Myers Mermel: Fatal flaws appear in clean heat standard

This commentary is by Myers Mermel, president of the Ethan Allen Institute. He resides in Manchester.

The clean heat standard is dead. That’s not to say that S.5 won’t become law, because it will. But the fatal flaws in the policy which will prevent its implementation became very clear this past week.

The primary flaws are excessive upfront cost and resulting non-compliance. It is good that the policy will eventually collapse. But until that time, it will prevent us from reaching critical climate targets and it will punish low and middle income Vermonters for the rest of this decade.

Myers Mermel

Myers Mermel is president of the Ethan Allen Institute

While cloaked in the rectitude of punishing polluters, the clean heat standard is an immoral policy that shifts the full cost of the entire state’s climate compliance onto the less fortunate. It is classist. It creates further income inequality through a regressive surcharge and will cause human needs to go unmet. We agree with the VT Renews BIPOC Council that it harms BIPOC people and upholds white supremacy. The moral underpinning of the clean heat standard is not virtue. To further attempt the enactment and imposition of this policy from this point forward is no more than vanity.

After graduating from UVM, I left Vermont for 35 years to have a career in real estate finance and banking in Manhattan. Over my professional career I supervised the renovation of over 60 million square feet of real estate, which is about four times the total inventory of our state. While there are many real estate experts in Vermont, my breadth of experience should put the validity of my assessments amongst theirs. Last week, Secretary of Natural Resources Julie Moore made her own “really rough” assessments of the renovation costs of the policy, and she admitted she “was confident that it’s wrong,” that she could “easily be off by a factor of two.”

Our calculations are that she is indeed off by a factor of two, if not more, on her gross costs. We believe that gross renovation costs will be impacted by inflation, and the scope of heat pump placement in each typical home will be larger including electric upgrades, and overall weatherization more expensive.

Further, we also believe that her deductions ranging from “free” state administration, a “free” default delivery agent, continued large Federal subsidies, and fuel dealer cooperation to eliminate their own profits are not guaranteed or achievable. The Ethan Allen Institute plans to conduct further detailed analysis of the costs. But the net result of our own “really rough” math using Moore’s model with our inputs is that fuel costs will not increase by 70 cents per gallon under the clean heat standard, they will increase by over $3.50 to $4 per gallon. Some renovation cost data indicate the actual amount required to be passed through on a surcharge could increase fuel costs by more than $5 per gallon.

This excessive upfront cost will unravel the policy. The tipping point of the policy, in our estimate, is likely around $1 per gallon. At that price, it will be more cost effective to purchase black market fuel imported from other states. Vermonters will react just like they did to other bad policies, namely the Embargo Act of 1807 (War of 1812), Vermont Alcohol Ban of 1853, and later the 18th Amendment (Prohibition), all of which strained the economy and created widespread non-compliance. Just as in the past, Vermonters will rampantly smuggle contraband into the state from any number of sellers out of state at much lower prices. Why pay $4 per gallon more when for just $1 per gallon you can get it delivered for a lot less? And since the state currently cannot stop fentanyl, it is unlikely it can stop fuel. The lesson for lawmakers to learn today is the same learned by the British and Yorkers in Vermont’s Revolutionary days: never underestimate a farmer.

Once it is passed, there will be legal challenges. In our view, the policy violates the 14th Amendment due process and equal protection clauses because it makes a portion pay for the mistakes of the whole. It also violates the 5th Amendment, because through its structure, it effectively takes the fuel dealer’s private property without compensation. But legal challenges may fail. Yet the basic structure mandating fuel dealers to front billions to improve homes won’t work.

Under the plan, the fuel dealers pass the improvement cost back to the consumer. But if the fuel dealers don’t have the sales at first to advance the money through credits, improvements won’t be made quickly, yet fuel prices will be high under the grand design.

As prices stay high, consumers will move to cheaper wood heat or start smuggling. As total gallons sold by Vermont dealers decrease, the $4 per gallon surcharge will escalate as the retrofit cost will be spread over a smaller group of fuel buyers. The downward spiral of the policy will pick up speed.

Predictable outcomes will result. Seniors will have to choose between heat and health, stress on families will build, domestic violence will increase, declines in education will happen, despair will bring more drug use, and there will be more strain on municipal services like police and fire. The policy will hurt the least among us and the vulnerable like BIPOC. Because the policy will rest on the backs of the poor, it is structurally racist.

While we believe the clean heat standard is unworkable, the moral imperative of combating climate change will likely continue to be put ahead of the moral imperative of being compassionate to the less fortunate. Despite its classist and racist failings, the clean heat standard will become law, and the state will achieve neither climate compliance nor moral justice. And a decade in which we could do both will be lost.

Images courtesy of Vermont Fuel Dealers Association and Myers Mermel

4 thoughts on “Myers Mermel: Fatal flaws appear in clean heat standard

  1. If the wonder nuts in MountStupid really wanted clean heat, they would give us a 100% tax credit for weatherizing our homes. And the credit should be applied not just to income taxes, but to the school taxes as well. — This won’t happen because the clean heat standard has nothing to do with clean heat.

  2. Every predicted climate catastrophe since the 1970s in my lifetime has not come true. The ice age, Polar bear extinction, catastrophic storms, global warming, melting north and south poles, Al Gore’s boiling oceans, the rising oceans with New York under water, what ever they could devise to scare the sheeple they have tried. And even this republican author states, “the moral imperative of combating climate change will likely continue”, just what is that climate change? As I write this it is minus 3 degrees outside, the wind is blowing and today’s high temperature will be 2 degrees. In March and April, the climate will change like it has ever since I was a little boy here in Vermont. This is all built on smoke and mirrors, lies and the greed of the climate evangelists who profit from it. Wake up!

  3. It’s as though these people pushing all this stuff forget- or don’t even know- their own population in the state.

    Real New Englanders are known for our frugality.
    We have never wanted to spend a whole lot of money to heat our houses!

    If modernizing the heating system, the house, upgrading the insulation, new windows, upgrade the attic insulation, new wood stoves.. if this was such an easy thing to do- we’d have all done this all decades ago and it’d be all done!
    People would have willingly done this not perhaps to save the planet- but to save their own household budgets.

    Vermont is one of the most highly taxed=expensive states in the nation to live in (try to survive in)
    Perhaps if this wasn’t the case, a whole lot more people would have the money to better maintain their homes and do this work.
    This problem exists because the state drives people into poverty.

    The people running the state seem oblivious to the fact that many problems are the direct result of driving people into poverty.

    When you go into the wealthy enclaves of the state- their houses are all well maintained aren’t they?
    This is what having money does! (that they largely made somewhere else- by the way)

    So perhaps maybe let the working people of the state keep some of their own money to then allow them to invest in their homes and the economy as they see fit might be a great idea!..if you have the capacity to see the big picture.
    Then you don’t have to regulate anything! People will willingly do these things themselves.

    Money grows money.. people in the private sector grow money- not the governments that steal every dime they can get away with. Government wealth redistribution is not what grows wealth- and it’s not going to save the planet either- because the planet is fine!
    In fact, just what problems has the government solved anyway? do you see anything that’s been solved? But you’re sure paying for it all aren’t you?!

    Lastly, that this New Yawker believes this climate change scam is real should be concerning to everyone.
    Geez, these people in Brussels that cooked up this entire idea have admitted on camera in many cases now that this has all been a plan to destroy Capitalism.. This is not about the climate, this is about MONEY!

  4. Re: “While we believe the Clean Heat Standard is unworkable, the moral imperative of combatting climate change will likely continue to be put ahead of the moral imperative of being compassionate to the less fortunate.”

    Not so. The moral imperative of being compassionate to the less fortunate is manifest in the State’s imperative to put the less fortunate out of their misery… literally killing two birds with one stone.

    Jefferson put it this way. “When tyranny becomes law, rebellion becomes duty.”

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