Previously, any unused or “banked” CO₂ allowances from prior years could be applied to adjust future allocation budgets, effectively increasing the number of allowances available in later years. Under the new rules, this Emissions Containment Reserve (ECR) is effectively being replaced by a higher minimum reserve price (lowest price an allowance may be sold at auction). The result is no allowances being withheld under the ECR if the auction price falls below the minimum price (i.e., those allowances will be unavailable with the price being below the minimum reserve price).
Also under the proposed rule, the Limited Industrial Exemption Set Aside Account will be replaced by a Limited Industrial Exemption. MDE will no longer automatically retire CO2 allowances and can now reallocate these allowances to the Consumer Energy Efficiency Account, simplifying the system and keeping more allowances in circulation. Similarly, the Long-Term Contract Set-aside Account will expire on January 1, 2027. Sources with long-term contracts will now rely on regular allowance distribution.
Additionally, monitoring, recordkeeping, and reporting requirements have been revised and simplified.
Auctions
COMAR 26.09.04 added conditions to include CCR tier 1 and tier 2 allowances in the general requirements for auctions. The meaning of CCR tier 1 and tier 2 were discussed in the “General Administrative Provisions” section of this article.
Offset Projects
COMAR 26.09.03 established the framework for CO2 offset allowances awarded to project sponsors of CO2
emissions offset projects. These projects, which included but were not limited to, reforestation, landfill methane capture, and avoided methane emissions from agricultural manure management operations, demonstrated a decrease or avoidance in CO2 or CO2e emissions. The proposed action repeals this section, aligning Maryland regulations to the RGGI Model Rule which eliminates offset allowances.
Conclusion
Overall, the proposed actions aim to simplify and align Maryland’s CO2 Budget Trading Program with the RGGI Model Rule. The Notice of Proposed Action was published in the Maryland Register on December 1, 2025 and can be found here. The public comment period ended on January 6, 2026 and the details from the January 6 hearing can be found here.
Please contact Trinity’s Maryland office (240.379.7490) if you would like to understand the impact of the proposed changes on your operations.
