Maryland’s 2030 GGRA Plan called for the state to accelerate the transition of fossil fuel heating equipment in buildings to efficient electric equipment that can be powered by clean electricity. Using electric, zero-emission appliances for applications like space heating, water heating, and cooking is common throughout Maryland and the rest of the nation. Several current policies described below already support reductions in fossil fuel combustion from these end-uses as well as the transition from fuel-burning to zero-emission equipment in buildings. New policies will accelerate those efforts while minimizing impacts on the electric grid, preparing for future EV charging needs, managing a transition of the natural gas system, and reducing household and business energy costs. Fuel use for high-temperature applications in the industrial building sector is harder to electrify but new technologies and incentives are expected to help achieve deep decarbonization of Maryland’s building sector over the next 21 years.
Energy Codes and Standards (current)
Building energy codes have supported a wide array of environmental, energy, and health policy goals such as improvements in indoor air quality, promotion of less-emitting appliances, structural resilience, and reductions in peak energy load demands. The Maryland Department of Labor includes the Building Codes Administration, and the purview of this Administration includes the implementation of Maryland Building Performance Standards (MBPS) and building energy codes. The MBPS requires that Maryland jurisdictions implement the latest edition of
building code requirements, including those pertaining to the International Building Code (IBC), the International Residential Code (IRC), and the International Energy Conservation Code (IECC). In Maryland, the Codes need to be considered for new construction as well as major renovations. According to Maryland law, the state may not adopt energy conservation requirements that are less stringent than the requirements in the IECC. Upon the MBPS being released, local jurisdictions are responsible for the modification and adoption of codes.
The CSNA required the state to adopt the IECC (2018 Edition) by January 2023 and to adopt each subsequent version of the IECC within 18 months after it is issued. Each local jurisdiction must implement and enforce the most current version of MPBS and any local amendments to MPBS. In addition, any modification to MBPS adopted by the state must be implemented and enforced by a local jurisdiction no later than 12 months after the modifications are adopted by the state. The building energy codes apply to all building owners undergoing new construction or large renovations, and the MBPS applies to all buildings and structures within the state for which a building permit application is received by a local government. Maryland’s 23 counties are responsible for the adoption of new building energy codes and related operational impacts. Impacted entities may include local governments, state governments, schools, residential property owners, and nonresidential property owners.
EV-Ready and Solar-Ready Standards for New Buildings
(current, modified)
Beginning in October 2023, homebuilders in Maryland are required to include EV charging equipment during the construction of single-family detached houses, duplexes, and townhouses. Specifically, each new housing unit in Maryland must include one EVSE-installed or EV-ready parking space capable of providing level-2 charging in a garage, carport, or driveway. EVSE-installed means having an EV charging device that is fully installed and ready to use at a parking space. EV-ready means having electrical panel capacity and wiring in place to easily install a level-2 EV charger in the future.
Multifamily residential buildings are expressly excluded from the enabling legislation. MEA is studying the cost, barriers, and impacts of requiring multifamily residential buildings to include EV-ready and EVSE-installed parking spaces. Pending the findings of MEA’s study, this plan calls for the Maryland General Assembly to introduce legislation requiring EV-ready and EVSE-installed parking spaces in new multifamily buildings. Legislation should also require solar-ready standards for new buildings.
Building Energy Performance Standards
(current)
MDE is in the process of adopting Building Energy Performance Standards (BEPS) for covered buildings to achieve a 20% reduction in net direct GHG emissions on or before January 1, 2030, as compared with 2025 levels for average buildings of similar construction, net-zero direct GHG emissions on or before January 1, 2040, and improve overall energy efficiency. BEPS applies to buildings in Maryland that have a gross floor area of 35,000 square feet or more (excluding the parking garage area). Historic properties, public and nonpublic elementary and secondary schools, manufacturing buildings, agricultural buildings, and federal buildings are exempt. There are approximately 9,000 covered buildings in Maryland located across all counties. Buildings covered by BEPS accounted for approximately 5 MMTCO2e in 2020. This policy is modeled to reduce emissions by approximately 18 MMTCO2e between 2025 and 2050.
Covered buildings will be required to benchmark energy use utilizing EPA’s ENERGY STAR Portfolio Manager tool, which is a free tool that enables the benchmarking of energy use of any type of building. Covered buildings are subject to interim performance standards before 2040 and to a final performance standard that must be achieved on an annual basis in 2040 and beyond.
The combination of direct GHG and site energy use intensity (EUI) standards delivers efficient electrification, manages grid impacts, and makes it easier for the state to achieve its GHG reduction goals. A study by the U.S. Department of Energy’s Lawrence Berkeley National Laboratory found that the Maryland BEPS will reduce peak electricity demand 6% by 2040 whereas a policy that excludes site EUI standards would increase peak demand 24% by 2040. By reducing peak electricity demand, BEPS prevents the need for additional electricity generation capacity and makes it more achievable for Maryland to hit its requirements to achieve net-zero statewide GHG emissions by 2045.
In July 2023, Maryland joined the White House National Building Performance Standards Coalition, which is a nationwide group of state and local governments that have committed to inclusively design and implement building performance policies and programs in their jurisdictions. Maryland’s development of BEPS has been supported by federal agencies, labor, and non-governmental organizations that provided resources for workforce engagement, technical analysis, equity strategies, policy design, and stakeholder engagement.
State Government Lead by Example (current)
Maryland state government has several programs in place that set an example for large institutions to reduce their carbon footprint. State government operations and buildings, including the University System of Maryland (USM), have reduced their carbon footprint by nearly 20% since 2018 through energy savings initiatives, green purchasing, renewable energy purchases, and replacing internal combustion engine vehicles with EVs. The state government accomplished the overall carbon reduction in one hundred million square feet of facilities across several agencies and university campuses throughout the state.
The Department of General Services (DGS) is responsible for procuring and managing construction projects for over 15 different state agencies. In 2022, DGS adopted an all-electric policy for planning and implementing new construction and major renovations. One of the first new all-electric buildings will be the Supreme Court of Maryland located in Annapolis. The building is approximately 215,000 square feet, will include electric vehicle charging infrastructure, and will attain Leadership in Energy and Environmental Design (LEED) Silver certification. Since 2020, DGS has also managed the replacement of nearly fifty thousand fluorescent light fixtures in state-owned buildings with high-efficiency LEDs and controls. Due to a strong focus on energy efficiency, overall energy use in state-owned buildings has declined nearly 12% since 2018.
DGS’s Energy Office partnered with USM to purchase over $165 million of electricity in FY 2023. Included in the energy commodity purchases are three 20-year Power Purchase Agreements (PPAs) of renewable energy from two utility-scale wind installations and one solar installation. In FY 2023, the state government spent approximately $19 million on renewable electricity, which accounted for 11.5% of the electricity cost for state operations.
The state is in its third year of transitioning its 4,000-vehicle fleet to EVs. In parallel with purchasing EVs, DGS installs EV charging infrastructure across the state at all agencies. The goal is to install at least 2,000 EV charging ports by 2030.
EmPOWER
(current, modified)
In response to concerns relating to sufficient electricity supply and reliability, the Maryland General Assembly passed the Maryland Energy Efficiency Act of 2008, thereby establishing the EmPOWER Maryland Program. The EmPOWER energy efficiency programs are managed by the five largest electric utility companies and the Department of Housing and Community Development (DHCD). As reported in PSC’s 2015 annual report to the General Assembly, the EmPOWER programs were successful at meeting initial goals relating to the reduction of per capita consumption and per capita demand. This first phase of EmPOWER was shown to have provided customer bill savings, lower wholesale energy prices due to the reduced need for infrastructure investments, and a reduction in GHG emissions.
In 2015, PSC established a new target for the five participating electric utilities: 2% annual incremental energy savings based on gross electricity sales by 2020. In 2017, this percentage goal was codified into law by the General Assembly. The percent target is based on a rolling baseline using the data from the year before the current three-year program cycle. Not only does the PSC consider aspects of its general authority to regulate utilities, such as public safety and climate change in approving programs, but over time the Public Utilities Article has also required that the PSC consider cost-effectiveness to encourage and promote the efficient use and conservation of energy. Through a rigorous evaluation process, the PSC reviews progress on EmPOWER on a semi-annual basis and may request program and budget changes.
As of 2023, the EmPOWER Program is concluding its fifth three-year cycle (2021-2023) and includes both electric and gas utility companies and DHCD. EmPOWER programs are managed by the following companies: Baltimore Gas and Electric Company (BGE), Potomac Edison Company (PE), Delmarva Power & Light (Delmarva), Potomac Electric Power Company (PEPCO), Southern Maryland Electric Cooperative, Inc. (SMECO), and Washington Gas Light Company (WGL). DHCD also provides EmPOWER programs and is aiming to increase annual energy savings across all limited-income households.
The CSNA required that the utility companies’ EmPOWER programs meet increasingly higher energy savings goals: 2.25% annually in 2025 and 2026, and 2.5% annually in 2027 and thereafter. Additionally, in 2023, legislation was enacted that established energy savings goals for DHCD requiring energy savings of 0.53% in 2024, 0.72% in 2025, and 1% in 2026 for limited-income households. However, the PSC’s Future Programming Work Group recommended that a GHG reduction goal be established as the central goal under EmPOWER. This plan calls for legislation to establish GHG reduction goals and require EmPOWER programs to include beneficial electrification. Beneficial electrification refers to the use of electricity to replace the direct use of fossil fuels in buildings in a manner that reduces overall lifetime GHG emissions or customers' energy costs. In addition to the continuation of efficiency efforts for electric utilities, EmPOWER will likely evolve in alignment with other GHG reduction policies, the PSC’s program processes, and in response to cost implications.
Zero-Emission Heating Equipment Standard (new)
The Zero-Emission Heating Equipment Standard (ZEHES) is a new state policy that will require new heating systems installed in Maryland buildings to produce zero on-site emissions beginning later this decade. Zero-emission heating equipment including electric water heaters and heat pumps for space heating and cooling are already widely used across Maryland. New technologies, falling prices, and robust federal, state, and utility-sponsored incentives for heat pump water heaters and space heating/cooling systems make heat pumps the preferred solution for energy-efficient, low-cost, zero-emission buildings. Marylanders can currently take advantage of a federal tax credit providing up to $2,000 off the cost of installing a heat pump. Starting in 2024, MEA will offer rebates that provide up to $8,000 off the cost of installing a heat pump for some low, moderate, and middle income households.
Maryland is among several states moving to adopt zero-emission appliance/heating equipment standards. In September 2023, Maryland joined with 24 other states in the U.S. Climate Alliance in committing to quadruple the number of heat pumps installed by 2030. With ZEHES, new buildings will be constructed with zero-emission heating equipment and the existing building stock will transition to having almost all space and water heating demand provided by zero-emission heating equipment by 2045. Cooking equipment is not covered by this policy but incentives will be provided to help Marylanders upgrade to electric cooking appliances, which can significantly improve indoor air quality compared to cooking with combustible fuels.
ZEHES will not require anyone to remove a working furnace, boiler, or other piece of heating equipment. Existing fuel-burning equipment can continue to be serviced and remain in place until the time the individual decides to replace their fuel-burning equipment. It is at this time of replacement that new equipment will need to meet the zero-emission standard. The effect of this policy will be, over time, to replace one-way air conditioning (AC) units with two-way heat pumps, which function as efficient AC and can reverse cycle to provide efficient heating. Modern heat pumps are more than capable of meeting 100% of the heating demand of Maryland buildings, as evidenced by the fact that heat pumps are already commonly used in buildings statewide.
ZEHES will eventually transition almost all buildings to zero-emission heating equipment but ZEHES plus current policies will not decarbonize buildings fast enough to achieve Maryland’s GHG reduction goals. ZEHES and current policies also do little to decarbonize fuels that are used for high-temperature applications and other energy end-uses. Switching to lower-impact combustible fuels for limited applications could be critical for achieving the state’s net-zero emissions goal. Thus, ZEHES will be coupled with a Clean Heat Standard, described below.
ZEHES is modeled to avoid annual GHG emissions of 0.8 MMTCO2e in 2031, and 3.4 MMTCO2e in 2045. MDE is responsible for developing, adopting, and implementing regulations to enact and enforce ZEHES in Maryland. MDE will initiate a rulemaking process in 2024 to propose draft regulations based on existing statutory authority before 2025.
Clean Heat Standard
(new)
A Clean Heat Standard (CHS) is a performance-based approach to reducing GHG emissions from the building sector. CHS is designed to broadly decarbonize covered sectors in a manner that is market-based and friendly to customer choice in coordination with other programs. It complements and supports the achievement of other policies including energy codes and standards, EmPOWER, BEPS, and ZEHES. As a sector-specific policy, it ensures that decarbonization proceeds at the pace needed to achieve the state’s goals.
CHS requires natural gas utility companies and heating oil and propane importers to reduce the GHG emissions associated with their businesses following a schedule set by MDE. As a market-based performance standard, obligated parties can meet the requirements in several ways including but not limited to helping their customers save energy, helping their customers install heat pumps, and replacing fossil fuels with lower-impact fuels. Obligated parties can also work with third parties to deploy a range of clean heat measures that reduce emissions. Anything that reduces emissions from buildings helps the obligated parties meet the CHS requirements, so as customers take advantage of federal, state, and EmPOWER incentives for energy efficiency and electrification upgrades or take any other actions to reduce emissions from buildings, the customers’ actions help the obligated parties achieve their requirements.
Importantly, CHS and ZEHES can work together to deliver the lowest-cost pathway for decarbonizing buildings. While ZEHES, electrification incentives, and other policies will transition almost all of Maryland’s fuel-burning buildings to be all-electric by 2045, CHS layers on top of these policies to increase the pace of building sector decarbonization while improving building shells and transitioning the last bit of fuel demand to lower-impact fuels, especially for high-heat applications.
CHS is also an important tool for incentivizing new technologies that are demonstrated to have low lifecycle emissions. For example, networked geothermal systems, which are in use on some campuses to efficiently share heating and cooling loads between buildings, are starting to be developed in non-campus settings such as residential neighborhoods. The lifecycle emissions benefits of networked geothermal, which could be significant when avoided electricity generation emissions are included, can be acknowledged and rewarded under the CHS program. The lifecycle emissions impacts of biomethane, biodiesel, woody biomass, hydrogen, and other alternative fuels that can be useful for high-heat applications can also be evaluated fairly under a CHS framework.
CHS is modeled to avoid annual GHG emissions of 0.8 MMTCO2e in both 2031 and 2045. MDE is responsible for developing, adopting, and implementing regulations to enact and enforce CHS in Maryland. MDE will initiate a rulemaking process in 2024 to propose draft regulations based on existing statutory authority before 2025.
Gas System Planning
(new)
The Maryland Commission on Climate Change recommended when it released its Building Energy Transition Plan in 2021 that the electric and gas utility companies operating in the state should submit plans to the PSC showing how the companies are making utility infrastructure investments that align with the state’s climate goals. In 2023, OPC filed a petition asking PSC to open a docket to consider near-term priority actions and comprehensive long-term planning for gas companies. PSC subsequently opened a public comment period on OPC’s petition and, as of the writing of this plan, is reviewing the comments to determine the next steps. Respecting PSC’s status as an independent state agency, MDE supports the call for PSC to oversee the development and implementation of gas system planning to achieve a structured transition to a net-zero emissions economy in Maryland.
State Incentives for Building Decarbonization
(current, modified)
The state will substantially increase its current investments to reduce GHG emissions and energy costs for the millions of residential, commercial, and institutional buildings in Maryland. Using $137 million from the IRA, MEA will begin in 2024 offering two new rebate programs to reduce energy costs for people living in single-family and multi-family buildings. The Home Efficiency Rebates program will provide homeowners and landlords up to $4,000 or 50% of project costs for eligible efficiency upgrades that are projected to save at least 35% of a home’s energy use and up to $2,000 or 50% of project costs for projects with modeled energy savings ranging from 20-34%. Higher rebate amounts are available for households with income levels less than 80% of the area median income (AMI).
The Home Electrification and Appliance Rebates program will provide rebates to households with incomes up to 150% of AMI or multifamily buildings in which at least 50% of residents have incomes equal to or less than 150% AMI. Rebates will be provided to qualifying homeowners and multifamily building owners for specific electrification measures, which may include:
Heat pump air conditioning and heating system: not to exceed $8,000
Electric panel upgrades: not to exceed $4,000
Electric wiring: not to exceed $2,500
Heat pump water heaters: not to exceed $1,750
These rebate programs were accompanied in the IRA by significant new efficiency and electrification tax credits that took effect in 2023. Tax credits cover 30% of the cost of certain energy upgrades made by a homeowner or business, up to $1,200 (or $3,200 if an upgrade includes a heat pump installation). Importantly, these credits can be claimed annually. This means that a customer can receive a $1,200 credit one year for installing new insulation and a $2,000 credit the next year for installing a heat pump. The IRA also expanded the energy-efficient commercial buildings deduction under the federal tax code. For commercial property placed in service in 2023 and after, this tax deduction allows a building owner to deduct the lesser of the cost of the installed property or the energy savings per square foot, up to a maximum of $1.00 per square foot for a building with 50% energy savings. This deduction can also be claimed annually.
MEA and other state agencies will work to ensure that Marylanders are aware of these rebate and tax incentive programs and can take advantage of them. Education of contractors, building owners, and customers will be critical to the achievement of these goals, as will the development of rebate application processes that are accessible to all Marylanders, including low-income building owners and occupants. It is also crucial that the new IRA rebate programs be coordinated with utility and DHCD-run EmPOWER programs and DHCD’s weatherization and whole home repair programs.
However, even with such education and coordination, additional state funding will be necessary for rapid building decarbonization in Maryland. The IRA rebates are among MEA’s residential energy efficiency and electrification programs that will be supercharged with new funding from the state. New programs will be established to support efficiency and electrification projects in commercial, institutional, and industrial buildings, including those covered by BEPS or other state requirements that require building improvements. Some of the funding will also support projects in Maryland’s elementary and secondary schools to reduce energy costs for local school districts and improve the health and well-being of students statewide.
Impact of Building Sector Policies
The new policies are modeled to reduce building sector GHG emissions by 75.2 MMTCO2e between now and 2050. The societal benefit of this level of emissions reduction is estimated to be $17 billion. Figure 5 illustrates the change in GHG emissions from this sector based on historical and modeled trends.
