On March 5, supporters of Maryland House Bill 939, the Regional Carbon Cost Collection Initiative (RCCCI), gathered at the State House for its first hearing. Sponsored by state delegates Ben Kramer and David Fraser Hidalgo, the bill would set an economy-wide price on CO2 emissions, starting at $15 per metric ton and rising to $45 over seven years. It has been affectionately nicknamed Ricky, a cousin of Reggie (RGGI), the Northeast and Mid-Atlantic states’ cap-and-trade system for electricity generation.
Climate XChange-Maryland(CXC-MD), led by founder Jessica Langerman, organized an impressive lineup of 14 witnesses, including scientists, environmental planners, business people and a star-studded group of economists and experts from the World Resources Institute (WRI), Brookings Institution, Resources for the Future, Howard University, and elsewhere.
Reception by the House Economic Matters Committee was generally favorable, with wide recognition that climate change must be addressed quickly. Some of the common issues were raised – how will this affect low income people and residents of rural areas, will people get their rebates in time to meet their cash flow needs, and why Maryland rather than the whole world at once?
Delegate Kramer led off with a rousing focus on the great dangers that Maryland, as a coastal state, faces from storms, rising sea levels, and other climate change impacts.
Economist Helen Mountford of WRI emphasized that carbon pricing systems already cover about 15% of global emissions, and that this will rise to 25% as China implements its own system. Mountford also pointed out that close to 1,400 major companies “have adopted an internal or ‘shadow’ carbon price to guide their investment decisions.”
Economist Adele Morris of Brookings stated that the bill makes thoughtful policy choices in many areas, including “the rate and trajectory of the charges, which emissions to cover, the use of the revenue, and how to manage the effects on households and businesses.”
This author described the results of two studies that Climate XChange in Boston has recently performed for the Maryland bill – forecasting the impacts of the policy on households, employers, and on CO2 emissions. As in Massachusetts, in the first study I estimate that the lower 60 percent of households, ranked by income, will on average come out ahead or even from the combination of pollution charges and rebates. The second study, conducted largely by CXC Research Associate August Granath, estimates that HB 939 will cut emissions 15% to 17% in 2030, going a long way toward meeting the state’s legislatively-set target of a 40% reduction by that year.
Environmental lawyer and CXC leader Larry Liebesman pointed out that the 12 million ton emissions cut from the bill is about the same as the amount the state forecasts its existing policies will fall short of meeting the 2030 target.
Maryland’s legislative session is only three months long, and sponsors Kramer and Fraser Hidalgo do not expect passage in this session. The sponsors, along with CXC-MD, will be building support for HB 939 among environmental groups, other constituencies, and legislators during the next year. Also important is influencing the Maryland Climate Commission, which is charged with developing a plan to meet the 2030 emissions reduction goal.
Maryland is part of the Regional Greenhouse Gas Initiative (RGGI), and the bill would credit electricity generators for what they pay to buy emissions allowances (permits) under RGGI, as would the bills pending in Rhode Island and Connecticut. Pollution charges would be imposed on all electricity consumed in the state, whether generated in or out-of-state.
HB 939 would distribute 10% of the overall revenues to a Green Infrastructure Fund, that could be used for clean energy, low-emissions transportation, adaptation to climate change, and transition benefits for workers and communities who currently depend on fossil fuel industries. Assisting communities in the lower third of all those in Maryland, ranked by income, would be a priority.
67.5% of the funds would go to households, with a focus on protecting low and moderate income people, but all households would receive rebates. 22.5% of the money would go to “vulnerable” industries, defined as energy-intensive manufacturers who compete with companies outside the state; small non-profits; and state and local government agencies. Public transit agencies are exempt.
Even when passed, the bill would only go into effect when two other states that are in RGGI and/or are contiguous to Maryland also pass carbon pollution prices that are comparable to those in HB 939, or equivalent emissions caps.
Marc Breslow, the Policy & Research Director of Climate XChange, designed both the Senate and House versions of the carbon pricing bills pending in Massachusetts, worked with Delegate Kramer and Maryland CXC to design the Maryland bill, and has assisted with the design of bills that are pending or will be submitted in Rhode Island, Connecticut, New Jersey, and other states.