Maryland lawmakers enter the 2025 legislative session facing a trifecta of challenges—soaring energy prices, a deepening budget crisis and shaky federal climate funding under a Trump presidency. That has observers concerned about whether the state can sustain its ambitious climate commitments amid competing mandates.

A $2.7 billion budget gap by FY 2026 that could swell to $6 billion over the next five years poses a direct challenge to Democratic Gov. Wes Moore’s climate agenda. Many state programs, including building electrification, electric vehicle grants and rebates and renewable energy projects, depend on federal funding from the Inflation Reduction Act (IRA), elements of which Trump has vowed to rescind after his inauguration.

Last year, Moore closed the legislative session touting climate progress . But advocates argued that the administration fell short where it mattered most—securing funding to advance the state’s bold emissions targets. Despite successes—like the EmPOWER reform bill that firmed up energy efficiency goals, the WARMTH Act that advanced a geothermal heating pilot program and expanded incentives for rooftop solar and offshore wind—lawmakers failed to pass key revenue measures.

Those included the Responding to Emergency Needs from Extreme Weather (RENEW) Act , which sought to establish a $900 million Climate Change Adaptation and Mitigation Fund by making oil and gas companies pay for their pollution. A proposed cap-and-invest program would have netted $300 million for climate initiatives, according to an estimate from the Maryland Department of the Environment (MDE).

The unsuccessful revenue proposals were key parts of the Climate Pollution Reduction Plan (CPRP), which the MDE released in late 2023. It estimated needing $1 billion in annual investments to “bolster Maryland’s chances of achieving its climate goals,” which include reducing 60 percent statewide emissions from 2006 levels by 2031 and achieving net-zero by 2045.

As the 90-day session kicks off this year, lawmakers must find creative ways to navigate the fiscal gap while allocating resources for the state’s competing obligations in the education and health sectors in addition to climate goals. Without the funds to drive its climate agenda, advocates fear that climate pledges from Maryland’s leaders could become more performative than transformative. Reached last week, representatives for the Moore administration said, as policy, that they do not comment on pending legislation.

“There will be several bills introduced aimed at generating revenue for climate action, but they’ll be fighting for space alongside other significant deficits,” said Del. Dana Stein, a Baltimore County Democrat, underlining the tough choices ahead.

In an interview with Inside Climate News, Stein said he will reintroduce his bill from last year that proposes a fossil fuel transport fee on coal moving through the state. “Last year, it was about coal and natural gas. This year, it’s just going to focus on coal that’s transported in the state, used in the state or exported. I can’t say it will pass. But there’s a growing interest since at least two other states have implemented something similar,” he said.

Stein’s bill proposes levying $13 per ton for coal coming into the state. If passed, it is expected to raise up to $300 million a year and will be spent on various mitigation efforts such as asthma treatment for communities affected by coal dust. The measure is among the recommended actions in the CPRP.

In December, the Maryland Commission on Climate Change urged lawmakers to reconsider Stein’s bill to fund mitigation and adaptation efforts at a time of financial crunch. Its 2024 report called on the General Assembly to authorize studies on climate change impacts and the pollution fee as proposed in the RENEW Act, and the design of a cap-and-invest program.

Stein cautioned that the Trump administration’s return has stirred concerns about the rollback of key federal subsidies and tax credits, including the widely used electric vehicle tax credit. “Without those incentives, the timeline for adopting renewable energy would be thrown off. Investment will continue, but it could lose momentum without that federal support.”

Del. Marc Korman, a Montgomery County Democrat who chairs the Environment and Transportation Committee, pointed out that Maryland has leaned on funds from the Regional Greenhouse Gas Initiative (RGGI) to bankroll certain climate policies.

RGGI is a multi-state cap-and-trade program that limits carbon emissions from power plants and reinvests revenue into clean energy and efficiency programs in partnering states.

The CPRP proposes modifications to RGGI to enhance its effectiveness to ensure a more robust and equitable approach to emissions reduction that complements Maryland’s and partner states’ clean energy goals. But it’s unclear if other members will agree to it.

“We’ve already tapped into RGGI revenue to support the Climate Solutions Now Act, and we might need to take a similar approach this year,” Korman said in an interview with Inside Climate News, alluding to the cap-and-invest proposal in the CPRP.

“We’re looking at a $1 billion annual gap for clean energy initiatives, and that’s just one piece of the puzzle alongside major priorities like public education and infrastructure.”

Korman said that among the key revenue bills gaining traction were the Reclaim Renewable Energy Act, HB0220 , which would end public subsidies for trash incineration, and the Transportation and Climate Alignment Act , aimed at tackling emissions from Maryland’s largest polluting sector.

The Reclaim Renewable Energy Act failed to pass last year despite bipartisan support. This year, the bill enjoys support of Senate President Bill Ferguson, who’s also the bill’s sponsor in the Senate, raising hopes about its passage after failing to pass for seven years straight.

Del. Lorig Charkoudian, a Montgomery County Democrat, didn’t mince words about the state’s growing need to self-fund its climate efforts. “We will go to the session with an understanding that we are not dealing with a friend of climate justice in Washington as it has been for the last four years,” she told Inside Climate News.

She said state legislators who support climate policies always knew about the impending need for significant revenue sources for achieving Maryland’s climate goals, and that need is stronger today.

“If federal cuts come through, we’re going to have to double down. Personally, I’ve supported making polluters pay, charging them for the damage they’ve done. So that’s my personal preference for funding climate action in the state,” she said, alluding to the RENEW Act, sponsored by her fellow Montgomery County Democrat Del. David Fraser-Hidalgo. Another Democrat, Sen. Katie Fry Hester, is the bill’s lead Senate sponsor.

Speaking to a rally in Annapolis on the first day of the session, Fraser-Hidalgo said: “[The RENEW Act] is a bill with a simple premise: If you make a mess, you clean it up … There is irrefutable proof that many of the largest oil companies were aware of the long-term effects of burning fossil fuels as early as 1968 but chose to conceal this scientific evidence.”

Charkoudian is the lead sponsor of the Abundant Affordable Clean Energy (AACE) Act, which, among other things, proposes a slew of policies to increase in-state electricity generation using a combination of battery storage, solar, wind and hydropower to meet increased load from data centers and in light of interconnection delays.

PJM Interconnection, the electric grid operator serving portions of the mid-Atlantic, South and Midwest, is under pressure from states , including Maryland, to reform its current rules and fix the snarled interconnection queue in which 3,200 clean energy projects are stuck.

Del. Brian Crosby, a St. Mary’s County Democrat, emphasized energy independence and grid resilience while talking to Inside Climate News. “We need to get serious about understanding how data centers affect our grid and whether co-location strategies really make sense for Maryland,” Crosby said. “We should also take a hard look at next-generation nuclear reactors as part of our energy mix.”

Crosby said addressing the state’s energy needs was among his legislative priorities. “We’re going to focus on the resource adequacy issue. We want to get ourselves on a path to having adequate resources to provide enough energy for the entire state, so we don’t have to rely on other states for that.”

Crosby is supporting the bill calling for a detailed assessment of how data centers will impact Maryland’s energy requirements, including clean energy targets. Sen. Karen Lewis Young, a Frederick County Democrat, is sponsoring the bill in the Senate and has repeatedly voiced her concerns about data centers’ impact on the environment and the state’s clean energy goals.

Environmental advocates are applying continuous pressure. Kristen Harbeson, political director of the Maryland League of Conservation Voters (LCV), said energy is going to be one of the key issues to watch this legislative session. “This is going to be a big year for energy and it’s going to be challenging. There’s going to be a lot of conversations about energy markets, energy independence and generation, regulations and data centers and the economy.”

There’s a growing realization that Maryland needs to expand in-state energy production, Harbeson said. Maryland currently imports approximately 25 percent of its electricity from external sources.

“We expect a [legislative] package from the House and Senate on energy. We also are looking forward to seeing language from the administration, which will have an energy package of its own,” Harbeson said, adding that the administration has a big Chesapeake Bay bill in the works.

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Maryland LCV is backing a number of bills this session, Harbeson said, including the RENEW Act, Stein’s fossil fuel transport fee bill and Charkoudian’s Abundant Affordable Clean Energy Act. The nonprofit also supports the Nearshore Farm Finance Act, which aims to protect Bay waters by expanding buffer zones between farmland and open water to reduce nutrient pollution and encourages innovative farming and conservation practices.

Josh Tulkin, director of the Maryland chapter of the Sierra Club, underscored the need for stronger state leadership.

“It’s very clear that we need more renewable energy in Maryland. We need it in places that will help provide cheap, affordable, clean energy to people. It’s also very clear that the grid operator, PJM, is going to be pushing for more gas and fossil fuel generation and Maryland needs to provide clarity and leadership on this.”

Tulkin said his group was supporting energy bills that would accelerate clean energy deployment to support more reliable and affordable energy. The Sierra Club was also supporting the RENEW Act and the Transportation and Climate Alignment Act, he said.

Jennifer Kunze of Clean Water Action counted four major legislative priorities for the current session, leading with the Reclaim Renewable Energy Act. The measure promises to divert an estimated $10 million to $12 million in public subsidies away from incineration and toward renewables like solar and wind.

“That’s really a good bill for the legislature to pass and for Gov. Moore to support this year when the budget is a big concern,” she said. The Reclaim Renewable Act is also included in Baltimore Mayor Brandon Scott’s legislative priorities for the year.

Clean Water Action is also supporting a food waste reduction bill, which was unsuccessful last year. The bill’s 2024 iteration proposed “establishing a $5 million annual grant program to help local governments and nonprofits develop composting and other organic waste diversion projects, aiming to reduce landfill load and methane emissions.”

The CHERISH Our Communities Act, an environmental justice measure the group is supporting, is aimed at creating additional scrutiny for industrial facilities in Maryland’s most impacted areas through cumulative impact assessments by the MDE.

“If that analysis shows that those facilities would harm the community, then the MDE needs to deny the renewal permits or take some other steps to save communities from harm,” Kunze explained. A climate resilience septic systems bill Clean Water Action is promoting suggests reforms to better protect waterways from pollution and prepare rural infrastructure for climate impacts.

“We are really looking for Gov. Moore to be a leader on these issues and get behind these bills early on to protect Marylanders from pollution and its health effects. These are very cost-effective environmental bills in a year where Maryland needs to find creative solutions for its environmental problems,” Kunze said.

In addition to the aforementioned bills, other climate and environmental legislations are expected to drop during the 90-day session and would need majorities in both chambers to pass.

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