy to achieve the needed emission reductions. Additionally, Maryland’s Climate Pathway includes an economy-wide cap and invest program as a supporting policy that achieves the last 4.8 MMTCO2e of emissions reductions needed to meet the 2031 target, and can help to fund future emissions reductions programs.

Cap and Invest Program

A cap and invest program sets a limit on the amount of emissions across the economy, and auctions off the allowed emissions such that all actors are incentivized to pursue emission reduction strategies that cost less than purchasing the emission allowance. The proceeds from the sales of these allowances are then re-invested within the state, potentially providing relief to sectors or individuals who are less able to pay for reductions, or funding state programs and infrastructure to support the green transition. Within this analysis, a high-level, theoretical cap and invest program incentivizes the least-cost emission reductions across all sectors of the economy within the model. Certain emissions sources that were analyzed exogenously were not included in the cap due to modeling constraints, including hydrofluorocarbons (HFCs) and agriculture. As this is a theoretical program that does not exist today, additional analyses will be needed to determine costs associated with the cap and specific details around how the cap would be implemented within the context of Maryland. No specific policy for reinvestment of funds is modeled in this analysis, but ensuring that investment is used effectively and equitably to support the State’s goals will be a key policy challenge for this program.

Maryland's Climate Pathway

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Figure 2.3. GHG emissions reductions by sector under Current Policies and in Maryland’s Climate Pathway to reach the State’s goal of 60% emissions reduction by 2031. Each bar from left to right indicates the emissions reductions achieved in that category. Darker shades indicate reductions achieved through new policies introduced in Maryland’s Climate Pathway in a given sector, and lighter shades of the same color indicate reductions achieved under Current Policies in that sector.

Beyond 2031: Reaching Net-zero

Maryland’s climate goals are ambitious not only because of the speed of reduction required, but also because of their scope. Both the 60% emissions reduction goal in 2031 and the net-zero goal in 2045 are for all GHGs, not just carbon dioxide. Some of these non-CO2 emissions are particularly difficult to abate, which together with residual fossil CO2 emissions, means that emissions sinks must be developed to offset residual emissions across the economy. These offsetting activities can include natural sinks from land use (Section 2.9) as well as technological CO2 removal from negative emissions technologies. In Figure 2.1, natural sinks are represented by the “Forestry and Land Use'' category, and technological removals are represented as “CO2 Removal”. In total, Maryland’s Climate Pathway includes 20.0 MMTCO2e of negative emissions in 2045 — 8.8 MMTCO2e from natural sinks and 11.2 MMTCO2e from technological removals. To achieve that quantity of negative emissions, cultivation of natural sinks and development of negative emissions technologies must be pursued well before 2045 if they are to reach the required levels in time. Enhancing land sinks will require significant afforestation and conservation efforts, expansion of best practices in agriculture and forestry to increase soil and standing carbon stocks, proactive management of coastal ecosystems, and improved measurement and monitoring practices to track success. Technological sinks will require investment in innovation, support for demonstration and deployment phases, and appropriate financial mechanisms as technologies mature, including research and development funding, carbon markets, impact investing, public-private partnerships, green bonds and climate funds, and philanthropic funding. Both will benefit from the development of scientific and legal frameworks to ensure that net sequestration is rigorously monitored and verified over time.

Methodology

The primary analytical tool used in this analysis is a 50-state version of the Global Change Analysis Model (GCAM), which is described more fully in Section 2 of the Technical Appendix. GCAM is a global, open-source integrated assessment model that links the human and Earth systems and has been widely utilized to assess global, national, and subnational climate change and climate mitigation pathways. Here, GCAM is used to model changes in the electricity, transportation, buildings, and industry sectors of Maryland. The fossil fuel industry, waste management, agriculture, and forestry and land use sectors are partially or wholly analyzed outside of GCAM due to modeling and data limitations. The modeling assumptions are described in the Technical Appendix.

GHG emission results are calibrated to the Maryland GHG inventory in 2020 as the last available year of historical data. GCAM generates results in 5 year time-steps, so emission results for 2031 are calculated as a linear interpolation between 2030 and 2035. Non-emissions data is not interpolated, and therefore 2030 data is sometimes referenced in discussions about the 2031 target. Global warming potentials (GWPs) with a 20 year time horizon are used throughout the report to convert non-CO2 gases to CO2-equivalents, as required in the CSNA.5 This effectively emphasizes the potency of short-lived climate pollutants (SLCPs) such as methane compared to 100 year GWPs, which were used in Maryland’s GHG inventory prior to the CSNA requirement. Therefore, sources of SLCPs are particularly important to address as drivers of overall emissions in sectors such as agriculture, fossil fuel, and waste management under this accounting requirement.

Considerations for Policy Implementation

This analysis assumes full implementation of all modeled policies in the Current Policies and Maryland’s Climate Pathway scenarios. This means that these results represent the uppermost potential for emissions reductions achievable under these policies (see Section 2.10 for sensitivity analysis of incomplete policy implementation). Significant effort through supportive policies, regulations, and community engagement is therefore necessary to reach the modeled emissions reductions. It is also important to address equity concerns about how a given policy is implemented, which is often not represented within the model structure itself. Particular challenges for implementation of key policies with regard to these issues are noted for each sector under Considerations for Policy Implementation. These sections are not intended to provide a complete analysis of these concerns, which is beyond the scope of this work, but rather to briefly describe challenges and opportunities for a given policy. Each consideration is motivated by a mitigation strategy the modeling results suggest is needed to reach the State’s goals, and addresses concerns that go beyond the scope of the model.

2.1 Electricity Sector

Modeled Policies: Current Policies Scenario

In the Current Policies scenario, the major policies modeled in the electricity sector include Maryland’s Renewable Portfolio Standard (RPS), the Regional Greenhouse Gas Initiative (RGGI), and renewable energy incentives from the federal Inflation Reduction Act (IRA). We also assume planned retirements of coal-fired power plants in Maryland, and relicensing of existing nuclear generation facilities at Maryland’s Calvert Cliffs station.

Maryland’s RPS works to increase the production of renewable energy sources such as solar, wind, hydropower, and other alternatives to fossil fuels. The RPS requires electricity utilities and suppliers to meet a prescribed minimum portion of their retail electricity sales with various renewable energy sources, which have been classified within the RPS Statute as Tier 1 and Tier 2 renewable energy sources.6 In the Clean Energy Jobs Act of 2019, Maryland’s RPS increased the amount of renewable energy that electricity suppliers must procure from renewables to at least 50% from Tier 1 renewable energy resources by 2030.6 Additionally, there is a carve-out that requires that 14.5% of retail electricity sales come from solar resources by 2030. The RPS initially allowed no more than 2.5% (500MW) from offshore wind, but then changed to require additional procurement of at least 1,200 MW from offshore wind projects. Maryland will surpass this new RPS target, with over 2,000 MW of total offshore wind capacity expected to come online after 2025.6,7 Due to modeling constraints, the RPS requirements were modeled as separate requirements on generation within Maryland and within the larger PJM region rather than a single policy, which effectively represents the purchase of renewable energy certificates (RECs) for imported power. Future analysis may refine this policy representation.

RGGI is a multi-state cap-and-invest cooperative effort by 12 Northeast and Mid-Atlantic states to reduce carbon dioxide (CO2) emissions from power plants with a goal to cut power plant emissions 30% below 2020 levels by 2030.8 Through this initiative, the states issue CO2 allowances that authorize regulated sources to emit one short ton of CO2. Once every three months, RGGI auctions off these allowances to power plants and re-invests the proceeds in member states.

Coal phaseout is already underway in Maryland. As of 2023, all coal-fired power plants are in the process of retiring or switching to other fuel sources in the next few years.9,10 However, a number of the states in the PJM Interconnection do not have plans to fully phase out coal power, including West Virginia, Kentucky, Illinois, Pennsylvania, Indiana, Ohio, and Michigan. This has a potential impact on the State’s climate progress because Maryland is currently a net importer of power and accounts for the emissions from imported power using the average emissions rate of the rest of the PJM interconnection.

Maryland has one operating nuclear plant, Calvert Cliffs Nuclear Power Plant, located in Lusby, Maryland which has two operating reactors that can produce up to 1,790 MW of zero-emissions energy.11 Both reactors have been relicensed with the Unit 1 reactor operating through 2034 and Unit 2 operating through 2036, and in this analysis, are assumed to be relicensed again for continued operation through 2050.11 This assumption is in line with the State’s previous assumptions in the 2030 GGRA Plan,12 but could impact the generation mix modeled here post-2034.

The IRA allocates $30 billion in clean energy production tax credits (PTC) for taxable businesses entities and direct pay to certain tax-exempt entities including local governments and many nonprofits.13 The PTC offers a base tax credit of 2.75 cents per kWh for clean energy projects under 1 MW and 0.5 cents per kWh for projects greater than 1 MW.14 Eligible entities can receive PTC bonuses for siting in energy communities which will be heavily affected by a transition away from fossil fuels, meeting domestic content minimums, and meeting wage and apprenticeship requirements.14 The IRA also allocates $10 billion in investment tax credits (ITC) for the same eligible entities. The base ITC is 30% of the total qualifying project cost for projects under 1 MW and 6% of the total qualifying project cost for projects greater than 1 MW. Eligible entities can also receive ITC bonuses for siting in energy communities, meeting domestic content minimums, and meeting wage and apprenticeship requirements, as well as siting in low-income communities and for qualified low-income residential building or economic benefit projects.14 To accommodate the influx in clean energy supply, the IRA provides $5 billion for energy infrastructure reinvestment projects.13 Qualifying projects will retool, repower, repurpose, or replace energy infrastructure that has ceased to operate; or enable operating energy infrastructure to avoid, reduce, utilize, or sequester air pollutants or anthropogenic emissions of GHGs.13 Finally, the IRA expands and extends the 45Q tax credit which incentivizes the use of carbon capture and storage (CCS).13 With the passage of the IRA, the tax credit now provides up to $85 per ton of CO2 permanently stored and $60 per ton of CO2 used for enhanced oil recovery (EOR) or other industrial purposes.15

Additional Modeled Policies: Maryland’s Climate Pathway Scenario

In Maryland’s Climate Pathway, all current policies above were included with the addition of more ambitious policies needed to reach the State’s goals. Additional policies in this sector include a strengthened RGGI target of zero GHG emissions by 2040 and a clean electricity standard (CES) requiring 100% of in-state electricity to be produced from clean sources by 2035.

Modeling Results

Decarbonizing the power grid will be critical as electrification ramps up in end-use sectors. In 2031, the electricity sector achieves GHG emissions reductions of 83% below 2006 levels under the Current Policies scenario and 89% under Maryland’s Climate Pathway scenario, delivering the largest emissions reductions of all sectors.

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Figure 2.4. Electricity sector GHG emissions over time in Maryland's Climate Pathway. Emissions under Current Policies are shown with the dotted line for comparison.

In both scenarios, coal power is assumed to phase out by 2025, per datasets from EIA-860,16 Global Energy Monitor’s Global Coal Plant Tracker,17 the U.S. Environmental Protection Agency (EPA) NEEDS database,18 and the announcement of the Warrior Run facility’s retirement by AES.19 In-state generation meets the RPS target of 50% by 2030 and complies with the current RGGI target, with federal tax incentives lowering the costs of renewables. In Maryland’s Climate Pathway, natural gas is rapidly displaced by renewable sources by 2031 under more stringent requirements from RGGI and the CES, and the early retirement of natural gas plants as a result of the cap and invest program. All remaining natural gas plants are equipped with carbon capture and sequestration (CCS) technology by 2035, which would be supported by the recently proposed EPA rule on power plant emissions.20 The majority of remaining emissions come from natural gas generation and electricity imported from surrounding states. Due to the rapid electrification in end-use sectors, the demand for electricity grows by over 20% from today’s levels by 2031, a level of growth comparable to electricity demand increases seen in Maryland in the 1990s.21

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Figure 2.5. Electricity generation mix in Maryland over time in Maryland’s Climate Pathway, including imported electricity from the PJM grid.

Zero/Low-emissions Technologies

Under Maryland’s Climate Pathway, both wind and solar generation increase five fold by 2031, with solar accounting for 33% of in-state generation and wind accounting for over 15%. Offshore wind represents over 80% of total wind generation in 2031, reaching an estimated capacity of 2.2 GW in 2035. Nuclear generation is held constant at 2020 levels due to the relicensing of Calvert Cliffs through 2050.

Fossil Fuel Technologies

With the phaseout of coal by 2025, the only major remaining in-state source of emissions is natural gas. By 2031, natural gas generation in Maryland’s Climate Pathway falls by over 95% from today’s levels, accounting for less than a 2% share of in-state generation, compared to a 15% share under the Current Policies scenario. This drop in natural gas generation is driven by the cap and invest program, which begins in 2030 and forces the retirement of natural gas power plants earlier than what would have occurred under the CES.

Imported Electricity

Imported electricity from surrounding PJM states makes up over half of the electricity demand in Maryland in 2031, and contributes to over 95% of the remaining emissions in the power sector. In this pathway, although Maryland achieves its renewable and clean energy targets for in-state generation, the rapid expansion of solar and wind from current levels in this scenario is not sufficient to meet the growth in electricity demand from end-use sectors and to make up for reductions in natural gas generation. This means that Maryland must also increase imports from other states. The amount of imported electricity will depend on the relative cost of in-state vs out of state generation and the rate at which new generation can be built in-state to supply increased demands from electrification. Further increases of in-state deployment of clean energy sources in the near-term beyond what is included in this scenario would decrease the need for imports.

Beyond 2031

To meet the net-zero goal, renewables deployment continues to ramp up, reaching over 75% of in-state generation by 2045. Additional wind generation is predominately offshore at almost 90% of total wind generation, reaching over 6 GW in capacity, which is close to the 8.5 GW target that Maryland has set.22 As electrification of end-use sectors continues to increase, electricity consumption also grows by about 50% from 2031 levels by 2045, primarily driven by increased consumption in the transportation sector. Natural gas with CCS is introduced in the 2030s, and contributes to 2% of in-state generation by 2045. Residual emissions from natural gas after the implementation of CCS are due to imperfect capture rates, which are generally expected to be at most 95%. Biomass with CCS is also introduced in the 2030s, though it plays a minor role, making up less than 1% of the generation mix in 2045. To help meet electricity demand, imported electricity from surrounding states continues at a level slightly higher than the modeled value for 2030.

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Figure 2.6. Electrical energy consumption by sector in Maryland’s Climate Pathway.

Considerations for Policy Implementation

Decarbonizing the electricity sector is critical not only for reducing emissions within the sector, but also for enabling the decarbonization of other sectors such as transportation, buildings, and industry where electrification is a key solution. This shift is essential for technologies such as electric vehicles (EVs), electric heating and cooling in buildings, and electrification of industrial processes. To facilitate this transition, several critical policies and regulatory actions will need to be implemented across the state. Importantly, coal phase-out and grid stability need to be prioritized to achieve 100% clean energy sources by 2035. Maryland can also leverage its involvement with RGGI to set a zero emissions cap by 2040. Finally, deployment of renewables, particularly solar photovoltaics (PVs), will need to accelerate rapidly in the near-term. Central challenges for these actions will be to ensure this transition is equitable through programs such as community solar, and to ensure that imported electricity from outside of Maryland is clean so that emissions reductions outside of state borders can also be accounted for in the state GHG Inventory.

IRA Implementation

The IRA allocates billions in federal funds to accelerate the clean energy transition and Maryland can leverage these funds to achieve its own emissions reduction goals. Extending and expanding the federal clean energy PTC and ITC for the next 10 years provides long-term stability and confidence, removing a previous deterrent to investment.23 The tax credits also include bonuses for domestic production of renewables and siting renewables in energy communities, providing opportunities for Maryland to spur job creation and prioritize equity. Additionally, for the first time, the IRA also allows for tax-exempt organizations to take advantage of tax credits through direct payments.24 This opens new possibilities for Maryland’s state and local governments to build out renewable resources themselves, as well as educating and supporting other tax-exempt organizations within the state about receiving these benefits. Furthermore, the tax credits are not capped, so Maryland should work to take advantage of the tax credits to the greatest extent possible.

To achieve an equitable implementation of the IRA’s benefits, it is essential to keep in mind disadvantaged communities that are greatly affected by climate change and bear disproportionate environmental burdens, as well as energy communities that are at risk of being left out of the renewables transition. Maryland can leverage IRA provisions including the Greenhouse Gas Reduction Fund and the Energy Infrastructure Reinvestment Program to bring clean jobs and clean electricity to disadvantaged areas.25,26 Maryland can also utilize the loans made available by the Energy Infrastructure Reinvestment Program to support coal phase-out by 2025 and revitalize energy communities whose livelihoods are tied to declining fossil fuels.

Ensuring Grid Stability Through the Renewable Energy Transition

To replace coal and other fossil fuels, Maryland needs to achieve a rapid deployment of renewable technologies that ensures a resilient grid in response to growing demand and concerns of instability. Many states, including Maryland,27 have begun implementing grid management and grid modernization policies to support increasing variable renewable generation. For example, Illinois’s Energy Infrastructure Modernization Act (EIMA) authorized up to $3.3 billion in funding for advanced metering infrastructure (AMI) and other grid investments, and established a performance-based mechanism for ROE rate determination.28 Maryland’s Public Service Commission (PSC) found that such performance based rates may be helpful, if carefully implemented, in facilitating the achievement of the State’s ambitious goals regarding electrification, renewable development, pipeline replacement, development of new consumer solutions, grid resiliency, and other state goals.29

Maryland can help prepare the grid for increased demand through investment and deployment of new technologies including central and distributed storage, and microgrids.30 Recently, Maryland enacted the Maryland Energy Storage Program that established energy storage targets to accelerate deployment — 750 MW by year’s end 2027, 1.5 GW through 2030, and 3 GW through 2033.31 This follows the establishment of an Energy Storage Pilot Program which required the state’s four investor-owned utilities to solicit offers to develop energy storage projects and submit to the PSC for approval.32 One ongoing energy storage project, the Talen Energy project in Baltimore, is projected to store 20 MW of energy with the potential to expand in the future.33 These energy storage additions can play an important role in grid stability as renewables come online, but it should be noted that when storage is connected to the wider grid rather than to a dedicated renewables project, the energy it provides is only as clean as the grid mix. Microgrids can improve supply and grid resilience by providing generation during extreme weather events independent of an impacted grid.34 For example, the California Public Utilities Commission implemented the Microgrid Incentive Program in 2021 to fund clean energy microgrids with a $200 million budget.35 However, technical and financial barriers exist to the widespread adoption of both of these technologies. As they have yet to be rapidly deployed, more research and development is necessary to achieve cost-competitiveness.34

Leveraging Inter-State Collaboration through RGGI

Setting RGGI on a path to zero emissions by 2040 is central to meeting the State’s ambitious 2031 goal. This is dependent on agreement of the other RGGI states, and Maryland will need to work in partnership with other leading states to push for more ambitious targets. Through Maryland’s Strategic Energy Investment Fund (SEIF), the mechanism by which the State invests RGGI auction proceeds, the State has an opportunity to direct additional funds to further solar deployment through programs such as community solar operated by the Maryland Energy Administration (MEA). In doing so, the state can consider environmental justice alongside the added capacity and CO2 emissions savings for every dollar invested by SEIF.

Solar Co-Siting and Co-Adoption

Solar siting is another critical factor for achieving sufficient deployment of renewables, as deployment of solar requires significant land area, and this can lead to land conversion or competition with other land uses. However, there are many opportunities to expand co-siting of solar within Maryland to address this concern including agrivoltaics,36 leveraging unused lands at airports,37 establishing community solar with the help of hospitals,38 and deploying solar on closed landfills and other brownfields.39 Some states, like New York and more recently California, have also increased their authority to approve utility-scale renewable energy projects.40 Since the passage of the law in NY in 2020 that gave the state final approval over new projects, many more utility-scale projects have been approved.40 It is important to keep in mind, however, that different policy instruments are appropriate for different states as factors such as population and long term support for solar help explain variations in adoption among states.41

There is also an important potential for synergy between adoption of residential solar and EVs, which could support a larger build-out of distributed solar through efforts such as the Solar Canopy Program operated by MEA.42–44 Research on adoption trends showed that adoption of EVs and residential solar follow different trends - necessitating a different approach for each to ensure co-adoption of both is supported.45–47 Solar adoption was strongly correlated with housing variables such as housing type, value, and ownership as opposed to race or income.45 EV adoption was better explained by economic variables like income and wealth.45 Thus, it is particularly important to consider trends and drivers of solar and EV adoption, along with implications for energy equity, when promoting adoption of EVs and residential solar.

Interconnection Challenges

Interconnection is the process of connecting power generation and storage projects to the local grid or transmission system. This process can sometimes be costly, at times requiring upgrades to the broader network or construction of additional infrastructure at the point of interconnection, particularly for variable renewable resources like solar.48 Given the need for rapid deployment of solar, wind, other renewables, and storage to meet Maryland’s goals, having an expeditious interconnection processes is paramount. A recent report focusing on Massachusetts49 outlined particular issues with interconnection queues, noting that considering one project at a time and placing all upgrade costs (referred to as cost causation) on the proposed project can cause delays and lead to project withdrawals. Another recent report on the PJM grid50 outlined how the backlog and delays of the PJM interconnection queue could affect Maryland’s ability to meet its renewable goals. It is important to note that PJM will be employing a new process for its interconnection queue going forward, which evaluates many projects at once in a cluster-based approach,51 but the extent to which that the backlog is filled and new projects are quickly studied and approved will be a deciding factor for renewables growth in Maryland.

Inventory Accounting Methodology

Maryland’s GHG accounting methodology calculates emissions from imported electricity based on the average carbon intensity of the rest of the PJM grid. This diverges from the accounting methodology of the state’s RPS, which allows out-of-state renewable generation to count toward the standard. This means that emission reductions from imported electricity either requires high ambition from all PJM states (both those participating in RGGI and outside of it) to lower the emissions intensity of the entire grid, or adjustment in state accounting methodology to allow for time-matched RECs. The use of time-matched RECs means that imported electricity would be uniquely matched with a renewable generation source that is producing electricity at the time of the import through the newly created PJM hourly tracking system.52

Partnerships for Equity, Access, and Benefits

Collaboration across private and public sectors, communities, and civil society has been proven to help expedite decarbonization efforts, gain support and funding for renewable energy projects, deploy new innovations in the clean energy field, and help ensure equity, access, and affordability to low-income communities.53 Recently, Maryland permanently adopted a less restrictive and more equitable statewide community solar program.54 At least 40% of the power output from community solar projects will be set aside for low and middle income (LMI) subscribers (except when subscribers totally own the system), aligning the State’s community solar program with the federal Justice40 initiative.5455 Through these collaborations between local utilities and solar facilities, all Maryland residents can pay to access solar-generated electricity, help advance renewable energy, and save money on utility bills—extending savings and access to historically marginalized residents that may not own their residence.56 A deliberate focus on community solar access for low-income Marylanders is important as historically, renewable energy benefits are primarily realized by high-income residents.57 One key recommendation to prevent this is ensuring early adoption, which Maryland is already working to accomplish through their pilot program. As this pilot program takes permanent form, more collaboration is still needed to answer critical questions on deployment, participation, and program evaluation.57

Case Study: Offshore Wind on Maryland’s Coasts

In an effort to meet its renewable energy goals and generate enough clean energy to power thousands of homes, the state of Maryland has begun developing four offshore wind projects located off the coast of Ocean City, MD. These offshore wind projects are planned at 2,022.5 MW of offshore wind capacity, enough to power 600,000 average Maryland homes and accelerate the achievement of Maryland’s renewable energy goals over their 20-30- year lifespans. While these projects are planned for operation in 2026, they are not yet permitted or under construction.58

Not only will these wind turbines create new sources of more environmentally friendly energy, but they are also expected to create about 12,000 direct full-time equivalent (FTE) job opportunities in Maryland. The installation of offshore wind projects is far more complex than a land wind project, and Maryland residents will benefit from the substantial job opportunities in building and operating the State’s wind projects. Wind jobs can support sustainable local economies and careers across a variety of skills and expertise including transportation of raw materials and supplies, production and assembly, installation, and maintenance. To realize a successful offshore wind industry in Maryland, training centers and resources must be economically and locationally accessible to all Marylanders, including the most vulnerable communities, and access to diverse and accessible career pathways must be expanded for the next generation of workers who will lead the clean energy transition.

2.2 Transportation Sector

Modeled Policies: Current Policies Scenario

In the Current Policies scenario, modeled policies in the transportation sector include the Advanced Clean Cars (ACC) II rule, the Advanced Clean Trucks (ACT) rule, and comprehensive smart growth policies that improve travel efficiency and reduce vehicle miles traveled (VMT). Federal policies impacting transportation include electric vehicle (EV) and sustainable fuel tax credits from the IRA, EV infrastructure investments from the Bipartisan Infrastructure Law (BIL), and Corporate Average Fuel Economy (CAFE) standards.

Maryland is adopting the ACC II rule this year, requiring manufacturers to continuously increase the share of zero-emission vehicles (ZEVs) they sell within the state until reaching 100% of passenger car and light truck sales by 2035.59 The ACC II rule was originally adopted in California, but has now been adopted by multiple other states including Maryland. The California ACT regulation similarly requires manufacturers to make zero-emission trucks an increasing percentage of their annual sales from 2024 through 2035.60 The Maryland ACT requires Maryland to adopt this regulation effective in 2027.

In addition to adopting emerging technologies and building out infrastructure to support such technologies, Maryland’s Department of Transportation (MDOT) also aims to improve travel efficiency and reduce VMT in a comprehensive approach to decarbonization in the transportation sector. Some of MDOT’s existing strategies include transitioning to cleaner and more efficient public transportation, expanding public transit systems and intercity systems, investing in bike and pedestrian infrastructure, and achieving the GGRA Smart Growth program’s compact development goal.12 Maryland previously achieved its 75% compact development goal (as defined in the technical appendix61) for the 2011-2020 planning period and is working to continue efforts on land use-location efficiency to reduce VMT and the combustion of fossil fuels.12 MDOT is also pursuing additional strategies that are not modeled here explicitly, including on-road technology for traffic management, projects to expand freight and rail capacity, transportation demand management, all-electronic tolling, drayage truck and BWI airport parking shuttle bus replacements, electrification of the State passenger vehicle fleet, and a Fall 2024 requirement for zero-emission school bus purchases.

The IRA provides a $4,000 tax credit for used light-duty EVs and a $7,500 tax credit for new light-duty EVs, subject to income limitations.13 To be eligible for the full credit, new vehicles must also undergo final assembly in North America, exceed domestic critical mineral and battery component sourcing thresholds, have a battery capacity of at least 7 kWh, and have a manufacturer’s suggested retail price (MSRP) below $80,000 for vans, SUVs, and pickup trucks, or $55,000 for other vehicles. The IRA also extends biofuel, sustainable aviation fuel credits, and other clean fuel incentives ranging from $0.20 to $1 per gallon for biofuels, and $0.35 to $1.75 per gallon for sustainable aviation fuels. The credits vary for each fuel based on the emissions factor.13 In addition to the tax credits, the IRA also allocates $300 million for a sustainable aviation fuel grant program to develop and apply various technologies to the production, transportation, blending, and storage of aviation fuels.13 The BIL invested $7.5 billion in EV charging infrastructure, $5 billion in school bus electrification, and $1.6 billion in transit bus electrification.62

CAFE standards set by the National Highway Traffic Safety Administration (NHTSA) regulate how far vehicles can travel on a gallon of fuel, with separate standards for light-duty vehicles and medium- and heavy-duty vehicles.63 Federal CAFE standards increased in 2022 for light-duty vehicles, requiring that new vehicles sold in the United States average at least 40 miles per gallon.64 The updated CAFE standards will increase fuel efficiency 8% annually for vehicle model years 2024 and 2025 and 10% annually for vehicle model year 2026.64 The EPA recently announced new, more ambitious proposed tailpipe emissions standards to further reduce emissions from light-duty and medium-duty vehicles starting with model year 2027, but these are not modeled here because they are only proposed, not yet adopted.65

Additional Modeled Policies: Maryland’s Climate Pathway Scenario

In Maryland’s Climate Pathway, all current policies above were included, with some additional policies also modeled. Additional policies in this sector include VMT reductions based on targets set by other leading states like Colorado, as well as California’s Advanced Clean Fleets rule, which is assumed to help facilitate achievement of the ACT targets in the near-term. The VMT reductions modeled in Maryland’s Climate Pathway represent decreasing passenger miles traveled. The Advanced Clean Fleet standards operate by driving EV sales of freight trucks after 2035, reaching 100% electric truck sales by 2040. Some electrification of nonroad gasoline usage is also assumed in consumption by lawncare and other commercial equipment.

Modeling Results

In 2031, the transportation sector achieves GHG emissions reductions of 38% below 2006 levels under the Current Policies scenario and 49% under Maryland’s Climate Pathway scenario. The majority of emissions reductions occur in on-road vehicles, which are the dominant source of emissions in the sector.

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Figure 2.7. Transportation sector GHG emissions over time in Maryland's Climate Pathway. Emissions under Current Policies are shown with the dotted line for comparison.

In both scenarios, Maryland achieves the ACC II and ACT targets starting in 2027, with federal EV tax incentives and investments lowering the costs of EVs. At the same time, CAFE standards increase the efficiency of new on-road internal combustion engine (ICE) vehicles as well as the deployment of EVs. The Advanced Clean Fleets policy is also implemented, complementing ACT to drive freight truck sales to 100% EVs by 2045. Smart growth and transportation demand management policies reduce personal vehicle travel through ridesharing and mode-switching to public transit, biking and walking.66 These changes are presented here in passenger-miles traveled, which encompasses any movement of a person over a single mile via any transportation mode. Similarly, changes in freight tonnage movement are presented in ton-miles traveled, which encompasses transportation of one metric ton of freight over a single mile via any transportation mode. Although passenger-miles and ton-miles are not equivalent to VMT, the percentage changes between model years can be interpreted in terms of percentage changes in VMT. With additional policies in Maryland’s Climate Pathway scenario, passenger-miles in personal vehicles are further reduced through additional smart growth transportation policies, and ton-miles are reduced for freight trucks due to the cap and invest program resulting in reduced diesel consumption through service demand reductions and mode shifts. See Considerations for Policy Implementation below for more information on policies that could contribute to these reductions.

Passenger Vehicles: Cars, SUVs, and Trucks

Passenger car, SUV, and truck ZEV sales reach 54% by 2030 and 100% by 2035 in Maryland’s Climate Pathway, achieving Maryland’s ACC II target. In the near term, battery EVs dominate, and hydrogen-powered fuel-cell EVs play a minor role. While passenger-miles grow with economic development in 2025, smart growth policies and the cap and invest program reduce passenger-miles in 2030. As a result of these drivers, passenger-miles increase by 0.6% annually from 2020 to 2030 on average, compared to 2% annually under Current Policies.

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Figure 2.8. Overview of passenger transportation in Maryland’s Climate Pathway showing a) passenger-miles traveled by mode in Maryland over time, and b) the percentage of passenger miles traveled in cars, SUVs, and trucks by fossil fueled vehicles and ZEVs.

Freight Trucks

Freight truck ZEV sales reach 30-50% by 2030, and 40-75% by 2035, depending on truck type, achieving Maryland’s ACT target. In the near term, battery EVs dominate, and hydrogen-powered fuel-cell EVs play a minor role. While ton-miles supplied by freight truck service grow with economic development in 2025, the cap and invest program reduces freight truck service in 2030 in order to rapidly reduce diesel use and decarbonize the sector. As a result of these drivers, ton-miles traveled in freight trucks increase by 0.9% annually from 2020 to 2030 on average, compared to 1.5% under Current Policies.

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Figure 2.9. Overview of freight transportation in Maryland’s Climate Pathway showing a) freight service in billion ton-miles by mode in Maryland over time and b) the percentage of freight trucking in ton-miles by fossil-fueled vehicles and ZEVs.

Nonroad Fuel Usage

Emissions from nonroad gasoline and diesel usage are not modeled directly in these scenarios. Nonroad gasoline usage (primarily by lawn and garden equipment) is assumed to remain constant at 2020 levels in the Current Policies scenario, and decarbonizes linearly to 50% of 2020 levels by 2045 in Maryland’s Climate Pathway. No specific policies are modeled to achieve this, but policy drivers could include decreased intensity of lawn and garden management, electrification of equipment, or both. Nonroad diesel usage (primarily by construction, mining, and other industrial equipment) was assumed to follow the same reduction trend as freight trucks.

Beyond 2031

To meet the net-zero goal, ZEVs reach 100% sales for all on-road vehicles by 2045. Fuel cell EVs, powered by hydrogen, play a larger role in freight trucking in the 2040s. Transport service also continues to decrease for passenger vehicles through continued expansion of smart-growth policies and the cap and invest program. In the 2040s, there is also potential for aviation, rail and shipping to reduce emissions through the use of low-carbon fuels.

Considerations for Policy Implementation

Maryland has demonstrated climate leadership by adopting the ACC II standards and passing the Maryland Clean Trucks Act, yet there remain many implementation barriers to achieve the rate of electrification needed in the transportation sector. Reducing VMT and shifting modes of transportation are also important strategies to reach the reductions shown here. Equitable implementation of both of these strategies will also be a key challenge for this sector.

IRA Implementation

Maryland can also look to other states, like Colorado, who have added additional state incentives on top of IRA provisions to bring in more federal dollars.106,107 Given that the IRA tax credits are non-refundable, Maryland could offer rebates for those who do not qualify, further promoting EV adoption. The state can also create regulations that support EV adoption, such as requiring new homes to be EV charger-ready to save consumers money on costly retrofits.108 Finally, the state can leverage IRA funding to aid in electrifying its own vehicle fleet by utilizing Clean Heavy-Duty Vehicle grants and the Commercial Clean Vehicle Tax Credit. The state can also educate and support municipal governments, schools, and others applying to these funds to electrify local government fleets.109

Electric Vehicle Adoption
For Maryland to increase its sales of EVs and achieve the full potential of ACC II, the state will need to find ways to lower the cost of EVs in a way that is equitable for all Maryland residents. Currently, Maryland offers an excise tax credit of up to $3,000 for EV purchases, while other states like New Jersey,67 Colorado,68 and Connecticut,69 provide higher rebates ranging from $5,500 to $8,000. Increasing Maryland's rebates and increasing the amount of funding for the program would align the State with others pursuing similar goals and prevent sales from flowing to neighboring states with less stringent targets. This is a key risk for Maryland’s ACC II regulation, as the purchase of non-EVs in surrounding states that have less stringent targets (a.k.a. “sales leakage”), could lead to lower numbers of EVs than if all sales were covered by the in-state targets. It is critical to track where EVs are sold and the total number of EVs on the road, as California does, to ensure Maryland’s transportation sector is truly decarbonizing and meeting its targets.

Another key policy consideration in this sector is the impact of increasing vehicle electrification on gas tax revenue and its traditional use for road maintenance. As increasing adoption of EVs reduces fuel sales, alternative sources of funding will need to be found. Detailed studies and pilot programs at both the state70–73 and federal74–76 level have addressed this issue, and identified potential solutions including shifting to a VMT tax, taxing kWh at commercial EV charging stations, and the introduction of more targeted taxes and fees based on vehicle weight, time of day, and location.74,77–79 Addressing this concern will be crucial to maintain and expand investment in the Transportation Trust Fund (TTF), which is primarily funded by fuel tax revenue, but can also be a key avenue to support the transition away from emitting vehicles by funding EV infrastructure, bike lanes, and walkability.66

Realizing the Advanced Clean Truck Rule

Another critical challenge for emissions reductions in this sector is achieving the full potential of the ACT rule. The ACT goals are very ambitious, given that the current market for ZEV trucks is close to zero at present and the rule will not be implemented until 2027. The steep increase in ZEV sales to reach 30-50% by 2030 will require early and rapid action from manufacturers as well as government incentive programs to reach this target. ZEV costs and availability will be a constraint for this sector, and policies will be needed to bring down costs in order to ensure sufficient deployment of ZEV trucks. The needs of low- and middle-income communities and small business operators must be met through various incentive and outreach programs, including funds described in the IRA implementation section below, to ensure a just transition. In addition, Maryland’s bill to implement ACT expands funding from FY 2024 through 2027 to at least $10 million in grants for medium- and heavy-duty ZEVs or zero-emission heavy equipment. EV charging infrastructure suitable for freight vehicles must also be built and expanded in Maryland and throughout the wider region in order to make this transition feasible, and Maryland should partner with surrounding states to support interstate freight transportation. One caveat with Maryland’s ACT regulation is its requirement of a thorough needs assessment prior to implementation, which could delay realization of the rule.80 The assessment must analyze factors such as the number of charging stations needed, how utilities could fulfill new demands, economic feasibility, etc. Through this assessment, the bill also lays the groundwork for transitioning medium- and heavy-duty vehicles in the state fleet to ZEVs.

Zero-Emission Vehicle Supply-Chains

Recent analysis from the Department of Energy classifies many materials necessary for ZEVs as critical or near-critical supply risks, including key components of batteries and fuel cells such as lithium, cobalt, nickel, and platinum.81 If future supplies of these materials are limited, it will be essential to both reduce the overall need for ZEVs by reducing personal vehicle use, and to reduce the materials intensity of vehicles by making vehicles smaller and lighter to make the most of available supply. Lighter-weight vehicles require less energy to go the same distance as heavier vehicles, meaning material requirements are reduced.82 Therefore, encouraging drivers to switch from SUVs and trucks to cars, or cars to e-bikes where appropriate, can dramatically reduce the total quantity of critical materials needed to support transport electrification.83,84 Circular economy approaches that ensure materials are recovered and reused can also help alleviate supply-chain constraints.85

Electrifying Nonroad Fuel Use

Nonroad engines, reliant on either diesel or gasoline, play important roles in numerous industries. As of 2020, the largest portions of Maryland’s emissions in this category come from lawn and garden equipment, construction and mining equipment, and industrial equipment. In each of these areas, opportunities for electrification are expected to grow in years ahead. Market research projects the global electric lawn mower market to grow at a rate of over 6% annually over the next five years.86 Households can be incentivized to trade in their gas lawn mowers for electric models through programs like Southern California’s rebate of up to $250.87 Purchasers of large, commercial grade electric mowers can take advantage of federal IRA tax credits worth 30% of total cost.88 Significant potential for emissions reductions also exists in electrifying construction equipment, which is currently dominated by diesel fuel. A rapid annual growth rate of 22% through 2027 is expected in the electric construction equipment industry, although continued investment in fast charging technology will likely be necessary to realize this growth.89 Again, California serves as a potential model for incentivizing the purchase of more expensive electric equipment through its Clean Off-Road Equipment Voucher Incentive Project (CORE).90

Beyond Vehicle Electrification

Relying solely on vehicle electrification is insufficient to meet the targets for reducing GHG emissions. The Climate Change Mitigation Study conducted by the Transportation Planning Board (TPB) revealed that the Greater Washington region (including Prince George’s, Frederick, and Montgomery Counties) needs to achieve a 15-20% reduction in per capita driving (light-duty VMT) below the 2030 baseline forecast, as outlined in the current transportation plan.91 Maryland has an uphill battle—total annual VMT steadily rose from 2014 through 2019 in Maryland, though there was a 17% reduction in VMT in 2020 due to the COVID-19 pandemic and associated restrictions.66 VMT in Maryland increased in 2021, although not to pre-pandemic levels, and increased only slightly in 2022. It is unknown if this slower growth reflects a longer-term trend. Establishing a comprehensive and accurate system to measure and track individual vehicle mileage across a diverse range of vehicles and roadways is complex and may face resistance from the public, particularly if it involves imposing additional costs or changing established practices.92 Addressing these challenges requires effective communication, stakeholder engagement, and a well-designed framework that promotes fairness, transparency, and public acceptance.

Smart Growth and Zoning Reform

Smart growth and zoning reform to reduce VMT are key areas where local and county-level action will be essential, and can offer additional opportunities to preserve open space, farmland, natural beauty, and critical environmental areas. Strategies that can contribute to reduced VMT include densification and “upzoning”,93 mixed-use development,94 transit-oriented development,95 parking reform,96,97 and programs targeting behavior change.98 However, it is crucial to implement these reforms using best practices that minimize potential drawbacks such as traffic congestion, inequitable access to infrastructure, disruption of existing communities, and increased pollution.99,100 Previous development of transportation systems such as the interstate highway system often happened at the expense of marginalized communities, and future development should seek to redress these harms rather than exacerbate them.101

Partnerships for Equity, Access, and Benefits

The promotion of bike lanes and walkability as alternatives to driving is an increasingly popular transportation strategy.110 This can be achieved through various measures including government funding for “complete streets” with protected space for biking and walking, as well as bike share programs or e-bike rebates and incentives.107,111–113 Additionally, restricting car access on roads and reclaiming street space for pedestrians through “Open Streets” can contribute to a more walkable environment.114 However, the lack of current infrastructure, lack of available governmental financing, limited retail interest, and the influence of the car industry pose challenges to implementation of these initiatives. Changing public perceptions towards alternative modes of transportation is also a significant factor. On the positive side, promoting bike lanes and walkability offers numerous benefits, including improved health from a more active lifestyle and lower maintenance costs for roads.115 California's Active Transportation Program (ATP) is a notable example of this approach, aiming to enhance active modes of transportation throughout the state.116 The 2023 Cycle 6 of the ATP is expected to include about $650 million in funding for around 100 potential projects.116 Most recently, Minnesota passed a new transportation funding bill addressing the negative climate impact of highway expansion and increasing VMT by requiring state agencies to make investment decisions consistent with GHG and VMT reduction goals.117 It further requires cities to establish climate action plans and forecasts related to GHG emissions and VMT, including from land use.117

Case Study: Montgomery County Public Schools’ Electric School Buses

Climate change and concerns about student and community health are driving school bus electrification mandates around the country, including in Maryland. The CSNA requires all new school bus purchases and contracts to be electric by 2025. Montgomery County Public Schools (MCPS) and Highland Electric Fleets (Highland) recently implemented the country’s single largest deployment of electric school buses at Walter Johnson High School, upgrading 326 school buses to electric by 2025. On a business-as-usual day, MCPS diesel buses use approximately 17,000 gallons of diesel fuel, emitting GHGs and other harmful matter from tailpipes. Replacing the diesel bus fleet with electric buses will help Montgomery County achieve its target of reducing GHG emissions 80% by 2027 and 100% by 2035.

The partnership between Highland and MCPS will not only deliver cleaner, healthier transportation for students and local communities, but will also support electric grid reliability with vehicle-to-grid (V2G) services, and the nation’s first use of electric school buses to provide synchronized energy reserves. During the 2021-2022 school year, MCPS installed 25 electric buses. This school year, another 61 buses will be delivered, and electric infrastructure will be installed at three more transportation depots.

Case Study: Electric Vehicle Charging Deployment & Job Creation in Maryland

Blink Charging actively collaborates with local governments, businesses, and organizations to identify suitable locations for charging infrastructure installations. One of their main facilities is based in Bowie, MD where they engage in local hiring initiatives by partnering with electricians, contractors, and technicians to ensure the successful deployment and maintenance of their charging stations.118 These collaborations not only stimulate economic growth but also help to upskill and train individuals in the emerging clean energy sector, fostering a skilled workforce for the future. Blink Charging has called for increased capacity from their Bowie manufacturing facility by 40,000 units by 2024.118

To realize Maryland’s climate goals, a comprehensive charging network is needed to facilitate the increased adoption of EVs and enable a shift away from traditional combustion engines. Blink Charging provides an example of how establishing partnerships with various stakeholders, including local governments, businesses, property owners, and utilities, and industry leaders can deploy charging solutions that will more seamlessly integrate into existing infrastructure. This collaborative approach can ensure the availability of charging stations in key locations, such as residential areas, workplaces, retail centers, and public spaces, making EV ownership more viable and convenient.

2.3 Buildings Sector

Modeled Policies: Current Policies Scenario

In the Current Policies scenario, modeled policies from buildings include the EmPOWER Maryland Energy Efficiency Act, the Building Energy Performance Standards (BEPS) required by the CSNA, and the IRA.

The EmPOWER Maryland Energy Efficiency Act was originally established in 2008 and promotes money-saving energy efficiency programs in Maryland for businesses and consumers.119 EmPOWER programs are managed by Maryland’s five largest electric utilities and two largest natural gas utilities with the exception of programs for low-income customers, which are managed by the Maryland Department of Housing and Community Development (DHCD). Various programs include lighting and appliance rebates, heating, ventilation, and air conditioning (HVAC) rebates, Home Performance with Energy Star, Energy Star New Homes, combined heat and power grant programs, and other efficiency services and measures for residential and commercial facilities.119 The EmPOWER Maryland Limited Income Energy Efficiency Program (LIEEP) helps residents of limited-income households install energy conservation materials in their homes at no charge. Overall, the EmPOWER program aimed to achieve an annual energy savings goal of 2% gross energy sales, which the CSNA increased to 2.25% for 2025 - 2026 and to 2.5% beginning in 2027.5 The Maryland PSC continues to require utilities to establish further programs to encourage and promote the efficient use of energy.

Under the CSNA, the Maryland Department of the Environment (MDE) was tasked with developing BEPS for buildings larger than 35,000 square feet.120 These standards are expected to establish benchmarking requirements as well as energy usage reduction and emissions reduction targets. Covered buildings are required to achieve a 20% reduction in direct greenhouse gas (GHG) emissions by 2030 compared with 2025 levels, and net-zero direct GHG emissions by 2040.120 The buildings covered by BEPS will have different energy use intensity (EUI) requirements depending on property type.

The IRA includes several incentives for reducing emissions in the buildings sector. The IRA provides $9 billion in consumer home energy rebate programs with a specific focus on low-income consumers for energy efficiency retrofits and electrification of appliances.13 The IRA also extends, increases, and modifies the new energy efficiency home tax credits.24 Additionally, the IRA provides $35 billion over ten years in consumer tax credits for energy efficiency and clean energy upgrades including heat pumps, rooftop solar, and electric HVAC.24 For commercial buildings, the IRA allows certain expenses associated with qualifying efficiency improvements to be tax deductible.

Additional Modeled Policies: Maryland’s Climate Pathway Scenario

The policies above were all modeled in Maryland’s Climate Pathway scenario as well as additional policies. Additional modeled policies in this sector include a zero- emission appliance standard, zero-emissions construction standard, and strengthened energy efficiency standards. The zero-emission appliance standard, which covers space and water heating appliances in residential and commercial buildings, begins in 2027 and takes full effect by 2030. The zero-emission construction standard is implemented in 2027, which covers all new residential and commercial buildings, increasing electrification of the building sector. The EmPOWER energy savings goal is held constant at 2.5% annual savings through 2045.

Chapter Three - Broader Societal Impacts

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Chapter Four - Building Maryland's Climate Pathway - Together

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List of Acronyms and Abbreviations

ACC Advanced Clean Cars

ACT Advanced Clean Trucks

AMI Advanced Metering Infrastructure

ATP Active Transportation Program

BEPS Building Energy Performance Standards

BIL Bipartisan Infrastructure Law

CAFE Corporate Average Fuel Economy

CCS Carbon Capture and Sequestration/Storage

CDR Carbon Dioxide Removal

CES Clean Electricity Standard

CGS Center for Global Sustainability

COBRA Co-Benefits Risk Assessment Health Impacts Screening and Mapping Tool

CORE Clean Off-Road Equipment Voucher Incentive Program

CO2 Carbon Dioxide

CPCN Certificate of Public Convenience and Necessity

CSD California Department of Community Services and Development

CSNA Climate Solutions Now Act

CSP Conservation Stewardship Program ()

DHCD Maryland Department of Housing and Community Development

EIMA Energy Infrastructure Modernization Act

EOR Enhanced Oil Recovery

EPA U.S. Environmental Protection Agency

EQIP Environmental Quality Incentives Program

EUI Energy Use Intensity

EV Electric Vehicle

FTE Full-time equivalent

GCAM Global Change Analysis Model

GDP Gross Domestic Product

GGRA Greenhouse Gas Reduction Act

GHG Greenhouse Gas

GHGRP Greenhouse Gas Emissions Reporting Program

GPI Genuine Progress Indicator

GWP Global Warming Potential

HFC Hydrofluorocarbon

HVAC Heating, Ventilation, and Air Conditioning

ICE Internal Combustion Engine

IPPU Industrial Processes and Product Use

IRA Inflation Reduction Act

ISEW Index of Sustainable Economic Welfare

ITC Investment Tax Credit

IUI Inclusive Utility Investment

kWh kilo-Watt hour

LIEEP Limited Income Energy Efficiency Program

LMI Low and middle income

MAC Marginal abatement cost

MCPS Montgomery County Public Schools

MDE Maryland Department of the Environment

MDOT Maryland Department of Transportation

MEA Maryland Energy Administration

MEW Measured Economic Welfare

MMTCO2e Million metric tons of carbon dioxide equivalent

MSRP Manufacturer’s Suggested Retail Price

NHTSA National Highway Traffic Safety Administration

NO2 Nitrogen Dioxide

OCED Office of Clean Energy Demonstrations, U.S. Department of Energy

ODS Ozone-Depleting Substances

OPC Ordinary Portland Cement

PAYS® Pay As You Save

PLC Portland Limestone Cement

PM2.5 Particulate Matter 2.5 microns in diameter and smaller

PSC Maryland Public Service Commission

PTC Production Tax Credit

PV Photovoltaic

REC Renewable Energy Certificates

REMI PI+ Regional Economic Models, Inc. PI+

RGGI Regional Greenhouse Gas Initiative

RPS Renewable Portfolio Standard

SEIF Strategic Energy Investment Fund

SF6 Sulfur hexafluoride

SNAP Significant New Alternatives Policy

SLCP Short-lived Climate Pollutants

TPB Transportation Planning Board

TPE TurningPoint Energy

TTF Transportation Trust Fund

VMT Vehicle Miles Traveled

V2G Vehicle-to-grid

ZEV Zero-emission Vehicle