Clean Heat Bill Advances Toward Key Vote in the Vermont Senate 

A bill meant to reduce climate pollution stemming from Vermont’s heating fuel industry is getting a warm reception in the Senate, but Gov. Phil Scott still remains cool to the controversial emission-reduction plan.

The Senate Natural Resources and Energy Committee voted 4-1 Friday morning in support of a “clean heat standard” bill meant to shift the state away from heating buildings with fossil fuels and toward more sustainable sources.

It would require fuel dealers to decrease the amount of fossil fuel they sell over time, or to offset sales by selling more biofuels or installing heat pumps and weatherizing homes to cut down on fossil-fuel consumption.

The legislation passed the House by a 96-44 vote last month, and Friday’s closely watched vote brings it one step closer to Senate approval.

It's unclear whether Scott would sign it. The governor remains concerned that lawmakers would be handing the job of designing such a consequential program to the Public Utilities Commission without a way to sign off on details before they go into effect.

“The governor does not like outsourcing what could be a very impactful policy to an unelected board,” Jason Maulucci, Scott’s spokesman, said before the vote.

Senators made several changes to the bill in response to concerns from the administration, including adding a provision requiring that key legislative committees be consulted before rules approved by the PUC are finalized.

Another change includes directing the PUC to design the program in a way that “minimizes costs to customers, and recognizes that affordable heating is essential for Vermonters.”

That language is meant to assuage fears that some fossil fuel wholesalers will simply pass on the compliance costs to customers least able to afford to switch to more sustainable fuel sources or systems.

Supporters counter that doing nothing would subject Vermonters — most of whom heat their homes and business with either heating oil or natural gas — to higher and more volatile fuel prices. Inaction, they argue, would also make it virtually impossible for the state to meet its aggressive emission reduction targets, which became legal requirements with the passage of the 2020 Global Warming Solutions Act.
The law gives anyone the right to sue the state for failing to take sufficient steps toward cutting emissions by 15 percent by 2025, 40 percent by 2030 and 80 percent by 2050. Though still eight years away, the 2030 target is viewed by many as extremely challenging to meet.

The heating sector accounts for 34 percent of the state’s greenhouse gas emissions, making cuts to the sector’s emissions vital, especially given the collapse last year of a multi-state effort to rein in emissions from the transportation sector.

 The bill instructs the PUC to design the clean heat program to ensure low- and moderate-income households receive a substantial portion of the rebates and incentives meant to speed the transformation to less-polluting heating sources.

Those details will take time to sort out, however. The bill gives the PUC until July 2024 to come up with rules following at least six public hearings.  The rules would go into effect at the start of 2025.

In broad strokes, the program would require wholesale fossil fuel dealers to pay for the pollution associated with their products. The gradually increasing annual fees would be based on the amount of carbon emitted to the atmosphere from the burning of fossil fuels sold.

Wholesalers could avoid such fees by earning tradable “clean heat credits” for work they do to reduce their emissions. These could be earned a number of ways, including by weatherizing customers’ homes, switching them to advanced wood heating systems like pellet stoves and boilers, selling more bio-fuels or renewable gas, such as methane from farm digesters.

That means that if a company like Bourne's Energy, which sells both fossil heating oil and biofuel, shifts their customers from one to the other, they would earn credits to offset the fees they'd otherwise have to pay for the pollution from fossil fuel sales.

This idea has been controversial because some biofuels have been shown to have an overall carbon footprint that is nearly as high or higher than some fossil fuels.

To address this, the bill includes language to ensure that credits will only be awarded if the carbon emissions for the entire lifecycle of the new fuels is provably lower than those of the fossil fuels they’re replacing.