Environmentalists who feared an extensive rollback of one of the state’s signature climate programs, instead managed to escape this year’s legislative session with what they say are just revisions to the Building Energy Performance Standards.
The BEPS program, adopted as part of the Climate Solutions Now Act of 2022, requires large buildings in the state to electrify over time, and reach net-zero greenhouse gas emissions by 2040, or pay fees.
This year, lawmakers exempted hospitals from the rules, amid other changes, but largely left the program intact to the relief of environmentalists.
“BEPS was trimmed, not cut down,” said Jamie DeMarco, a lobbyist for the Chesapeake Climate Action Network.
CCAN initially supported House Bill 49, which would have given buildings some more flexibility, including with a waiver program for specific cases. The Maryland Department of the Environment, which enforces building emissions rules, proposed the bill.
But midway through the legislative session, lawmakers began discussing broader modifications to the rules, including exempting residential buildings and hospitals, said Brittany Baker, CCAN’s Maryland director.
“Once we were having these BEPS conversations, legislators had all of this angst … about BEPS, that now they wanted to attach all of these weakening amendments to the bill,” Baker said.
That came about the same time that a bill rolling back Maryland’s electric vehicles program was advancing in the legislature. Ultimately, that bill failed, but not before Gov. Wes Moore issued a similar executive order, allowing his administration to pause penalties for the first two years of the EV program, which requires manufacturers to sell an increasing percentage of electric cars in Maryland.
“This legislative session was a tough, tough few months,” read an online post from CCAN. “However, our advocacy changed the trajectory of the session in a tangible way.”
Residential buildings don’t appear in the passed bill, which is on the governor’s desk. But hospitals were exempted, and emissions associated with steam sterilization and back-up generators at medical facilities, nursing homes and laboratories are also exempt under the bill.
“We think it was unnecessary. No other BEPS in the country exempts hospitals,” DeMarco said. “But that’s what happened.”
Prior to this year’s bill, historic buildings, elementary and secondary schools, manufacturing buildings, agricultural buildings and federal buildings could all apply to be exempted from BEPS.
In testimony on the original bill, the Maryland Hospital Association pushed for lawmakers to exclude hospitals, arguing that they are held to unique HVAC standards, and intensive care units, emergency rooms and operating rooms need “continuous and guaranteed access to power.”
“While hospitals support efforts to combat climate change, the unique nature of hospitals — and the potentially deadly consequences of power failure on patient safety — requires special consideration for an exemption,” wrote Natasha Mehu, vice president of government affairs and policy at MHA.
This year’s bill also clarified the relationship between the state and a similar building emissions program established in Montgomery County, in a way DeMarco called “fair and reasonable”: It lets MDE certify county-level programs and waive the state rules for buildings in counties that have approved regulations.
Tom Ballentine, vice president for policy and government relations for Maryland NAIOP, a commercial real estate association, said the change reconciles “overlapping requirements at the state and local level” and lets building owners focus on Montgomery’s rules, which include earlier deadlines.
Buildings — with fossil-fuel burning furnaces, water heaters and stoves — contributed 16% of Maryland’s greenhouse gas emissions as of 2020. Under state law, Maryland’s overall emissions must be net-zero by 2045.
In addition to reducing emissions, Maryland’s BEPS program requires large buildings (over 35,000 square feet) to reduce their “energy use intensity,” which measures annual energy use per square foot. The exact reductions haven’t been set yet, after the General Assembly required MDE last year to take in energy use data from buildings first.
Ballentine said that the energy use regulations represent an “expansion of the policy scope that needs some consideration,” because it goes beyond greenhouse gas emissions.
“The way that energy efficiency has been managed in the past is through building and energy codes that are developed through a process that puts a high value on technical feasibility and cost effectiveness,” Ballentine said. “MDE doesn’t have that same mandate.”
The bill exempted buildings with permanent “sensitive compartmented information facilities,” or SCIFs, owned by certain federal agencies, from the energy use requirements. These facilities are essentially secure rooms where classified information is discussed, protected by security technology.
DeMarco said he would have preferred to see SCIFs themselves exempted from the rules, rather than any building that contains a SCIF.
“The fear is that any data center, if it wants to be exempted from energy-use intensity, could just find a SCIF to be contained in it. But most data centers right now do not have SCIFs,” DeMarco said.
Meanwhile, BEPS waivers focused on economic feasibility were stricken from the bill.
The energy use regulations are a “co-equal pillar” of the BEPS rules, DeMarco said, because they help prevent building owners from purchasing cheaper yet more inefficient electric heating systems, forcing tenants to deal with high bills.
As originally introduced, this year’s bill, which came from MDE, would have set up alternative compliance payments for the energy use segments — instead of only the greenhouse gas emissions. But that language was scrapped from the bill.
Ballentine said the fees were set far too high. Using data from Montgomery County, his association estimated that the worst performing condominium building might have paid up to $600,000 per year.
“I was very surprised, actually, that in a session where the BGE bill impacts of increased energy costs and power surcharges were such an item of discussion, the energy intensity fee didn’t get more attention,” Ballentine said. “Because it is big for some buildings. It’s a substantial number.
With MDE’s backing, the fees may resurface in the legislature.
Getting the balance right is critical, DeMarco said. The fees must be high enough to encourage building owners to make the building renovations, but low enough that they don’t bankrupt building owners who cannot comply.
“It essentially caps how much any building will ever have to pay, and knowing that there’s an upper bound of how much you would ever have to pay provides a lot of beneficial certainty,” DeMarco said.
