Recognizing the trajectory of climate change and the adverse impacts on Vermont if it goes unchecked, the Vermont General Assembly passed the Global Warming Solutions Act in 2020. The GWSA set legally-binding greenhouse gas emission reduction targets. It requires the State to reduce greenhouse gas pollution to 40% below 1990 levels by 2030, and to 80% below 1990 levels by 2050. The law created a Vermont Climate Council, which released a Climate Action Plan at the end of last year.
During the current session, Vermont’s General Assembly is continuing to do its part to limit our contribution to the climate crisis. It is advancing policies that reduce reliance on fossil fuels in a manner that has the added benefit of saving money for Vermonters.
The Clean Heat Standard, which has passed the Vermont House and is being considered by the Senate, is such a policy. Heating homes and businesses produces greenhouse gases that account for one-third of Vermont’s carbon pollution. As determined in the Vermont Climate Council’s Climate Action Plan, significantly reducing pollution from heating buildings is one of the most consequential actions we can take to reduce carbon emissions and transition Vermont’s economy away from reliance on fossil fuels.
The Clean Heat Standard would make sellers of fossil heating fuels accountable for the greenhouse gas impact of those fuels. Fuel sellers would be required to obtain “clean heat credits” in proportion to their sales. The number of required credits increases gradually over time. Increased credits would result in increased use of cleaner heating options that, in turn, would lead to reduced use of fossil fuels and their greenhouse gas emissions.
To obtain credits, fuel sellers can help their customers reduce carbon pollution from their homes and businesses by weatherizing or switching to less-polluting fuels. Credits could be obtained by offering a range of clean heat alternatives such as electric heat pumps or advanced wood heating systems. They can be obtained by reducing fossil fuel consumption through replacing some fossil fuel delivery with biofuels.
Fuel dealers that import fossil fuels into the State would thereby take on the responsibility to move toward less-polluting heating options. It would be up to them to obtain the necessary clean heat credits by incentivizing consumers to weatherize their homes or buildings or to move to less polluting heating options. Consumers would continue to have a choice of the heating options that work best for them, but fuel dealers would be spurred to provide incentives that would prioritize the lowest-cost, best emissions-reducing options.
Dependence on fossil fuels for heating — especially propane and fuel oil — is expensive, with unpredictable price swings for Vermont consumers. By encouraging cleaner heating options that do not rely on fossil fuels, the Clean Heat Standard would help Vermonters switch to lower cost, more price-stable options like heat pumps powered with clean electricity. It would reduce our vulnerability to the volatility of fossil-fuel prices, like we are experiencing now. This change will be most beneficial to low-income Vermonters, who pay the highest percentage of their household income on heating bills.
It is possible that fuel dealers may increase the price of fossil fuels under the program to recoup the cost of acquiring clean heat credits. But there is no evidence that the policy will lead to substantial price increases in fossil fuels. The closest example to the Clean Heat Standard is Oregon’s Clean Fuels Standard. Oregon’s experience has been that, for every 5% reduction in emissions, the effect on fossil fuel prices has only been about a 1% increase. And the standard aims to replace the use of fossil fuels overall.
The Clean Heat Standard bill provides an overall policy direction – with clear parameters and guardrails – that will be implemented by the Vermont Public Utilities Commission (PUC). The PUC will conduct the necessary processes to implement the law, including public hearings, technical analysis, compliance, and verification. The Clean Heat Standards would not go into effect for two-and-a-half years after the law is passed. There will be plenty of time for the PUC to do its work, stakeholders to weigh in, and fuel dealers to transition to the Standard’s requirements. The Clean Heat Standard would give Vermonters more choices for clean, cost-effective, and price-stable heat over time while also doing our part in reducing greenhouse gas emissions.