Vermont Senate advances transformative bill to overhaul how the state heats its buildings
The Vermont Senate voted Friday to advance a bill that directs the Public Utility Commission to start work on a clean heat standard. The policy passed the House earlier this session with strong support.
It next goes to a committee of House and Senate lawmakers who will reconcile differences between the two bills. If successful, the proposal will then go to Gov. Phil Scott for a signature.
The climate policy would regulate businesses that import fossil fuel heat. It's the biggest emissions cutting policy outlined in Vermont's Climate Action Plan.
Vermont ranks 17th in the United States when it comes to how much energy its residents consume per capita to power and heat their homes.
The bill tasks the Public Utility Commission with creating a regulated marketplace where businesses that import fossil fuels for heat will have to buy or create so-called "clean heat credits" based on how much their products emit.
Businesses can create credits by doing things that lower emissions from buildings. That includes weatherizing homes, helping people switch to high-efficiency wood heat or hot water and installing cold-climate heat pumps. The bill also allows companies to earn credits by supplying green hydrogen, renewable natural gas and biofuels.
Businesses that import fossil fuel heat will be required to create or purchase a certain number of clean heat credits every year.
The bill requires that 32% of the credits must come from helping low- and moderate-income households reduce their fossil fuel consumption.
It also says the credits will be awarded based on the emissions a new fuel or efficiency measure saves, and that accounting will be based on the lifecycle emissions a fuel generates.
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 of the clean heat standard say the policy will reward companies that help their customers switch to the lowest carbon heat options. But some climate and environmental justice advocates in the state have criticized the policy for including biofuels and renewable natural gas in the credit system at all.
On April 12, several organic farmers joined NOFA-VT, the environmental justice collaborative REJOICE, Standing Trees, 350Vermont, Rights and Democracy and Vermont AFL-CIO, among other groups, in signing a letter to Senate lawmakers, asking them to slow down for the sake of transparency and equity.
The 16 groups condemned the inclusion of biofuels and renewable natural gas, saying they incentivize extractive industrial agriculture outside the state — and contribute to the loss of small family farms.
The Vermont Chapter of the Sierra Club has pushed for only small-scale, locally produced bio-energy and biofuels to be included.
"This puts a question mark at the end of this process, and opens up the possibility of it not, in fact, going into effect, and therefore us not seeing the pollution reductions this policy would achieve."
"Whether it's harvesting wood for wood chips, or recycling the waste oil from restaurants, or small, locally controlled and transparently operated sources of renewable natural gas, which are appropriate and can work really well," said Steve Crowley with the chapter.
He says the group is "right on the edge of being able to support this bill."
But it would also like to see more directives to the Public Utility Commission about how to count lifecycle emissions for all energy sources — including for Vermont's electricity, more than half of which is imported from out of state.
The bill's proponents say it already calls for this, and that factoring lifecycle emissions into the credit system will create market pressure that prevents high-carbon biofuels from earning credits.
Second approval in 2024
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 House's bill would have directed the Public Utility Commission to design and launch a Clean Heat Standard by 2025. But the version that cleared the Senate this week directs the PUC to bring a draft policy, complete with economic analysis, back to the General Assembly for final approval in 2024.
Gov. Phil Scott also pushed for the policy to come back to the Legislature for approval once designed — even threatening a veto if it didn't.
House Energy and Technology Chairperson Tim Briglin of Thetford, who sponsored the bill, says it's important the timeline for getting the policy launched isn't extended — and that lawmakers do ultimately adopt the clean heat standard so the state can comply with the statutory emissions reductions it committed to in the Global Warming Solutions Act.
"If we choose ultimately not to pursue a clean heat standard policy, what we're going to do is we're going to default to the Agency of Natural Resources regulating how the state of Vermont will reduce its greenhouse gas emissions and use of fossil fuels," Briglin said.
"The entire Northeast Kingdom — the vast majority of people who live there — are far lower in income than the average income of the people in this room."
Ben Edgerly-Walsh, with the nonprofit Vermont Public Interest Research Group, says the Senate's amendment weakens the bill, but that the group still supports it moving forward.
"This puts a question mark at the end of this process, and opens up the possibility of it not, in fact, going into effect and therefore us not seeing the pollution reductions this policy would achieve," he said.
The Senate floor
On the Senate floor Thursday, Democratic Sen. Chris Bray, chair of the Senate Committee on Natural Resources and Energy, urged his colleagues to support the bill.
"Saying no is not an option," he reminded them, pointing to the Global Warming Solutions Act, which requires the executive branch to step in if Vermont fails to meet its climate commitments.
"And saying no begs a question: If you oppose the clean heat standard, then what act, what alternative, are you proposing?"
Sen. Joe Benning, a Republican from Caledonia County, said he is concerned that the clean heat standard will raise fuel prices for vulnerable Vermonters.
According to data from Efficiency Vermont, the Northeast Kingdom is one of the most energy burdened parts of the state, meaning people spend a disproportionately high amount of their income on energy needs.
Data from Energy Action Network shows Vermonters who make less than about $30,000 per year spend, on average, as much as 18% of their earnings on heat and electricity.
Speaking on the floor Thursday, Benning said lawmakers need to be honest with their constituents that a clean heat atandard will raise the price of fossil fuel heat for Vermonters.
He voted against the bill, saying his constituents can't weather that.
"The entire Northeast Kingdom — the vast majority of people who live there — are far lower in income than the average income of the people in this room," he said.
Senate Appropriations Chairperson Jane Kitchel, a Democrat from Caledonia County, said that's why her committee introduced the amendment that brings the clean heat standard back to the full Legislature for final approval after economic analysis to determine how much it will cost and to whom.
"The greatest fear would be not to have that requirement that we understand what the plan is, we understand what the impacts are, how we finance those and mitigate any impacts on the most vulnerable," Kitchel said.
Democrat Sens. Kesha Ram Hinsdale of Chittenden County and Anthony Pollina of Washington County introduced an amendment Friday morning that would have limited the role of biofuels and renewable natural gas.
They proposed that no more than 10% of clean heat credits each year come from those fuels — and that they be phased out of the system entirely by 2030.
The amendment would have required that someone from Vermont's agriculture sector be represented on the equity advisory group for the clean heat standard, but it did not pass Friday morning.
The Senate voted emphatically to advance the bill Friday, without the cap on biofuels and renewable gas proposed by Pollina and Ram Hinsdale.
The bill goes next to the House where lawmakers in that chamber will review the Senate's changes, before sending a final version to the governor's desk.