Bill Summary – FastDemocracy

HB 419
                      Department of Legislative Services
                             Maryland General Assembly
                                   2021 Session
                           FISCAL AND POLICY NOTE
                                   Enrolled
House Bill 419                 (Delegate Qi)
Economic Matters                                                                 Finance
  Economic Development - Advanced Clean Energy and Clean Energy Innovation
                          Investments and Initiatives
This bill requires the Maryland Energy Innovation Institute (MEII) and the Maryland Clean
Energy Center (MCEC) to implement an accelerator program for Maryland-based
technology companies engaged in clean energy innovation. MEII and MCEC must also
coordinate and consult with certain State entities, as specified. MCEC is designated as a
green bank for the State and must work in conjunction with other local and private green
banks. MCEC’s financing authority is also clarified as it relates to State entities. The
Strategic Energy Investment Fund (SEIF) must transfer at least $2.1 million annually to
the Maryland Energy Innovation Fund (MEIF), which must be apportioned to MEII (at
least $0.9 million) and MCEC (at least $1.2 million). In fiscal 2022 only, the transfer is
offset by the amount transferred under a separate provision of law. MCEC’s board
membership is altered, related terms are defined, and an annual MCEC report is modified
to include information related to the bill. The bill takes effect July 1, 2021.
                                   Fiscal Summary
State Effect: Special fund revenues for MEIF increase by at least $0.6 million in FY 2022
and by at least $2.1 million annually thereafter, as discussed below. Special fund
expenditures for MEIF increase correspondingly as funds are used for required and
authorized purposes. Overall special fund expenditures for SEIF are not affected, but
diverting funds to MEIF decreases revenues available for other SEIF-funded programs.
This bill establishes a mandated distribution beginning in FY 2022.
Local Effect: The bill does not materially affect local government finances or operations.
Small Business Effect: Meaningful.
                                         Analysis
Bill Summary: The accelerator program must feature seed funding, training,
developmental support for the companies, and pilot projects focused on on-site clean
energy generation for buildings.
MCEC may enter into financing transactions with, on behalf of, or for the benefit of any
State agency for the purposes of a project on State-owned or State-leased property.
Financing may be in any form, including bonds, loans, grants, energy performance
contracts, shared energy savings contracts, participation agreements, lease agreements, and
reimbursement agreements but may not pledge the faith and credit of the State.
Current Law:
Strategic Energy Investment Fund
Chapters 127 and 128 of 2008 established SEIF primarily to contain revenue generated
from the sale of carbon dioxide emission allowances under the Regional Greenhouse Gas
Initiative (RGGI). The allocation of revenue has been altered several times in budget
reconciliation legislation. The current allocation requires (1) at least 50% for energy
assistance; (2) at least 20% for energy efficiency and conservation (at least one-half for
low- and moderate-income programs); (3) at least 20% for renewable and clean energy,
energy-related education and outreach, resiliency, and climate change programs; and (4) up
to 10% but no more than $5.0 million for administrative expenses.
Maryland Clean Energy Center and Maryland Energy Innovation Accelerator
MCEC was established by Chapter 137 of 2008 as a body politic and corporate and an
instrumentality of the State. The Act provided no dedicated funding source. The purpose
of MCEC is to (1) promote economic development and jobs in the clean energy industry
sector; (2) promote the deployment of clean energy technology; (3) serve as an incubator
for the development of the clean energy industry; (4) in collaboration with the Maryland
Energy Administration, collect, analyze, and disseminate industry data; and (5) provide
outreach and technical support to further the clean energy industry. MCEC may make
grants or provide equity investment financing to clean energy technology-based businesses
and may borrow money and issue bonds consistent with its purpose. MCEC may also:
      acquire, develop, improve, manage, market, license, sublicense, maintain, lease as
       lessor or lessee, or operate a project in the State to carry out its purposes; and
      acquire, directly or indirectly, from a person or governmental unit, by purchase, gift,
       or devise any property, rights-of-way, franchises, easements, or other interests in
HB 419/ Page 2
       land as necessary or convenient to improve or operate a project to carry out its
       purposes and on the terms and at the prices that it considers reasonable.
Maryland Energy Innovation Initiative and Fund
Chapters 364 and 365 of 2017 established MEII in the A. James Clark School of
Engineering at the University of Maryland, College Park Campus (UMCP) to
(1) collaborate with academic institutions in the State to participate in clean energy
programs and (2) develop and attract private investment in clean energy innovation. In
addition to funding from MEIF, MEII also receives federal and private funding to support
its activities.
The Acts also established MEIF in UMCP to support the administrative costs of MCEC
and MEII and required that $1.5 million be transferred from SEIF to MEIF each year from
fiscal 2019 through 2022. MEII is authorized to use the fund to purchase advisory services
and technical assistance and for administrative, legal, and actuarial expenses of MEII.
State Fiscal Effect: Overall special fund expenditures for SEIF are not affected, but
diverting funds for the required MEIF transfers decreases the revenues available to be
distributed (and then expended) under the established formula for allocating SEIF revenues
from RGGI proceeds for energy assistance, energy efficiency, clean and renewable energy
programs, and administrative expenses.
Generally, the bill requires the transfer of at least $2.1 million annually from SEIF to MEIF.
However, the bill also requires, for fiscal 2022 only, that this required transfer be offset by
any actual transfers from SEIF to MEIF under Chapters 364 and 265 of 2017. Those Acts
require $1.5 million to be transferred annually from fiscal 2019 through 2022.
Accordingly, special fund revenues for MEIF increase by at least $0.6 million in
fiscal 2022 – reflecting the required offset – and by at least $2.1 million annually thereafter
from new SEIF transfers. In fiscal 2022 only, the required apportioned amounts total at
least $257,143 for MEII and $342,857 for MCEC – once again reflecting the required
offset. In future years, at least $0.9 million must be apportioned to MEII and at least
$1.2 million must be apportioned to MCEC each year. Special fund expenditures for
MEIF increase correspondingly as funds are used for authorized and required purposes
(MCEC established the Maryland Energy Innovation Accelerator in 2019).
MCEC advises that the financing authority in the bill related to State entities is largely
clarifying in nature and that it may enter into such financing arrangements under current
law. However, to the extent that the bill facilitates or authorizes such activity, State finances
may be affected; the amount and timing of any effect cannot be reliably estimated at this
time.
HB 419/ Page 3
There is no immediate or necessary effect of designating MCEC as a green bank for the
State and requiring it to work as a green bank with other local and private green banks,
although such entities are often capitalized with some source of public or ratepayer funds
(as is the case under the bill).
State agencies can likely collaborate and coordinate with MCEC and MEII as necessary
under the bill with existing budgeted resources.
Small Business Effect: Small businesses pursuing energy innovation benefit from
enhanced programs and resources provided by MEII, MCEC, and the funding provided for
the accelerator program. Conversely, funds provided through the existing SEIF allocation
formula may also benefit small businesses; those funds are no longer available.
                               Additional Information
Prior Introductions: SB 739 of 2020, a similar bill, received a hearing from the Senate
Finance Committee, but no further action was taken. Its cross file, HB 1426, received a
hearing from the House Economic Matters Committee, but no further action was taken.
Designated Cross File: SB 460 (Senator Feldman) - Finance.
Information Source(s): Maryland Clean Energy Center; Department of Commerce;
University System of Maryland; Department of Budget and Management; Department of
General Services; Maryland Energy Administration; Maryland Technology Development
Corporation; Department of Legislative Services
Fiscal Note History:     First Reader - February 2, 2021
rh/lgc                   Third Reader - March 19, 2021
                                Revised - Amendment(s) - March 19, 2021
                         Enrolled - April 12, 2021
Analysis by: Stephen M. Ross                          Direct Inquiries to:
                                                      (410) 946-5510
                                                      (301) 970-5510
HB 419/ Page 4
Statutes affected: 
Text - First - Economic Development - Advanced Clean Energy and Clean Energy Innovation Investments and Initiatives: 10-826 Economic Development, 9-101 State Government, 10-401 State Government, 10-402 State Government, 10-801 State Government, 10-802 State Government, 10-806 State Government, 10-807 State Government, 10-820 State Government, 10-821.1 State Government, 10-823 State Government, 10-826 State Government, 10-828 State Government, 10-829 State Government, 10-830 State Government, 10-834 State Government, 10-835 State Government, 10-839 State Government
Text - Third - Economic Development - Advanced Clean Energy and Clean Energy Innovation Investments and Initiatives: 10-826 Economic Development, 9-101 Economic Development, 10-401 Economic Development, 10-402 Economic Development, 10-801 Economic Development, 10-802 Economic Development, 10-806 Economic Development, 10-807 Economic Development, 10-820 Economic Development, 10-821.1 Economic Development, 10-823 Economic Development, 10-826 Economic Development, 10-828 Economic Development, 10-829 Economic Development, 10-830 Economic Development, 10-834 Economic Development, 10-835 Economic Development, 10-839 Economic Development
Text - Enrolled - Economic Development - Advanced Clean Energy and Clean Energy Innovation Investments and Initiatives: 10-826 Economic Development, 9-101 Economic Development, 10-401 Economic Development, 10-402 Economic Development, 10-801 Economic Development, 10-802 Economic Development, 10-806 Economic Development, 10-807 Economic Development, 10-820 Economic Development, 10-821.1 Economic Development, 10-823 Economic Development, 10-826 Economic Development, 10-828 Economic Development, 10-829 Economic Development, 10-830 Economic Development, 10-834 Economic Development, 10-835 Economic Development, 10-839 Economic Development