Funding

State investments are often intended to leverage private investment and influence behavior by businesses and individuals to achieve the state’s goals. State investments are also often directed to public sector projects that do not always receive private investment. The following is a list of potential new state investments and revenue sources that should be considered as the state determines how to fund the investments that are needed to support a rapid and equitable transition to a clean energy economy.

New Investments

This plan calls for at least $1 billion annually in new state spending for investments in the following priority measures:

Home Energy Efficiency and Electrification Incentives - MEA will expand its offerings of consumer point-of-sale rebates and contractor incentives.
Commercial, Multifamily, and Institutional Building Incentives - MEA and MCEC will scale up the distribution of grants and low-interest loans for projects in large buildings.
EV Incentives - MVA and MEA will provide point-of-sale rebates to help consumers purchase EVs and EV charging equipment.
Industry, Public Infrastructure, and Nature-Based Solutions Incentives - MEA, MCEC, MDE, DNR, DGS, and MDA will use and distribute funds in the form of grants and loans for different types of emissions reduction and sequestration projects.
Workforce Development - The Department of Labor will expand investments in apprenticeship and workforce development programs for electricians, heat pump installers, and other jobs needed for the clean energy transition.
Consumer Education Campaign - MEA will amplify its promotion of rebates and tax credits that are funded by federal and state investments.
Climate Transition and Clean Energy Hub - MEA will add capacity to provide technical support to building owners on building decarbonization projects.

New Funding Sources

The investments listed above can be fully paid for by one or a combination of the funding sources listed below. The state will need to decide which one or more of these or other funding solutions are best for Maryland. New funding should provide at least $1 billion annually to ensure that the state can achieve its goals.

Green Revenue Bonds - Provides near-term funding to jump-start the investments described in this plan. Revenue bonds could be repaid with revenue from any of the funding sources below and do not impact taxes or the state’s capacity to use general obligation bonds to fund other state priorities.
Cap and Invest - Requires polluters to reduce climate pollution and buy emission allowances for the emissions they produce. Allowance prices are determined by a market-based mechanism. Revenue from the sale of allowances would go into SEIF to fund the investments described in this plan. A portion of the funding provided by this program could offset potential fossil fuel price impacts for low-income households. This policy would expand Maryland’s existing and successful cap and invest program, RGGI, by extending coverage of emissions sources beyond fossil fuel power plants.
Carbon Fee - Requires polluters to pay a fee for emissions produced based on a fee rate set by the government. The government adjusts the fee rate to achieve the state’s goals. Fee revenue would go into SEIF to fund the investments described in this plan. A portion of the funding provided by this program could offset potential fossil fuel price impacts for low-income households.
Hazardous Substance Fee - Requires companies to pay a fee for the hazardous substances transported in the state, including fossil fuels used in or exported from the state, based on a fee rate set by the government. Fee revenue would go into SEIF to fund the investments described in this plan and help MDE pay for remediation efforts to clean up the release of hazardous substances. A portion of the funding provided by this program could offset potential fossil fuel price impacts for low-income households.
Clean Air Toll - Requires interstate drivers who drive through Maryland, pollute the air in Maryland, but do not otherwise contribute to paying for pollution mitigation efforts in Maryland, to pay a toll-by-mail for the pollution they created in Maryland. This policy should be coupled with one of the other policies listed in this section to ensure that the state would be assessing a pollution fee on out-of-state drivers that is comparable to a pollution fee paid by Maryland drivers.
Pollution Fee on Fuel-Burning Vehicles - Requires owners of fuel-burning vehicles to pay a pollution mitigation fee during vehicle registration. If the state decides to increase registration fees for EVs, which the state is currently considering because EV drivers do not pay motor fuel taxes that currently fund road maintenance projects, then the fee increase on fuel-burning vehicles should be at least as much as the fee increase on EVs.

This plan does not recommend any one funding solution over another. Instead, this plan informs policymakers and the public that Maryland will fall short of its goal of reducing emissions 60% by 2031 without additional policy action that reduces pollution and funds the types of investments described in this plan.

Green Bank Investments

Green banks are mission-driven financial institutions that leverage private capital to promote clean energy projects. They exist in Maryland both at the state and local levels. The state’s green bank, the Maryland Clean Energy Center (MCEC), was established by statute in 2008. Its mission is to encourage the transformation of the energy economy with programs that catalyze the growth of business, increase related green-collar jobs, and make clean energy technologies, products, and services affordable, accessible, and easy to implement.

MCEC supports financial partnerships among public and private organizations by promoting the deployment of technologies, serving as an incubator for development, evaluating available industry data, supporting community outreach, and providing technical assistance. Financial initiatives include the Clean Energy Advantage (CEA) Loan Program, the Maryland Clean Energy Capital Program (MCAP), the Maryland Energy Innovation Accelerator (MEIA), and the Maryland Commercial Property Assessed Clean Energy (MDPACE) Program. The Climate Solutions Now Act also created the Climate Catalytic Capital (C3) Fund, which will receive millions of dollars of state budget funding and will be combined with private donations, federal grants, financing repayments from the fund, and proceeds from sales of collateral and assets.

Two other green banks are operating in Maryland: the Montgomery County Green Bank, a publicly chartered nonprofit serving Montgomery County, and the Climate Access Fund, an independent nonprofit based in Baltimore and operating throughout Maryland. The Montgomery County Green Bank was founded in 2016 using an estimated $18 million in funding from the merger of Pepco and Exelon corporations. It advances energy efficiency, renewable energy, and clean energy investment through residential financing opportunities as well as commercial sector opportunities. For the commercial sector, several offerings include the Affordable Multi-Family Housing Electric Vehicle Charging Infrastructure Program, Property Assessed Clean Energy (C-PACE), Solar Power Purchase Agreement, Technical Assistance Program, and Small Business Energy Savings Solutions. The Climate Access Fund was created in 2017 and focuses on delivering community solar energy access to low and moderate income residents. The Climate Access Fund provides two main financial mechanisms for developers: a solar bill guarantee, which receives funding from MEA, and low-cost financing, as well as direct economic benefits to communities served through project ownership access and paid apprenticeships and contractor opportunities.

Federal Investments

The BIL and IRA reflect the largest federal investment in infrastructure, clean energy, and climate action in U.S. history. As of November 2023, $4.9 billion in BIL and IRA funding has been announced for Maryland with over 100 projects identified for funding. Approximately $3.8 billion has been announced for transportation – to invest in roads, bridges, public transit, ports, and airports – and roughly $307 million has been announced for clean water. $249 million has been announced for Maryland through grants, rebates, and other initiatives to accelerate the deployment of clean energy, clean buildings, and clean manufacturing. This does not include clean energy tax incentives from the IRA.

Maryland’s state agencies collaborate through the Governor's Federal Office, which is tasked with determining the best strategies Maryland can implement to leverage federal funds for the state. FIT is responsible for tracking notices of funding opportunities, keeping the Administration updated on these funding opportunities, working collaboratively through inter-agency coordination, and mitigating any problems or concerns that arise in a timely manner. The Federal Office also supports state and local governments to identify gaps in funding to determine how federal dollars can be used to address them.

The first year of these historic federal investments has spurred the clean energy transition nationwide. Maryland is in a lead position to leverage these once-in-a-generation federal investments to further accelerate its continued response to the climate crisis and transition to a clean energy economy in a way that is robust, equitable, and inclusive. The new and expanded federal investments are available to Maryland through loans, grants, and tax incentives for consumers, private industry, and for the first time direct-pay tax incentives for tax-exempt and governmental entities—such as states, local governments, tribes, territories, and nonprofits.

Table 4 summarizes key federal grant programs that have already begun to deliver support to Maryland to achieve its climate action goals:

Table 4: Notable federal grants for climate action.

Sector	IRA / BIL Grant Programs	2023 Maryland Highlight
Environmental Justice	- EPA Emerging Contaminants in Small or Disadvantaged Communities Grant Program - EPA Fenceline Air Monitoring and Screening Air Monitoring - EPA Pollution Prevention Grants	MDE is taking a lead role to support Maryland communities with EJ concerns. In 2023, MDE was awarded three competitive grants to improve environmental quality and community resilience.
	- EPA Environmental Justice Thriving Communities Technical Assistance Centers	EPA has selected 16 Environmental Justice Thriving Communities Technical Assistance Centers (EJ TCTACs) to provide training and other assistance to build capacity for navigating federal grant application systems, writing strong grant proposals, and effectively managing grant funding.
	- DOC Broadband Equity, Access, and Deployment State Grants	As of Nov 6, $768.1M in federal funding to provide affordable, reliable high-speed internet to everyone in Maryland.
Workforce Development	- DOC Good Jobs Challenge	Maryland Works for Wind (MWW) is a nearly $23 million federally-funded program that creates a pipeline of skilled talent to support the emerging offshore wind industry. In partnership with leading employers, this regional workforce training system will place and/or upskill more than 3,800 individuals into good paying careers by the end of 2025.
Workforce Development	- DOE State-Based Home Energy Efficiency Contractor Training Program (also known as Training for Residential Constrators)	DOE is providing $2.5 million to Maryland to provide contractor training support for the type of residential improvements that will be occurring under the HOMES and HEAR programs.
Economywide	- EPA Climate Pollution Reduction Grant	MDE is leading the State of Maryland Climate Pollution Reduction Grant for Planning and coordinating with Maryland’s jurisdictions in the CPRG Planning grants for the Philadelphia, Baltimore, and Washington DC metropolitan statistical areas. There will be competitive CPRG Implementation grants available for climate pollution reduction measures represented in Priority Climate Action Plans developed under the Planning Grants.
Electricity	- DOE Energy Efficiency and Conservation Block Grant Program - DOE Energy Efficiency Revolving Loan Fund Capitalization Program - DOE Preventing Outages and Enhancing the Resilience of the Electric Grid, Grants to States and Tribes - DOE State Energy Program	As the State Energy Office, the MEA leverages a number of important DOE federal grant programs to assist Maryland and its local governments in implementing strategies to reduce energy use, to reduce fossil fuel emissions, to improve energy efficiency, and enhance the electrical grid.
Transportation	- DOT Advanced Transportation Technologies and Innovative Mobility Deployment Program (ATTAIN) - DOT - FAA Airport Terminal Program - DOT - FRA Consolidated Rail Infrastructure and Safety Improvement Grants (CRISI) - Charging and Fueling Infrastructure (CFI) Grant Program	The most significant funding from the BIL has provided key investments in Maryland’s roads, bridges, rail, public transit, ports, and airports.
	- DOT - FHWA National Electric Vehicle Infrastructure Formula Program	The National Electric Vehicle Infrastructure Formula Program (“NEVI Formula”) provides funding to States to strategically deploy EV charging infrastructure and to establish an interconnected network to facilitate data collection, access, and reliability. Maryland’s original NEVI Plan was submitted to the Federal Highway Administration (FHWA) on July 15, 2022.
	- DOT - FHWA Carbon Reduction Program	The Carbon Reduction Program (CRP) provides funds for projects designed to reduce transportation emissions, defined as carbon dioxide (CO2) emissions from on-road highway sources. The CRP will send an estimated $94 million to Maryland over 5 years.
	- EPA Clean School Bus Program	EPA’s Clean School Bus Program provides $5 billion over five years (FY 2022-2026) to replace existing school buses with zero-emission and low-emission models. In 2022, Baltimore City Schools received $9.4 million for 25 buses.
Buildings	- DOE Home Electrification and Appliance Rebates (HEAR) Program - DOE Home Efficiency Rebates Program (HOMES)	MEA will be the recipient of the HOMES and the HEAR Program being funded from the DOE through the IRA. The HOMES program is focused on whole-home energy efficiency upgrades, while the HEAR program addresses home electrification. DOE requires that both the HOMES and HEAR programs contain dedicated allocations for low-income households; additionally, the federal legislation establishing the HEAR electrification program limits electrification incentives to only households with incomes that meet the definitions of low-income or moderate-income.
	- DOE Weatherization Assistance Program	DHCD leads Maryland’s WAP to assist income-eligible homeowners and renters in Maryland by reducing heating and cooling costs through energy-conservation measures, while also addressing health and safety issues in their homes.
	- DOE Assistance for Latest Building Energy Code Adoption	Maryland Department of Labor will lead the state’s application for the DOE Assistance for Latest Building Energy Code Adoption grants to support states and local jurisdictions in adopting, implementing, and enforcing the latest model, zero energy codes, or equivalent codes and standards, improving residential and commercial new construction and retrofits, and transitioning the building stock to more efficient, decarbonized buildings for all.
	- DOE Renew America's Schools Grant Program	DOE’s Renew America’s Schools grant provided funding for infrastructure upgrades at K–12 public school facilities. Baltimore County Public Schools was selected for funding in 2023.
Industry	- DOE State Manufacturing Leadership	Maryland’s Manufacturing Asset Deployment for Energy (MADE 4.0) Program will support Maryland small- and medium-sized manufacturers (SMMs) through a combination of smart manufacturing technology applications and community workforce training, leading to energy, production, and quality efficiency gains in their facilities.
Waste	- EPA Solid Waste Infrastructure for Recycling	MDE received an EPA grant to inform the public about residential or community recycling or composting programs, provide information about the materials that are accepted as part of residential or community recycling or composting programs, and increase collection rates and decrease contamination in Maryland. Additionally, Baltimore City received $4 million to develop a solar-powered, scalable composting facility co-located with the new East Side Transfer Station at Bowley’s Lane.
Agriculture	- USDA Agricultural Conservation Easement Program - USDA Conservation Stewardship Program (CSP) - USDA Conservation Technical Assistance - USDA Environmental Quality Incentives Program (EQIP)	USDA funds numerous financial assistance programs to incentivize Maryland's farmers and forest landowners to conserve the nation’s soil, water, air and other natural resources. All programs are voluntary and offer science-based solutions that benefit both the landowner and the environment.
Forestry and Land Use	- USDA Urban and Community Forestry Program - USDA Regional Conservation Partnership Program	DNR is leading federal grants to promote conservation, plant Maryland forests, implement land management practices to address water quality in the Chesapeake Bay and its tributaries, and increase resiliency.

For more details, Marylanders can view the state’s federal grant requests and information through the Maryland State Clearinghouse’s Intergovernmental Monitor or Maryland Department of Budget and Management quarterly reports.

Greenhouse Gas Reduction Fund

The second-largest allocation in the IRA was the creation of the $27 billion Greenhouse Gas Reduction Fund (GGRF). EPA is managing the GGRF through three concurrent, competitive grant competitions. The goal of the GGRF is a historic investment to mobilize financing and private capital to address the climate crisis, ensure our country’s economic competitiveness, and promote energy independence while delivering lower energy costs and economic revitalization to communities that have historically been left behind.

The three competitions include the National Clean Investment Fund, Clean Communities Investment Accelerator, and Solar for All. The $14 billion National Clean Investment Fund competition will provide grants to 2–3 national nonprofit clean financing institutions capable of partnering with the private sector to provide accessible, affordable financing for tens of thousands of clean technology projects across the country. The $6 billion Clean Communities Investment Accelerator competition will provide grants to 2–7 hub nonprofits that will, in turn, deliver funding and technical assistance to build the clean financing capacity of local community lenders working in low-income and disadvantaged communities—so that underinvested communities have the capital they need to deploy clean technology projects. The $7 billion Solar for All competition will award up to 60 grants to states, territories, Tribal governments, municipalities, and eligible nonprofit recipients to expand the number of low-income and disadvantaged communities primed for distributed solar investment—enabling millions of low-income households to access affordable, resilient, and clean solar energy. Grantees will use funds to expand existing low-income solar programs or design and deploy new Solar for All programs nationwide.

Several Maryland-based non-profits have submitted applications under the National Clean Investment Fund and Clean Communities Fund Competition. Maryland’s green banks participated in all three GGRF competitions, including the state’s application to the Solar for All Competition, led by the Maryland Clean Energy Center. Results from these competitions will be announced in 2024 by EPA and will result in significantly added financial resources to advance Maryland’s clean energy transition.

Clean Energy Tax Incentives

The IRA introduced and expanded tax credits for clean energy technologies and provided new provisions that will enable tax-exempt and governmental entities such as states, local governments, Tribes, territories, and nonprofits to benefit from these tax credits to further accelerate the clean energy transition. For the first time through the IRA’s “elective pay” or “direct pay” provisions, tax-exempt and governmental entities will be able to receive a payment equal to the full value of tax credits for building qualifying clean energy projects.

Unlike competitive grant and loan programs, in which applicants may not receive an award, elective pay allows entities to get their payment if they meet the requirements for both elective pay and the tax credit. The entities eligible for elective pay would not normally owe federal income tax. However, by filing a return and using elective pay, these entities can receive tax-free cash payments from the IRS for clean energy tax credits earned. Applicable entities can use elective pay for 12 of the Inflation Reduction Act’s tax credits., Additionally, there are bonuses to the tax credits that increase the value of the tax credit when certain criteria are met such as Prevailing Wage and Apprenticeship Requirements, Domestic Content Bonus, Energy Communities Bonus, and Low Income Communities Bonus Credit Program.

The proposed guidance also includes a new rule that would enable entities to combine grants and forgivable loans with tax credits. An example provided by the Department of the Treasury is that a school district receives a tax-exempt grant in the amount of $300,000 to purchase an electric school bus, such as from the EPA Clean School Bus Program.

Under the IRA, clean commercial vehicles are eligible for a tax credit of up to $40,000. The school district purchases the bus for $400,000, using the grant and $100,000 of the school district’s unrestricted funds. The school district’s basis in the electric bus is $400,000 and the school district’s section 45W credit is $40,000. Since the amount of the restricted tax-exempt grant plus the amount of the section 45W credit ($340,000) is less than the cost of the electric bus, the school district receives the full 45W credit of $40,000. Therefore, the school district can access the $400,000 bus with $60,000.