​The Maryland State Senate introduced a bill that will prohibit all new buildings from using natural gas or heating oil beginning in 2023, as well as place other restrictions on replacing heating systems in older buildings. If enacted, The Climate Solutions Now Act of 2022 (“Bill”), which recently was introduced in the Maryland Senate, would force new buildings to meet green energy code standards and cease fossil fuel hookups and would require existing buildings to undertake emissions reporting and reductions or face fines and penalties. Although climate change initiatives are important, industry stakeholders are mobilizing to educate lawmakers about the widespread impacts of this bill in its present form.  

What You Need to Know:

• The Maryland General Assembly is in session and the Maryland Climate Solutions Now Act of 2022 was just introduced in the Senate.
• The Bill proposed expensive building code changes, including requiring full compliance with the 2018 International Green Construction Code, creating “electric-ready” standards like solar hookups, and prohibiting the use of fossil fuels to meet any water or space heating demands.  The changes would go into effect quickly.
• The Bill would also require any preexisting buildings to start recording and reporting greenhouse gas emissions, and report percentage decreases over the next twenty years or be subject to a yet to be determined fine.

The Bill proposes major changes and additional regulations for all future construction. First, by 2023, the Bill would require the adoption of regulations for new construction that prohibit any fossil fuels be used to meet any water or space heating demands. Local governments would be permitted to grant variances of this requirement, but only in accordance with a yet to be developed cost-effectiveness test where “the incremental cost of constructing the building” in compliance “would be greater than the social cost of the greenhouse gasses that would be reduced by” compliance. Second, the Bill would require all future construction to include “electric-ready standards” meaning new construction is “ready” for (i) the installation of solar energy systems; (ii) the installation of electric vehicle charging equipment; and (iii) “building-grid interaction.” There will be no exception or variance to the required “electric-ready” standards. Finally, the Bill would require the adoption of the 2018 International Green Construction Code (“IgCC”) by 2023 and any subsequent versions released in the future (the 2021 IgCC was already released and would need to be adopted under the requirements of the Bill and the automatic change each time the IgCC is updated adds further uncertainty). While the State of Maryland adopted the IgCC in 2011, the 2018 version is far more expansive and includes requirements addressing site sustainability, water use efficiency, energy efficiency, indoor environmental quality, materials and resources, and construction and plans for operation for any commercial construction and multifamily residential over three stories tall—all of which add considerable administrative and construction expense that can impact existing development timelines, plans, budgets and financing. 
 
As for current buildings, the Bill would require reduction of building greenhouse gas emissions to net-zero by 2040. Any commercial or multifamily residential buildings that have a gross floor area of 25,000 square feet or more, excluding parking, must begin measuring and reporting its direct emissions in 2025. These buildings will then need to report a 20 percent reduction in net greenhouse gas emissions by 2030, a 40 percent reduction by 2035, and net-zero emissions by 2040. Those buildings that cannot perform the required reductions, would have to pay an unspecified fee for emissions exceeding the standards that must be more than the “special cost of greenhouse gases” as adopted by the Maryland Department of Environment.
 
Ultimately, the Bill proposes revolutionary regulatory burdens on future construction and current real estate. The Bill already is sponsored by a majority of Maryland Senators and the entire democratic membership of the Education, Health, and Environmental Affairs Committee. A cross-filed version has not been filed in the House of Delegates, rather a number of House bills have been introduced addressing and proposing the same concepts within the Climate Solutions Now Act of 2022 in piecemeal fashion. A hearing is scheduled for February 15, 2022.