By Rob Roper
The members of the Senate Natural Resources and Energy Committee are tying themselves in intellectual knots over why they don’t need to investigate how much the Clean Heat Standard they’re prepared to put into law will cost Vermonters or how it will work. They are now buying hard into the old line, “we have to pass it to find out what’s in it.”
As Jared Duval of the Energy Action Network and Climate Council said in testimony, “We’ve heard a number of folks say we need to know what the cost of a clean heat credit would be, or what the impact on a gallon of fuel oil will be next year, or the price of a gallon of biodiesel next year. … It is impossible to know the answers to that question until you set up the program (1/19/23).” This was met with bobble-headed agreement from the lawmakers. But this is not just irresponsible government in action, it is largely a straw man argument.
While, yes, it would be nice to know exactly what the price of a gallon of heating oil would be following passage of the Clean Heat carbon tax and what the cost of a “carbon (tax) credit” will be, Duval is correct we can’t know that number exactly. But we do deserve to know a ballpark figure — and that is an entirely doable exercise. As is coming up with a pretty good estimate of what it will cost taxpayers to run the program.
To that end, here are some questions that can and should be answered prior to passage of a law designed to radically alter the state’s economy, culture, and lifestyle:
1) What exactly is the revenue generated from the selling of clean heat credits supposed to cover? How much money is selling credits supposed to raise?
We know that the Climate Action Plan (CAP) says that that meeting the thermal sector greenhouse gas emissions reduction mandates will require the weatherization of 120,000 more homes between 2025 and 2030. The estimated average cost per home as discussed by the Climate Council is $10,000. That’s a total estimated cost of $1.2 billion or $240 million per year. We know the plan calls for prioritizing the homes of low- and moderate-income Vermonters, especially in the early stages of implementation, which means much of this activity will require heavy subsidies. Is the selling of credits supposed to cover all that expense? Some? How much?
We know that the CAP calls for installing 169,000 heat pumps by 2030, 137,000 heat pump water heaters, converting 21,000 homes to biofuels, and more. Again, what is the estimated cost of all this activity? The Scott Administration estimates the total cost of this work, including weatherization, will cost over $2 billion. How much of it is expected to be borne by the sale of clean heat credits (i.e. people purchasing fossil-based heating fuels), how much from other sources, if any, and what might those be?
2) How big a bureaucracy will be necessary to run the Clean Heat Standard, and what will it look like?
We know that the Clean Heat Standard allows anyone to generate clean heat credits by performing actions in one or more of eleven specified categories with other potential categories to be included as new technology allows. We know these multiple hundreds of thousands of uncoordinated, disparate actions performed by thousands if not tens of thousands of individual actors. Each unique credit-generating activity will need to be verified and processed into credit values based on the amount of CO2 reduced by each project. How will this process take place, what level of verification is expected to take place, and how many new state employees and/or contractors will be necessary to perform these duties?
We know S.5 calls for increased duties by the Public Utilities Commission (PUC), the Department of Public Services, and the Agency of Natural Resources. The bill creates a new Technical Advisory Group (TAG), as well as Clean Heat Standard Equity Advisory Group, and the Climate Council is shaking the trees for more money and staff. How many people/employees are we talking about here?
3) How much will operating the Clean Heat Credit program to cost taxpayers?
We know that the revenue generated from the selling of clean heat credits is designed to never pass through the government’s coffers (this is the loophole politicians think they can use to get away with not calling clean heat credits a “Carbo Tax”). This means, revenue from those credits can’t be used to pay for the state bureaucracy necessary to run the program. Where will that money come from?
We know that the Regional Greenhouse Gas Initiative (RGGI), a regional credit system for large-scale electrical generation often used as an example for the clean heat standard, had an operating budget in 2022 of $3,118,019 according to their website (RGGI website).
We also know that RGGI is far simpler a program than the Clean Heat Standard as the credits in that program are issued by the single entity, RGGI, not generated by thousands of individuals performing a wide variety of activities that need to be independently verified. Additionally, the “obligated parties” under RGGI are a handful of large-scale electricity producers all based within the region of participating states whose activities are comparatively easy to monitor. There will be over one hundred obligated parties under the Clean Heat Standard ranging from large, regional, national and international fuel providers based outside of Vermont to local, small mom and pop dealers with only a few employees.
We know that once generated clean heat credits, which are a financial instrument, will have to be assigned ownership and a marketplace for buying, selling, tracking ownership, and retiring the credits will have to be established. Who is going to create and run this exchange, and what will this operation require in terms of staffing, technology, and budget?
4) What is the plan to develop the labor force necessary to complete all of the work necessary to fulfill the obligations of the Clean Heat Standard?
We know that such a labor force does not presently exist. The Energy Action Network estimates that we will need a workforce of at least 5000 skilled workers to meet these obligations, but only 14 percent of that workforce currently resides in Vermont. We know this is a declining industry with many practitioners nearing retirement and there is already a scarcity of such services in the existing market for electricians, plumbers, etc.
Given the local and national labor shortage, what realistic expectations do we have that the other 86 percent will materialize? What will the state do to train Vermonters to do the work and/or lure trained workers from elsewhere? Who will do this work and at what cost to taxpayers?
Testimony before the Senate Natural Resources & Energy Committee indicates that starting wages in the heat pump installation business are in the $20 to $25 an hour range. While these are good wages, they are not exceptionally higher than wages paid in other industries desperate for workers where opportunities exist for employment, yet still those industries struggle to find workers.
What will ramping up demand for such labor do to the cost of this labor a) as it impacts the cost of implementing the Clean Heat Standard, and b) as impacts other businesses and individuals ability to find and afford these services (electricians, plumbers, etc.) for non-Clean Heat Standard projects?
Governor Scott vetoed the Clean Heat Standard in 2022 largely because he insisted that questions like these be asked and answered before putting the program into effect. His desire was and is for a two-step process. Step on, the legislature passes a bill which mandates the crafting for a detailed plan for how the Clean Heat Standard would work, what logistics would be necessary to carry it out, what revenues would be necessary to pay for it, and where those revenues would come from crafted and evaluated. This plan would be presented to the legislature as a second bill. Step 2: The legislature would evaluate the complete plan for a Clean Heat Standard as legislation and vote for it – or not.
This is logical and responsible governance.
Legislative proponents of passing the Clean Heat Standard first and figuring out all these details later ague that it is “irregular” for lawmakers to authorizes agencies to create rules and then have to vote later on those rules. The rules, they argue, can always be amended “on the fly” by the Legislative Committee on Administrative Rules (LCAR) – a body made up of four representative and four senators that, as currently constituted, can be counted on to do absolutely nothing to stop this train wreck from occurring.
This is illogical and irresponsible governance. It may be how things are regularly done (a poor reflection on the way our state is run), but the Clean Heat Standard is not a regular bill by any definition. Its intent is to radically change our entire economy, our way of life, and standard of living. Vermonters deserve to have a clear idea of what it is, how it will work, and what it will cost before it becomes the law of the land.
Rob Roper is a freelance writer who has been involved with Vermont politics and policy for over 20 years. This article reprinted with permission from Behind the Lines: Rob Roper on Vermont Politics, robertroper.substack.com