Real Estate Groups Raise Concerns About State Building Energy Policies

NAIOP and four other commercial and residential real estate trade associations are raising significant concerns with the proposed final report of Maryland’s Building Energy Transition Implementation Task Force. In a joint submission, the associations gave notice of their intent to vote against adopting the report and its recommendations.

The real estate representatives on the task force cited four main areas of concern with the draft:

  1. The report makes no recommendations on tax incentives to help fund decarbonization projects in large buildings subject to emissions standards. Recommendations on tax incentives for “covered” buildings were the primary charge to the task force from the General Assembly.
  2. In response to the charge that the task force presents a funding plan, the draft proposes an economy-wide carbon emissions tax, an additional tax on the carbon content of fuels, and the novel concept of using Medicaid to fund energy efficiency and electrification of buildings. Task force members are being asked to endorse these concepts without modeling or details about implementation.
  3. The cost-benefit analysis conducted by the Lawrence Berkeley National Energy Laboratory was based on modeling of generalized costs. It did not account for utility interconnection or borrowing costs. This resulted in overly optimistic estimates which were 40% lower than Montgomery County’s case studies of existing buildings.
  4. The recommendations do not meet the scale of the Climate Solutions Now Act which necessitates the replacement of space heating, water heating, and air conditioning equipment serving hundreds of thousands of apartment and condominium units, and hundreds of millions of square feet of commercial space before 2031. The weak policy support and lack of financial incentives raise concerns that building owners and occupants will be exposed to high compliance costs on one side and a combination of non-compliance fees and criminal penalties on the other.

The Building Energy Transition Implementation Task Force was created by the Climate Solutions Now Act to make recommendations on incentives and supportive policies to achieve reductions in greenhouse gas emissions from buildings subject to the Building Energy Performance Standards and the task force is working to submit its recommendations to the Governor and General Assembly prior to the start of the 2024 Session.