For the past two months, my committee, the House Energy & Technology Committee, has been taking testimony on and debating a bill to establish a program called the “Clean Heat Standard” (CHS). The CHS is part of the Climate Action Plan put forward by the Climate Council under the Global Warming Solutions Act (GWSA).
The CHS is designed to drive up the cost of fossil home heating fuels (oil, propane, natural gas and kerosene) by forcing distributors to purchase “credits” to offset their products’ greenhouse gas emissions. These credits would be created primarily by other businesses by installing cold climate heat pumps, getting customers to switch from oil to biofuel, weatherizing buildings, and similar actions. Once the credits are created, the businesses that created them can sell them to the fuel dealers who, by law, need them.
This is a complicated proposition. Consultants to the Climate Council estimate that meeting the goals of the GWSA will require 253,481 separate actions across weatherization, installation of heat pumps, etc., by 2025 and 469,743 by 2030. Each of these actions will potentially generate one or more clean heat credits.
It is not clear how the state is going to verify that each of these events took place, assign a credit value to each, assign ownership of these credits, and monitor that ownership through purchases and sales over the credits’ lifetime. This is a huge task that will require meticulous oversight. The cost to run an operation of this scale has not been researched, nor has a feasibility study been done to see if it’s even logistically possible with the resources we have.
Making matters worse, the CHS proposal originally given to us by the Climate Council worked by obligating only the wholesalers of fossil heating fuels, which are few in number and tend to be larger and more sophisticated businesses, to purchase credits. But we soon learned that roughly 80% of these fuels sold in Vermont are bought through wholesalers in other states or Canada, and we have no authority or ability to force them to buy Vermont credits.
The only alternative was to stick a whole bunch of local mom & pop fuel dealerships with the mandate to buy credits. We heard testimony that these requirements would drive many of them out of business. It also makes administering an already unwieldy system even more complicated. The CHS would cost hundreds of Vermonters their jobs. And it could leave thousands of Vermonters scrambling to find a new heating fuel provider if they could find one at all.
The objective of the CHS is to make using fossil fuels for home heating so prohibitively expensive that people give it up for other options. One propane dealer testified that if CHS becomes law, the added cost of credits regulatory requirements could drive propane prices up to $8 to $10 per gallon. This may have been a back of the napkin calculation, but it was the only analysis anyone offered of how this policy would impact Vermonter’s pocketbooks. This to me is unacceptable.
An important logistical issue to consider is that, while the CHS would increase the cost of fossil fuel heating systems in hopes people will switch to greener alternatives, we heard testimony that there isn’t enough of a labor force in Vermont to install all the heat pumps and do all the weatherization the GWSA requires. This means a lot of Vermonters who heat with fossil fuels could be stuck with much higher home heating costs but no availability to switch systems even if they wanted to.
We had lots of talk in our committee about a safety net mitigating the impacts of these higher costs for low and moderate income Vermonters but, again, no real analysis of how this would work, what it would cost, or who would foot the bill.
Lastly, we heard testimony from people who had experience with cold climate heat pumps that they do not work well in low temperatures that are common during Vermont winters. If the state is going to force its residents into making an expensive switch to a new type of home heating system, we better be darned sure it actually works to keep people warm. We’re not there yet.
To my mind, the Clean Heat Standard is nowhere near ready for prime time. No detailed analysis has been done to determine how deep the economic impact will be for Vermont home and business owners, or how the safety net programs proposed to mitigate the harm to people would work or how much any of this would cost. As the bill is written, it leaves it to an unelected body, the Public Utilities Commission (PUC), which has no experience running a program like this, to just figure out the details and then implement them.
I proposed a two-step, “safety switch” provision for the bill wherein we would first authorize the PUC to come up with a detailed CHS plan. After the whole system has been designed and we have all the projected costs and a suggested revenue stream, the CHS would then come back to the Legislature for an up or down vote. This to me just makes sense. When you build a house, you tell the architect to come back with blueprints and cost estimates before you give the final OK to start construction. You don’t hand them a blank check and say “whatever.” But the majority on my committee disagreed and opted for the “blank check,” “whatever” approach.
I can’t vote for a bill that will put many hard-working fuel dealers out of their jobs, that will kill scores of small businesses with deep ties to their communities, and that will create significant financial stress for thousands of Vermonters who heat their homes with oil, propane, natural gas or kerosene. That’s not what my constituents sent me to Montpelier to do. So, I vote “no” on the Clean Heat Standard.
Rep. Sally Achey represents the towns of Middletown Springs, Pawlet, Rupert, Tinmouth and Wells, and is a member of the House Energy & Technology Committee.