Study on Greenhouse Gas Emissions Economy-Wide Cap-and-Invest Program (Maryland Climate Crisis Equity Act)

EXPLANATION: CAPITALS INDICATE MATTER ADDED TO EXISTING LAW.
[Brackets] indicate matter deleted from existing law.
*sb0590*

SENATE BILL 590
M5 6lr1972
CF 6lr2397
By: Senator Kramer
Introduced and read first time: February 5, 2026
Assigned to: Education, Energy, and the Environment

A BILL ENTITLED

AN ACT concerning 1

Study on Greenhouse Gas Emissions Economy–Wide Cap–and–Invest Program 2
(Maryland Climate Crisis Equity Act) 3

FOR the purpose of requiring the Department of the Environment , in collaboration with 4
the Maryland Commission on Climate Change, the Department of Transportation, 5
and the Maryland Energy Administration, and in coordination with the Commission 6
on Environmental Justice and Sustainable Communities and other certain entities 7
and persons, to complete a study and develop a report evaluating the potential design 8
and implications of implementing an economy –wide cap–and–invest program that 9
will help the State achieve certain greenhouse gas emissions reductions and provide 10
a sustainable funding source for climate–related initiatives; and generally relating 11
to a study on greenhouse gas emissions economy–wide cap–and–invest programs. 12

Preamble 13

WHEREAS, Greenhouse gases are air pollutants that endanger public health, 14
welfare, and the prosperity of the people of Maryland; and 15

WHEREAS, Maryland law requires the State to achieve net–zero greenhouse gas 16
emissions by 2045; and 17

WHEREAS, The Department of the Environment’s December 2023 Maryland ’s 18
Climate Pollution Reduction Plan identified an economy–wide cap–and–invest program as 19
a critical strategy to close the State’s greenhouse gas emissions gap and provide a 20
sustainable revenue source for State–funded investments; and 21

WHEREAS, In 2024, the Maryland Commission on Climate Change recomme nded 22
that the General Assembly authorize a study to evaluate the design of the economy–wide 23
cap–and–invest program identified in Maryland’s Climate Pollution Reduction Plan; and 24

2 SENATE BILL 590

WHEREAS, Other North American jurisdictions, including California, Quebec, and 1
Washington, have successfully implemented cap–and–invest programs to reduce 2
greenhouse gas emissions and support climate investments; and 3

WHEREAS, Maryland has extensive experience with cap –and–invest programs 4
through its longstanding participation in the Regional Greenhouse Gas Initiative , which 5
has generated more than $1.6 billion since 2008 for investments in utility bill assistance, 6
energy efficiency, clean energy, clean transportation, and other public needs; now, 7
therefore, 8

SECTION 1. BE IT ENA CTED BY THE GENERAL ASSEMBLY OF MARYLAND, 9
That: 10

(a) (1) In this section the following words have the meanings indicated. 11

(2) “Department” means the Department of the Environment. 12

(3) “Program” means an economy–wide cap–and–invest program. 13

(b) (1) The Department shall, in collaboration with the Maryland Commission 14
on Climate Change, the Maryland Department of Transportation, and the Maryland 15
Energy Administration , and in coordination with the Commission on Environmental 16
Justice and Sustainable Comm unities and any other agency or stakeholder identified by 17
the Department, complete a study and develop a report evaluating the potential design and 18
implications of implementing an economy–wide cap–and–invest program that: 19

(i) places the State on a path way to achieve its greenhouse gas 20
emissions reduction targets under § 2–1204.2 of the Environment Article; and 21

(ii) provides a sustainable funding source for climate –related 22
initiatives. 23

(2) The Department shall engage with stakeholders during the study, 24
including soliciting input and feedback on: 25

(i) program design; 26

(ii) revenue use; 27

(iii) equity considerations; and 28

(iv) other components of a program. 29

(c) The study shall: 30

(1) evaluate, at a minimum, program design elements regarding: 31

SENATE BILL 590 3

(i) covered sectors and entities , including evaluating and 1
considering: 2

1. major sources of greenhouse gas emissions within the 3
State; 4

2. minimizing administrative and compliance burdens, 5
including establishing requirements for relevant agencies at the beginning of the 6
administrative or compliance process; 7

3. the benefits and drawbacks of including electricity 8
generation under a program in addition to its coverage under the Regional Greenhouse Gas 9
Initiative; and 10

4. the benefits and drawbacks of including electricity 11
generated in and imported from states that do not participate in the Regional Greenhouse 12
Gas Initiative; 13

(ii) the use of facility–specific limits or other mechanisms to lim it 14
greenhouse gas emissions from facilities located in or near overburdened communities; 15

(iii) the treatment of emissions–intensive, trade–exposed industries, 16
including identifying methods to protect against competitiveness impacts while accounting 17
for facility proximity to overburdened communities; 18

(iv) the distribution of allowances, including potential no –cost 19
allowance allocations to gas and electric utilities to mitigate the cost to customers; 20

(v) auction design, including mechanisms enabling allowance 21
auctions to respond automatically to changes in market price and demand; 22

(vi) the use of offset credits, including whether to allow offsets for a 23
portion of compliance and evaluating the assumption that annual allowance budgets would 24
be reduced to account for the offsets; and 25

(vii) any other design elements the Department or any other entity 26
identified in subsection (b)(1) of this section considers necessary to ensure an effective, 27
equitable, and efficient program; 28

(2) consider: 29

(i) the potential uses of revenue generated through a program, 30
including: 31

1. providing rebates, weatherization services, and other 32
measures to reduce energy costs and protect low– and moderate–income households; 33

4 SENATE BILL 590

2. expanding clean energy and energy efficiency programs; 1

3. investing in cleaner, more equitable, and more eff icient 2
transportation systems; 3

4. investing in technologies and programs that remove 4
carbon from the atmosphere; 5

5. enhancing the climate resiliency of waters, forests, and 6
vital ecosystems; 7

6. investing in the State’s economy and communities to make 8
them more resilient to climate impacts and extreme weather; 9

7. workforce development in clean energy and 10
climate–related fields; and 11

8. other investments to promote a rapid, effective, and 12
equitable transition to a decarbonized economy; 13

(ii) the implications of some or all of the revenue generated through 14
a program being temporarily diverted to other non–climate–related expenditures; and 15

(iii) the implications of linking a Maryland program with similar 16
programs in other North American jurisdictions, including considering: 17

1. design elements necessary to facilitate the linkage; and 18

2. the efficacy of linking the program compared with the 19
efficacy of not linking the program; and 20

(3) include modeling and an analysis of: 21

(i) the potential impacts of a program on: 22

1. achieving the State’s greenhouse gas emissions reduction 23
targets; 24

2. energy affordability for consumers; and 25

3. the State’s economy and economic competitiveness; 26

(ii) remedial measures, if needed , to address potential adverse 27
impacts of a program; 28

(iii) strategies to ensure that low –income households do not 29
experience a net increase in costs resulting from a program; and 30
SENATE BILL 590 5

(iv) the potential impact of existing and anticipated changes to 1
federal funding and regulatory programs. 2

(d) The Department may contract with a consultant with expertise in economics 3
and environmental policy to conduct all or part of the study. 4

(e) (1) Funding for the study shall be provided from the Maryland Strategic 5
Energy Investment Fund under § 9–20B–05 of the State Government Article. 6

(2) If a program is implemented on or before June 30, 2030, funding 7
provided for the study under paragraph (1) o f this subsection shall be reimbursed from 8
revenue generated by the program. 9

(f) On or before December 31, 2027, the Department shall submit the report 10
required under this section to the General Assembly, in accordance with § 2 –1257 of the 11
State Government Article. 12

SECTION 2. AND BE IT FURTHER ENACTED, That this Act shall take effect June 13
1, 2026. 14