Building owners will soon have to learn the art of energy benchmarking and carefully report each building’s greenhouse gas emissions (GHG) to the Maryland Department of the Environment (MDE).
The first building GHG number reported to MDE, which building owners are required to do beginning in 2025, will be the most important, according to Stuart Kaplow, Principal, ESG Legal Solutions, who presented an overview of the Climate Solutions Energy Act of 2022 to attendees of the recent Hunt Valley Business Forum’s Annual Public Policy Symposium. He explained that the “first reported number” will likely represent the first time a company calculates its greenhouse gas emissions and it may well set a baseline against how reduction efforts will be measured.
The new act mandates MDE “shall require the owners of covered buildings to measure and report direct emissions to the department annually beginning in 2025,” said Kaplow who added that calculating that number is “more art than science.” He urged building owners to elicit the support and guidance of third-party providers to complete the process.
According to Kaplow, Maryland enacted the most rigorous climate law in the country when it passed Senate Bill 528, the Climate Solutions Now Act.
“It will have a significant impact on and change the trajectory of every business in the state,” most specifically owners and investors of commercial real estate, he said. “Every building consisting of 35,000 square feet and larger must reduce its greenhouse gas emissions by 20 percent, beginning in 2030, which represents the first step towards the achievement of net zero emissions by 2040. Basically, natural gas is gone and all-electric is here.”
Kaplow predicted that “beginning in this year’s General Assembly, different groups and stakeholders will be looking to soften the levels contained in last year’s bill,” as well as change the exemption status of different buildings. For instance, all public and private pre-K through high school schools, many historic buildings and others used for manufacturing and agriculture are not required to participate in SB 528’s decarbonization program but houses of worship are. That is subject to a change in the law.
Residential, commercial and industrial real estate presently account for 16 percent of greenhouse gas emissions, while transportation, at 35 percent, represents the largest contributor.
Kaplow recommends building owners establish a benchmark Energy Star Portfolio Manager greenhouse gas emission score now in order to learn how that software works and the data points it includes. He further suggests utilizing that Energy Star data on “direct emissions” to identify the energy equipment changes and retrofits needed to comply with the emission reductions in the new law.
Energy benchmarking, including Maryland’s new Building Energy Performance Standards, is the process of comparing performance over a set period of time against the same performance of a similar building or the same building over a different time period.
Kaplow made one thing clear during his presentation: Burying one’s head in the sand will not cause the need to disclose and reduce greenhouse gas emissions in Maryland to go away.