Maryland commission backs fuel CO2 program

Maryland should move ahead with its plans to join a regional cap-and-trade program to reduce CO2 from the transportation sector to keep the state on a path to slash its greenhouse gas (GHG) emissions, a government advisory panel says.

The Maryland Commission on Climate Change on 17 November gave a strong endorsement of making TCI a key part of the state's plan to reduce emissions, while also calling on lawmakers to set even more aggressive GHG targets.

"Maryland should lead in the interstate TCI discussions to develop, finalize, adopt, and implement an ambitious, equitable, and sustainable regional transportation cap-and-invest program that creates a new source of funding for clean transportation solutions that reduce GHG emissions," the commission said in its annual report to governor Larry Hogan (R) and the state legislature.

The commission, whose members include Hogan administration officials, lawmakers and representatives from utilities, environmental organizations and other stakeholder groups, called for the TCI program to "begin as soon as possible, ideally by 2022."

More broadly, the commission called for the legislature to replace the 40pc by 2030 GHG-reduction target it set in 2016 with a mandate to cut emissions by 50pc from 2006 levels by 2030. It also called for the state's plans to be designed with a goal of achieving net-zero emissions by 2045.

Hogan's administration did not immediately say how it would act on the commission's recommendations, but it was involved in crafting them.

"Maryland continues to make real progress in finding common ground for common sense solutions to our environmental challenges, and this report reflects that commitment," said Maryland Department of Environment secretary Ben Grumbles, who serves as chair of the commission.

The commission's recommendations comes as the TCI members are nearing the release of a final framework for the market.

As currently envisioned, the program would cover emissions from the petroleum component of on-road gasoline and diesel fuel use in 11 states and the District of Columbia, from Virginia north to Maine. New Hampshire governor Chris Sununu (R) last year said his state would not join the market because it will lead to higher gasoline prices, a concern echoed by many of the fuel suppliers that would be regulated by the market.

The states are contemplating requiring a 20-25pc reduction in emissions from 2022-32. The program would cover fuel suppliers and require them to hold allowances to cover reported emissions. Auctions would serve as the primary vehicle for distributing allowances.

Transportation, at 43pc, is by far the largest source of greenhouse gas emissions in the TCI states.

It remains to be seen how the Covid-19 pandemic will affect the final shape of the program, although Massachusetts governor Charlie Baker (R), one of the leading proponents of the market, this week suggested it may influence things.

Baker said the TCI members have been updating their modeling data to determine how the pandemic affects the final costs and benefits of the market. The update is needed because "we are living in a point in time now that is dramatically different" than a year ago when states first outlined their vision for the cap-and-trade program, he said.

"It is certainly something we think is an important part of helping states make decisions on this," Baker said during a 17 November press conference.

Once the final market framework is finished, each TCI state will decide whether to participate in the market.

Last year, the TCI members said the initial CO2 cap could be around 254mn short tons in 2022, which would be about three times the size of the Regional Greenhouse Gas Initiative, a 10-state cap-and-trade program for power plant emissions that includes many TCI members, including Maryland and Massachusetts.

The Maryland commission for its part said the pandemic should not delay the state's efforts.

"Now, more than ever, Maryland should stay the course and lead on environmental protection efforts and make their climate change mitigation and adaptation strategy a key piece of the state's economic recovery from the Covid-19 pandemic," the commission said.

By Michael Ball