2022 | Green

Council designates millions in energy tax money for environmental goals

Legislation focuses on lower-income communities, helps building owners with projects

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This story was updated at 9:30 p.m. Feb. 1, 2022, to include comments from County Council Member Tom Hucker.

The Montgomery County Council on Tuesday unanimously voted to allocate 10% of the county’s energy tax revenue — almost $18 million this year — to a county nonprofit focused on energy efficiency and investment.

County Executive Marc Elrich said in a brief interview Tuesday that he would sign the bill. However, council members need to consider where in the budget to cut roughly $18 million, unless they want to raise taxes somewhere, he said.

Council Members Tom Hucker and Andrew Friedson led the move as co-sponsors on the bill, and said before Tuesday’s vote that efforts on it started about three years ago.

Their bill was amended multiple times to further note how the funds could be spent by the county’s Green Bank, and when aspects of the law would take effect.

The Green Bank is a publicly chartered 501(c)3 nonprofit. Its website says it uses funding from the utility merger of Exelon and Pepco. 

It uses private lenders and capital to help leverage public money to invest in environmental projects countywide, according to its website.

The amended bill says:

  • The Green Bank must spend 20% of its funds from the county to support activity in “Equity Emphasis Areas” countywide, as defined by the Metropolitan Washington Council of Governments. Those areas have higher concentrations of low-income and/or minority populations.
  • The bank must also spend 15% of the county funds to help reduce the cost of energy projects by property owners “by a loan subsidy, interest rate buydown, technical assistance, pre-development, blended capital, or other similar tools.”
  • After July 1, 2023, the Green Bank may not use the funds to pay for mechanical equipment upgrades, for newer equipment that still use fossil fuels. Council Member Hans Riemer said this amendment was needed so property owners and partners could adjust to the new law.
  • The county’s director of the Department of Environmental Protection must submit an annual report to the county executive and council members detailing the activities of the Green Bank.

Elrich said he is frustrated that the council has not taken up building energy performance standards legislation for a final vote. The measure was introduced last May.

That legislation is needed for builders and developers to know what energy use requirements they need to meet regarding future climate goals, Elrich said.

It’s hard to see how the money in the Green Bank bill might be used without the benchmarks and laws set in the other bill, he added.

“If you don’t have this, you’re not able to drive the kind of change you want to make,” Elrich said.

Hucker was County Council president when the bill was introduced, and chairs the Transportation and Environment committee, where it is assigned. In a voicemail message, Hucker said he and colleagues are “eager” to pass the building energy performance standards bill, but they are waiting on a feasibility study from Elrich’s administration. 

That study would help determine how feasible it is for building owners countywide to implement the changes proposed in the bill, and how enforceable the benchmarks and regulations are, Hucker said.

Regarding the Green Bank bill, Hucker said before Tuesday’s vote that it “puts our money where our policy commitment is,” calling it one piece of how county officials will reach goals laid out in the Climate Action Plan. That plan calls for the county to eliminate greenhouse gas emissions in the county by 2035, and cut them 80% by 2027.

Friedson called the bill “critical” as the county addresses those goals in the coming years. 

The county has budgeted $175.7 million for energy tax revenue in the current budget year, and 10% of that — just under $18 million — would go to the Green Bank. Council members could revisit that level of funding in the future. 

The bill does not delineate what types of projects the money must be used for, but the Green Bank can assist property owners with improvements like adding solar panels to a roof; making a heating, ventilation, and air conditioning system more efficient; or modifying a building to conserve natural resources like sunlight or water, for instance. 

The funds will come from the county’s energy use tax, which is “levied and imposed on every person transmitting, distributing, manufacturing, producing, or supplying electricity, gas, steam, coal, fuel oil, or liquefied petroleum gas in the County,” according to council staff reports.

Steve Bohnel can be reached at steve.bohnel@bethesdamagazine.com