Policy Opportunities for Achieving Maryland’s Clean Energy Goals

This paper examines three frameworks to achieve 100 percent clean energy for electricity consumption in Maryland with full compliance by 2040. Increasing the stringency of the existing Renewable Portfolio Standard (RPS) is insufficient to achieve this goal. A higher alternative compliance payment is essential for boosting policy-driven clean energy development.

A Clean Energy Standard (CES), similar to the RPS, but credits all nonemitting generation and includes an increasing alternative compliance payment, achieves greater investment in clean energy. This standard might be met with imported clean energy or imported clean energy credits, both of which enable continued fossil generation in Maryland, potentially for export.

The third framework, an Emissions Intensity Standard (EIS), would cover Maryland’s generated and imported power, focusing on the emissions intensity of consumption. This approach provides incentives for a greater set of compliance opportunities, including substitution away from coal in imported power, and improving the cost effectiveness of emissions reductions. The EIS yields lower electricity prices, negligibly above business as usual through 2035, and modestly higher thereafter.

We identify several essential elements of policy design. Compliance could be achieved by placing an obligation upon retail suppliers to achieve clean energy goals. Enforcement would require a resource planning process. Suppliers might demonstrate compliance through power purchase agreements and potentially through joint compliance planning. A regulatory process involving oversight by the Public Service Commission could aim to balance the imperatives to maintain affordability and electricity resource adequacy with clean energy goals. The regulatory process might involve planning, procurement obligations (e.g., power purchase agreements), and ongoing compliance evaluation.

Increasing demand for clean energy by large private loads such as data centers could lead to future increases in the price of clean energy, hence early commitments to contracts for clean energy could help limit exposure to such price increases.

These policy designs retain Pennsylvania-New Jersey-Maryland’s (PJM’s) role of assuring resource adequacy in the broader region including Maryland, while accelerating the transition toward clean energy consumption within the state. The reliability of electricity supply in Maryland is not necessarily tied to locating generation in Maryland, however, locating a greater amount of generation in the state may provide greater local resilience and give Maryland more options in future energy planning.