Vermont's House passes Clean Heat Standard — major climate bill aimed at reducing emissions from buildings
Lawmakers in Vermont’s House of Representatives on Wednesday voted 96 to 44 to advance a bill that would create the state’s first ever Clean Heat Standard. The bill goes next to the Senate.
The standard would create a marketplace, where fossil fuel wholesalers and importers who do business in Vermont would have to buy or create so-called “Clean Heat Credits” — in proportion to the amount of climate warming emissions their products generate.
The idea is that credits will be generated by doing things that reduce emissions from heating buildings. Primarily, that means weatherizing homes and businesses and helping Vermonters switch to heat sources that emit less carbon into the atmosphere.
The bill includes a list of activities that could generate credits including supplying biofuels in lieu of traditional fossil fuels, weatherizing homes and installing cold climate heat pumps and high-efficiency wood heat.
“The sooner we transition to cleaner heating options, the more money we will save, the more economic and environmental benefits we will enjoy,” Rep. Tim Briglin of Thetford, chair of the House Energy and Technology Committee said. “The longer we wait to transition, the more costly, the more disruptive and the more inequitable that transition will be.”
Heating buildings accounts for roughly 34% of Vermont's greenhouse gas emissions. The state has committed by law to reducing them dramatically — starting in 2025.
The Clean Heat Standard is the main emissions cutting measure recommended in the state's Climate Action Plan.
If it becomes law, the bill would trigger a two-and-a-half-year process, whereby the Public Utilities Commission would create the credit system with public input along the way. It would go into effect in January 2025.
“The longer we wait to transition, the more costly, the more disruptive and the more inequitable that transition will be.”
The legislation requires the PUC consider the total emissions an alternative fuel generates, an addition climate advocates wanted.
Lifecycle emissions are the total greenhouse gas emissions a fuel creates, from its extraction or refinement, to being shipped, to what you burn at your house or in your car. Some biofuels are as carbon intensive as the fossil fuels they are intended to replace. Proponents say this system would award credits based on the emissions they actually offset.
In an op-ed published Wednesday in VTDigger, Rep. Laura Sibilia of West Dover — vice chair of House Energy and Technology — said she sees action now as a boon for small businesses and customers.
"Our smallest fossil-fuel dealers, and the Vermonters reliant on them to heat their homes, are in danger of being left behind in this increasingly volatile global energy market," Sibilia wrote. "... inaction threatens to be an anchor, pulling small fossil fuel dealers and their most vulnerable customers under."
Roughly 60% of Vermont homes are heated with petroleum products like fuel oil, propane and kerosene, according to the U.S. Energy Information Administration. Right now, prices are at a premium.
With energy prices so high, some lawmakers raised concern about whether the bill would raise costs for energy-burdened Vermonters.
Reps. Jim Harrison of Chittenden, Peter Fagan of Rutland City and Barbara Murphy of Fairfax proposed an amendment that would have required the Public Utilities Commission study the cost implications of a standard before the Legislature approves it, delaying its approval until 2023.
“We don’t know what H.715’s impact will be on the prices going forward…” Harrison said, referencing the bill number. “We don’t fully know what the program will look like going forward, and what the impact will be on all of us.”
Modeling from the Energy Action Network shows fuel oil and propane are much more volatile in their pricing than options like wood pellets and electric heat pumps.
Generally speaking, switching away from fossil fuel heat sources tends to save consumers costs over time, but does require an upfront investment.
"There are companies that are already figuring out how they can sell biodiesel, pellets, efficiency services, how they can get credits with the things they already do."
The bill that passed Wednesday would require 32% of the clean heat credits that fuel wholesalers and importers have to acquire each year be sourced by delivering cleaner heat to low and moderate income households.
Additionally, the bill would create an equity advisory council of Vermonters from impacted backgrounds.
It carries a $1.2 million appropriation, to fund among other things: new staff at the Public Utilities Commission and Department of Public Service to oversee and audit the program.
The bill moves now to the Senate.
Reaction to the bill
Climate groups across the state voiced support for the bill, particularly for its emphasis on lifecycle emissions.
Ben Edgerly-Walsh of Vermont Public Research Interest Group says this bill would, for the first time, move Vermont away from fossil fuels — rapidly.
"That's obviously critical from a climate standpoint," he said. "It's also the only way we're ever going to protect Vermonters from these periodic price spikes that we see in oil and other fossil fuels."
But House Republicans reiterated their opposition to the bill, saying it remains unclear how it would affect fuel prices for consumers.
House Minority Leader Patti McCoy (R-Poultney) said the bill leaves too much of the Clean Heat Standard to be developed by the Public Utility Commission.
"We had the opportunity today to assure Vermonters that we, as their elected officials, will determine the future of the Clean Heat Standard," McCoy said. "And we refused to do so. We passed the buck to a group of unelected, unaccountable individuals."
Gov. Phil Scott echoed that concern, at his weekly press briefing Tuesday.
"I'm opposed to having the PUC be the final destination of that decision making," Scott said, adding he thinks the standard should come back to the Legislature for approval, once it's fully fleshed out — and ultimately to his desk.
A spokesperson for Scott said on Thursday the governor supports reducing greenhouse gas emissions to combat climate change, but won't support measures that exacerbate what he called "a crisis of affordability."
Jared Duval, executive director of the Energy Action Network says, without this measure, it will be hard to comply with the Global Warming Solutions Act.
"This is by far the single largest pollution reduction recommendation that's in the Climate Action Plan," said Duval, who also sits on the state's Climate Council. "And it's really important that we move quickly, because we have legally binding emissions reduction requirements in the year 2025, and in the year 2030."
If Vermont fails to meet its legally mandated emissions reduction targets, the Global Warming Solutions Act requires the Agency of Natural Resources step in to enforce them.
Speaking on behalf of ANR, Conservation Commissioner Peter Walke said the agency also has concerns about how a Clean Heat Standard would impact fuel prices — and how much of the program's design the bill leaves to the Public Utility Commission.
But ultimately, Walke says the agency supports a Clean Heat Standard because in the end, if the Legislature does nothing, state regulators at ANR are going to be forced to step in and come up with rules to keep Vermont on track to meet its emissions targets. That could mean a pretty stringent, top-down approach with less public input.
“From my mind, the approach of having ANR do top-down regulations to address emissions from all of our homes and businesses doesn’t make a lot of sense, and is likely to be significantly more costly,"
"This is by far the single largest pollution reduction recommendation that's in the Climate Action Plan."
Walke said. "And you know, by the time we get to that point, then our timeline will be shortened too. So those reductions will be steeper.
But for some, the reductions laid out by the current bill already feel steep. Matt Cota is president of the Vermont Fuel Dealers Association, a trade organization that represents fuel dealers and haulers.
He says the requirement that importers of fossil fuels are also subject to the Clean Heat Standard means it won't just be on big fossil fuel companies that have to comply: small businesses will be regulated too.
For example, Cota says propane dealers in Vermont have to import their fuel. And he estimates about 80% of fuel oil and kerosene dealers also import their fuel — which could mean they too are obligated to produce Clean Heat Credits under the current bill.
Right now, the Department of Public Service says it doesn't track this data.
"There are companies that are already figuring out how they can sell biodiesel, pellets, efficiency services, how they can get credits with the things they already do. They can do more of the things that the government is encouraging them to do for this credit system," Cota said.
"But there'll be some that can't. And it won't be because they don't care about the environment ... or their customers. It will be because what the government is asking them to do is something they don't have the ability to do."
But ultimately, he said a system like a Clean Heat Standard is easier for businesses to adapt to than options like an outright ban on the installation of new fossil fuel heating equipment – an option Quebec and New York City have pursued.