By Annette Smith
If you have heard of the Clean Heat Standard (CHS), the messaging is it will save you money, reduce fossil fuel consumption and reduce greenhouse gas emissions to comply with the Global Warming Solutions Act (GWSA). Without it, the State of Vermont will be sued!
CHS, H.715, is complicated legislation from the House Energy & Technology Committee, the same committee that birthed the GWSA that created the Vermont Climate Council (VCC). The CHS is the work of Chris Neme of Energy Futures Group (consultant to VCC) and Richard Cowart of Regulatory Assistance Project (member of VCC).
The proposal places the burden of reducing Vermont consumers’ fossil fuel consumption on “obligated parties.” That means fuel dealers. It directs the Public Utility Commission (PUC) to undergo a two-year process to establish a new regulatory system that will require fuel dealers to earn credits. Credits can be earned by hiring workers to weatherize buildings, install heat pumps, install “advanced wood heating,” as well as fuel switching to use more biofuels or “renewable” natural gas. Electricians and contractors who are not fuel dealers would be able to earn credits which they could sell (or not sell) to “obligated parties.”
Fuel dealers who sell heating fuels to Vermont consumers would be required to register with the PUC as an “obligated party” and file reports, including collecting and reporting their low- and moderate-income customers’ income. If an “obligated party” fails to obtain enough credits, they must pay an “alternative compliance payment” to the “default delivery agent” (contractor selected by the PUC to implement the program) at the rate of three times the credit value — i.e., a penalty.
The PUC is required by H.715 to establish a credit value, create and maintain an “obligated party” registration system, define and create a low- and moderate-income credit system to ensure that 16% of each group receives clean heat measures, update annually the cost of the credit to be paid to the “default delivery agent” by the “obligated party,” and establish requirements for record keeping by fuel dealers.
To determine the emissions reduction value, the PUC must establish a schedule of lifecycle emission rates for heating fuels and eligible clean heat measures, and enforce compliance.
The PUC must designate the “default delivery agent” through a competitive procurement process, contract with a consultant to assist with implementation of Clean Heat Credits, and may hire a third party contractor to implement the database for tracking and compliance. The PUC must establish a CHS Technical Advisory Group, a CHS Equity Advisory Group, and by Oct. 1, 2022, hire a third party consultant to design and conduct public engagement. Public meetings, focus groups, workshops and several reports are also required of the PUC, with their final rule to be adopted by July 1, 2024.
Might there be some flies in this ointment?
The number of fuel dealers required to be regulated by the PUC is magnitudes greater than the number of utilities currently regulated by the PUC. How will compliance be enforced?
Then there’s the goal of broad public participation, which will add to the number of participants in ePUC, the digital filing system. Each individual filing results in an email to participants who must click on a link and download a document to their computer. With robust fuel dealer and public participation, one comment deadline could result in hundreds of emails flooding into everyone’s inbox, requiring downloading hundreds of documents into download folders on each participant’s computer.
In the real world, numerous questions arise:
- Fuel dealers in neighboring states who deliver to Vermont customers will be “obligated parties.” Will they stop selling to Vermonters?
- How does the requirement for fuel dealers to collect and report customer’s income violate privacy laws?
- Propane dealers will have to hire workers to install heat pumps and wood stoves or do weatherization, or pay a 3x credit penalty, as there is no alternative to propane. Where will they find workers?
- Emissions accounting is corrupt, based on modeling, assumptions, inputs of emissions data notoriously out of date, and dishonestly excludes CO2 emissions from biofuels and biomass. More than 50% of the CHS would be met by biofuels from industrial agriculture whose claims of emissions reductions are not credible. Can you believe this?
- Since fuel is a tangible product (unlike electricity), what prevents people from taking their containers across the border to buy fuel? Scenes from “Mad Max” come to mind. Will a black market develop? Why wouldn’t it?
What does this mean for consumers? It means pay for weatherization, heat pumps and new wood stoves. Buy more stuff.
For suppliers, small family-owned fuel dealers will likely go out of business. Green Mountain Power will sell more electricity. Vermont Gas Systems will put some “renewable” natural gas in their pipeline and earn credits. Canadian Énergir will be the big winner; they are lobbying heavily for H.715.
Vermont politicians will take credit (but not responsibility) for Vermont establishing the “first in the nation” clean heat standard.
There is still time to contact your senators and ask them to table H.715 and let the $200 million they are allocating for clean energy do the real world work. Vermont does not need more gimmicks and convoluted energy policies and requirements to buy more stuff.
Annette Smith is executive director of Vermonters for a Clean Environment, based in Danby.