Secure State Energy Actions 2010 UPDATE

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1 Clean and Secure State Energy Actions 2010 UPDATE

2 The National Governors Association (NGA), founded in 1908, is the instrument through which the nation s governors collectively influence the development and implementation of national policy and apply creative leadership to state issues. Its members are the governors of the 50 states, three territories and two commonwealths. The NGA Center for Best Practices is the nation s only dedicated consulting firm for governors and their key policy staff. The NGA Center s mission is to develop and implement innovative solutions to public policy challenges. Through the staff of the NGA Center, governors and their policy advisors can: Quickly learn about what works, what doesn t and what lessons can be learned from other governors grappling with the same problems; Obtain specialized assistance in designing and implementing new programs or improving the effectiveness of current programs; Receive up-to-date, comprehensive information about what is happening in other state capitals and in Washington, D.C., so governors are aware of cutting-edge policies; and Learn about emerging national trends and their implications for states, so governors can prepare to meet future demands. For more information about NGA and the Center for Best Practices, please visit ACKNOWLEDGEMENTS This report was authored by Rachel Escobar and Sue Gander of the National Governors Association Center for Best Practices (NGA Center), with writing and research assistance from Greg Dierkers, Devashree Saha, Andrew Kambour, and Katherine George, also of the NGA Center.

3 Energy Efficiency Appliance/Equipment Efficiency Standards Building Energy Codes Utility Demand-Side-Management Utility Rate Realignment Energy Savings Targets/Energy Efficiency Resource Standards Minimum energy efficiency standards for nine categories of appliances Residential and Commercial: Maryland Building Performance Standards based on the 2006 IECC, mandatory statewide 15% demand side management by 2015 based on 2007 baseline Requires an electric company to include procedures for the competitive selection of heating, ventilation, air conditioning, or refrigeration service providers in its electricity savings and demand reduction plan (SB 1095) Decoupling in natural gas and electricity markets Goal to reduce per capita consumption and peak demand 15% by 2015 The Community Energy Loan Program provides financing for local governments and nonprofit organizations to identify and implement energy conservation improvements; SLAP is a revolving state agency loan program to be used for energy performance contracting or improvements The Maryland Strategic Energy Investment Fund will direct proceeds from the RGGI auction to energy efficiency and renewable energy programs as well as bill payment assistance for low income consumers Financial Incentives Loans, Rebates, Taxes, Bonds, Etc. Offers an income tax credit nonresidential and residential multifamily buildings of at least 20,000 sq. ft. that are constructed or rehabilitated to meet criteria set forth by the U.S. Green Building Council or other similar criteria (newly constructed buildings must be located on a qualified brownfields site, or in a priority funding area, and not in a wetlands area) The Change a Light program encourages Marylanders to change at least one incandescent light bulb to a compact fluorescent light bulb annually; Home Performance with ENERGY STAR is a market transformation program to train and certify contractors to provide whole-house diagnostics and improvements to customers homes; the weatherization program provides assistance for low income energy efficiency improvements Allows for Property Assessed Clean Energy (PACE) financing (HB 1567) Clean Electricity Renewable/Alternative Energy Portfolio Standards and Goals Requires that 20% of the state s electricity supply come from renewable sources by 2022; utilities demonstrate compliance by acquiring renewable energy credits (RECs) Altered the renewable energy portfolio standard by increasing the percentages of electricity sales that must be met in specified years through the accumulation of renewable energy credits from certain sources; redefines a specified renewable energy credit and increases the maximum allowable alternative compliance payment (subject to a certain limitation) (COMAR et seq.) Accelerated the annual solar energy requirements and the solar alternative compliance schedule, will take effect in 2011 (SB 277) 2010 UPDATE 75

4 Net Metering and Interconnection Standards Interconnection standards for all eligible systems up to 2 MW; systems owned or leased by residents, businesses, schools or government entities that generate electricity using solar, wind or biomass resources are eligible for net metering until the aggregate capacity of all net-metered systems reaches 1,500 MW; developing interconnection standards for all distributed generation Extended net metering policies to micro-combined heat and power systems and third-party ownership structures (HB 1057, SB 981) Extended net metering to qualifying fuel cell electricity generation equipment, effective October 2010 (HB 821) Revised how customer-generators are compensated for net excess generation (NEG) (HB 801) - Requires NEG to be carried forward from month to month as a monetary credit whose value is determined by the prevailing market price - Customer-generators may also receive payment for NEG remaining at the end of a 12 month period Maryland Public Service Commission (PSC) developing regulations to implement the revision, including a method for determining the value of NEG credits PSC to convene a working group to address time differentiated crediting, as well as meter aggregation and credit transfers for agricultural, non-profit, and governmental customer-generators The Maryland Strategic Energy Investment Fund will direct proceeds from the RGGI auction to energy efficiency and renewable energy programs as well as bill payment assistance for low income consumers; offers rebates for residential and commercial geothermal heat pump property; provides financial incentives to homeowners, businesses, local governments and non-profit organizations that install solar water-heating systems or solar-electric systems Financial Incentives Loans, Rebates, Taxes, Bonds, Etc. Offers a production tax credit for electricity generated by wind, geothermal energy, solar energy, hydropower, small irrigation power, municipal solid waste and biomass resources; offers a corporate income tax credit for photovoltaics, wind turbines and fuel cells that serve a green whole building, a green base building, or green tenant space; provides a property tax exemption for residential solar energy systems; requires that solar heating and cooling system be assessed the same as traditional sources for tax purposes; exempts from the state sales tax all wood or refuse-derived fuel used for residential heating purposes Provides grants for small wind energy systems through the Windswept program Residential wind energy equipment and devices that use solar thermal electric energy are eligible for property tax exemption (HB 1171) Sales tax exemption for residential wind energy equipment Revised the definition of solar energy equipment so that other systems in a net metering type arrangement could also be sales tax exempt 76 Clean and Secure State Energy Actions

5 Reopened the Windswept Grant Program application period in 2009 to provide funds for the installation of wind energy systems of at least 1 kw (over 20 kw approved on a case-by-case basis) Financial Incentives Loans, Rebates, Taxes, Bonds, Etc. Revised corporate tax credit for renewable energy systems (HB 494) - Extends the facility in service deadline from 2010 to Sets a minimum tax credit limit of $1,000 - Makes excess tax credits refundable Established a fund for the management of coal combustion by-products, authorizes the Department of the Environment to establish and collect fees (HB 1556) Authorized political subdivisions to enact an ordinance or a resolution establishing a Clean Energy Loan Program to provide loans to residential and commercial property owners for the financing of energy efficiency and renewable energy projects (HB 1567) Allows for Property Assessed Clean Energy (PACE) financing (HB 1567) Alternative Fuels & Vehicles Financial Incentives Loans, Rebates, Taxes, Bonds, Etc. Offers ethanol and biodiesel production tax credits Lead By Example Appliance/Equipment Efficiency Building Efficiency Requires all new energy-using products in state buildings to carry the ENERGY STAR label or be in the top 25% in energy efficiency when products with labels are unavailable The Maryland Energy Administration provides loans through the State Agency Loan Program to state agencies for cost-effective energy efficiency improvements in state facilities; requires energy consumption in state buildings by reduced by 5% by 2009 and 10% by 2010 relative to a 2005 baseline; LEED or Green Globes certification required for all capital projects over 5,000 sq. ft.; the Green Buildings Act requires all new schools and state buildings to meet the LEED Silver standard; the Clean Energy Schools program is working towards have a renewable demonstration project in at least one school in each county in Maryland 2010 UPDATE 77

6 Green Power Purchasing Alternative Fuel and Vehicle Fleets At least 6% of the electricity consumed by state-owned facilities must be generated from green energy sources, such as wind, solar, landfill gas, and other biomass resources At least 50% of state vehicles must use a minimum biodiesel blend of B5 beginning in fiscal year 2008; the state will revise fleet policy and purchasing guidelines to offer more flexibility in purchasing, where practical, low emission vehicles and AFVs for its fleet; the state must help develop the refueling and maintenance infrastructure required to make using certain types of AFV use practical GHG Emissions GHG Policies Participant in Climate Registry; utility cap through RGGI; Climate Action Plan in progress, due 2008: the Climate Change Commission will assess the possible impacts of climate change; calculate Maryland s contribution to the climate change problem; work together with various state agencies, energy providers, business leaders and other groups to develop a greenhouse gas reduction strategy; and develop a plan for reducing the state s vulnerability to sea level rise and other effects of climate change; RGGI participant; adopted CA vehicle emissions standards Requires the Department of the Environment to publish and update an inventory of statewide greenhouse gas emissions for calendar year 2006 and develop a specified plan to reduce greenhouse gas emissions and develop renewable energy (SB 278) Requires the state to reduce statewide greenhouse gas emissions by 25% from 2006 levels by 2020 Requires specified erosion protection projects to include specified nonstructural shoreline stabilization measures, requires the Department of the Environment, in consultation with the Department of Natural Resources, to adopt regulations Green Economic Development Task Force, Workforce Development, Incentives, Analysis, Etc. In April 2008, created the Maryland Strategic Energy Investment Program to provide grants and training funds for clean energy jobs Opened the Maryland Clean Energy Center in 2009 to promote and coordinate the expansion of the green economy Requires the Secretary of Budget and Management to develop and implement a plan for hiring current and former Family Investment Program recipients, their children, foster youth, and certain obligors Requires that the job skills enhancement program include job training for employment in energy efficiency and renewable energy industries Maintains the Maryland Green Registry, a free, voluntary self-certification program for organizations of all types to promote their best practices for environmental protection 78 Clean and Secure State Energy Actions

7 Green Economic Development Task Force, Workforce Development, Incentives, Analysis, Etc. The registry provides checklists and innovative ideas to encourage members to take further action The Maryland Energy Administration (MEA) created the Clean Energy Economic Development Initiative (CEEDI) Support Program to assist in achieving the goal of 100,000 green-collar jobs by Uses this program to help attract emerging clean energy companies and to expand existing clean energy companies including the generators, component producers and the associated supply chain producers - To implement this program, MEA has issued guidelines and application instructions in line with DOE parameters on its website All grant awards are expected to be performance based with payment made against attainment of certain pre-determined milestones 2010 UPDATE 79

8 NGA Center Divisions The NGA Center is organized into five divisions with some collaborative projects across all divisions. Economic, Human Services & Workforce focuses on best practices, policy options, and service delivery improvements across a range of current and emerging issues, including economic development and innovation, workforce development, employment services, research and development policies, and human services for children, youth, low-income families, and people with disabilities. Education provides information on best practices in early childhood, elementary, secondary, and postsecondary education. Specific issues include common core state standards and assessments; teacher effectiveness; high school redesign; science, technology, engineering and math (STEM) education; postsecondary education attainment, productivity, and accountability; extra learning opportunities; and school readiness. Environment, Energy & Transportation identifies best practices and provides technical assistance on issues including clean energy for the electricity and transportation sectors, energy and infrastructure financing, green economic development, transportation and land use planning, and clean up and stewardship of nuclear weapons sites. Health covers a broad range of health financing, service delivery, and coverage issues, including implementation of federal health reforms, quality initiatives, cost-containment policies, health information technology, state public health initiatives, and Medicaid. Homeland Security & Public Safety supports governors homeland security and criminal justice policy advisors. This work includes supporting the Governors Homeland Security Advisors Council (GHSAC) and providing technical assistance to a network of governors criminal justice policy advisors. Issues include emergency preparedness, interoperability, cyber-crime and cyber-security, intelligence coordination, emergency management, sentencing and corrections, forensics, and justice information technology.

9 John Thomasian, Director NGA Center for Best Practices 444 N. Capitol Street, Suite 267 Washington, DC