Senators don’t understand their own clean heat standard bill

By Rob Roper

This week the Senate Natural Resources and Energy Committee looks like it is going to vote on its clean heat standard bill, dubbed by critics as the “Unaffordable Heat Act.” But discussion of the bill at the end of last week’s hearings demonstrated that the committee members still don’t understand how key elements of the bill they have spent the last five weeks crafting work.

The main thing the “clean heat standard” does — it’s entire reason for being — is to create a system of “carbon credits” that some fossil fuel businesses will be forced to buy from some other business that creates these credits by reducing carbon emissions through actions such as weatherizing homes, installing heat pumps, etc. The senators still don’t have a clear picture of how either end of that equation works.

Those who will be forced to buy credits are called “obligated parties” in the bill (S.5). The senators would like those obligated parties to all be designated at the wholesale level — based on the first transaction made to a dealer in Vermont. This is ideal because there are fewer wholesalers to regulate, and they tend to be larger businesses than the retailers, of which there are many and of various sizes ranging from large distributors to “a guy with a truck and a cell phone.”

The problem with this preferred structure is that it is not entirely legal. Not all wholesale sellers of heating fuel exist in and make their sales to retail vendors in Vermont. Some small retail fuel dealers travel with their trucks into neighboring states to pick up and purchase their product and bring the fuel back into Vermont themselves. Some retailers are based in other states. In these cases, the wholesaler is entirely outside of Vermont’s jurisdiction and, according to the Commerce Clause of the U.S. Constitution, Vermont can’t tell these wholesalers what to do.

So, what has to happen if the wholesale dealer can’t be forced into the role of obligated party, the burden must fall on the retail dealer who makes the first sale of fuel inside Vermont.

This creates an unfair (potentially illegal) two-tiered system in which some “obligated parties” will be wholesalers and some will be retail deliverers. This is a complication for regulators, but the retailers who end up as obligated parties will have a significant competitive disadvantage next to those that aren’t. It is a messy can of worms.

Committee Chairman Chris Bray took to the white board to try to explain to legislative council how he wants the law to work, and he utterly failed. (Dear reader, you have to watch the video. No written description can do these three minutes of incomprehensible babble justice, and leg council’s reactions are precious.)

VIDEO: Sen. Chris Bray tries to explain what an obligated party is

Realizing he had left everyone in the room more confused than when they started, Bray said, “Because this is a potentially ‘wrap around the axle’ thing, I would say let’s flag it and come back.”

The other side of the carbon credit market is those businesses that generate credits for sale to the obligated parties. S.5 specifically references 11 measures that can generate credits, from weatherization, installation of cold climate heat pumps and water heaters, converting from gas to electric stoves, etc. A key element of this part of the plan is the establishment of the Default Delivery Agent, a single designated organization (like Efficiency Vermont) that an obligated party could simply choose to pay to generate credits for them.

Still, Sen. Dick McCormack had to ask as late in the process as last Friday, “How does a Default Agent work in this scheme?” It was a reasonable question as the committee hasn’t figured this out yet.

The way the clean heat standard was originally envisioned, virtually anybody could generate a credit by taking one of those actions. Under this system, obligated parties would be encouraged to pay off all or part of their carbon debt by generating their own credits, thus evolving their business model away from fossil fuels at the same time they were weaning their customers off of the same. For those fuel dealers unable or unwilling to create their own credits, S.5 established a “Default Delivery Agent” as a place of last resort.

However, realistically, from a regulatory standpoint, having literally thousands of entities throughout the state claiming to have created credits and having to verify literally tens of thousands of such actions — and then having to manage the credit exchange — would be challenging. So, the Public Utilities Commission (PUC), the organization that will be tasked with overseeing this scheme, asked to the committee to eliminate the widescale creation of credits and mandate that all obligated parties just pay the DDA as the entity of first and only resort.

Having a single entity responsible for generating all the credits necessary to meet the greenhouse gas reduction requirements of the Global Warming Solutions Act creates its own problems. First, it takes away the incentive for fuel dealers to evolve their business models to include clean heat measures. It likewise disincentivizes the public from participating.

But, the biggest issue is one hit on by McCormack himself: “Is the state creating a windfall for whoever gets designated the default? … A great big profit that came out of nowhere. You were just plodding along and suddenly the state sent you all these customers.”

The conversation around this subject flustered Bray because McCormack is exactly right. The sale of credits is expected to generate between $1.2 billion to $2 billion over four years. The state would be creating a monopoly organization to which it would be funneling all of this money. The potential for corruption and political favoritism/patronage here is enormous.

The final kicker of Friday’s bill run through came when Sen. Mark MacDonald, D-Orange, said that it wasn’t clear to him how the clean heat standard bill — a law he and his colleagues have been working on near-exclusively since the new year — defines what a heating fuel is and isn’t.

Rob Roper is a freelance writer who has been involved with Vermont politics and policy for over 20 years. © Copyright True North Reports 2023. All rights reserved.

Image courtesy of TNR

25 thoughts on “Senators don’t understand their own clean heat standard bill

  1. Climitard – ’klimit’tard/ A person that believes the climate can be changed by paying a CO2 tax to the government.

  2. If they really wanted to lower oil use for heating, they could do it by giving people a 100% tax credit for money spent on weatherization. Its as simple as that.

    • one might take note the pfizer executive is going to the RGA….Republican Governors Association….hmm….

      Why would the CEO of the richest pharmaceutical company need to attend the RGA?

      Any zoom recordings of that meeting? lol, my guess is no. Our governors meeting secretly with the man who runs a company that just nuked the world. Nothing to see here. It’s all safe and effective they say.

  3. Why do these climate nazis think the other states got out of this gorebull warming hoax program? Their trying to make a law that’s unlawful!!! They don’t know the definition of heating fuel they wish to tax!!! These daft ijits don’t have the brain power or common sense to be making any laws for VT’ers. Give up this failed from the start attempt to accomplish nothing and go home and stay there. If they want to feel good about themselves then they can go full electric and send a few thousand $ extra to the state coffers.

  4. I heard on my news in NH today that your committee passed the Bill for Assisted Suicide Tourism in Vermont. Hopefully they understand that Bill better than this one- before the bodies of outta staters start piling up in Vermont. Do these people in the committee know there is a coffin shortage?

    This meeting doesn’t exactly instill a whole lot of confidence.

    • No worries – the human compost act that passed last session takes care of the flesh vessels. Not sure if the vaxx’d ones would be considered organic material? Can it be considered non-GMO? How about keeping the name Suicide Six “a great place to die skiing!” The movie Secret Window where the corn field was fertilized with the wife’s remains. Predictive programming? Is the Tourism Board working on this now? Vermont, come ski, change your gender, and if you happen to die, we’ll compost you. A one stop eugenist globalist utopia!

  5. Let’s see, inept fools come to mind, where do we get these people ……………

    Follow the money and whose agenda is it, surely not hard-working taxpayers,
    but you’ll be on the hook for this nonsense……………. wake up people !!

  6. In her 2018 book, “Going Up The Country, When the Hippies, Dreamers, Freaks and Radicals Moved to Vermont, Yvonne Daley mentions Senator Dick Mc Cormack on pages 16 and 17. She wrote, “Senator Dick McCormack, a Democrat from Bethel who came to Vermont in 1968 from New York City with a guitar and little else said “free spirit” is what would better describe him. He believed his generation was turned off to suburban and city life because American citizens had lost their connection to decision making.”
    Well Senator Mc Cormack, here is your chance to follow your concerns of half a century ago and do what is right for Vermonters. S5 is nothing but a gift to the environmental lobby and renewable industry. The bill’s pathetic, incomprehensible, pernicious and despicable babble only brings harm to your constituents with no tangible benefit. Please speak up for Vermonters and tell your colleagues on the Senate that it is time to end this farce. Rather than losing face by pushing this ahead, you will be remembered as the Senator who saved Vermont when the next history book is written.

  7. This meeting is totally laughable
    If this happened in private industry, they would be out of business in a New York second.

    It looks like Bray is wasting his time and everyone else’s time, and our money.
    His time should be up.
    Out he goes
    Geeze us C

    He does not know about process flowcharts, which is elementary college stuff.
    He does not know the ducks, and does not have any ducks in a row, or around his axel.
    Gowd ole Mighty

    Looking at the dull face expressions of these people
    They do not need, nor want, any explanation.
    Their minds are made up.
    They will vote the party line, for whatever, anyway, and call it a victory.

    Too bad this gang controls the registered voter list, manages the elections, staffs the election centers, counts all the ballots, no matter where they come from, and away we go to never, never land, per Jackie Gleason

  8. The senators still don’t have a clear picture of how either end of that equation works.

    Isn’t this how all politician’s work.

  9. They don’t write the bills because they are incompetent. They can’t even read and understand them. They can accept whatever gratuities they they get for submitting them. This is BS.

  10. These are the people who construct our laws?
    It’s disgraceful, dangerous and scary!
    They don’t seem to give a damn about the wellbeing of their constituents.
    This is NOT intelligent legislation. It is just purely selfish politics constructed by idiots.

  11. Let us all remember the names of Senators MacDonald, McCormack and Bray. Senator Bray seems hell bent on passing this insanity of S5 even though he can’t seem to explain it to his committee members. The word “fuel” hasn’t been defined yet? Who is Bray kidding? Possibly himself.

    • Perhaps bray’s gaslighting has worked on himself.
      I am amazed by the number of Vermonters ambivalent and ignorant of S.5, the GWSA or much of anything that has been introduced this session under the golden dome. They are angry about the price of eggs and gas but completely unaware of why. If the majority of Vermont’s electorate thinks this way, it explains why we are where we are.
      Because of the legislatures pretending and our apathy, Vermont will transform into the first dystopian state in the US.

      • There is no “free press”, it’s 90% propaganda……

        ironically when they see the truth, they claim it’s biased media. Our minds in Vermont are obese with ideas and mantra from VPR, Seven Days and VT Digger….

        The soviets would be proud.

        • The downfall of the US started in California, Minnesota and Vermont, all of which are in very deep do-do, and would be totally unviable without the annual influx of federal funds

      • Frank there is a reason that they’ve been dumbing down the electorate and keeping us in the dark for decades now.
        Yeah, this is the way the electorate thinks- it’s why there is a disaster now every where we look.

        For cripes sake that train crash of highly toxic chemicals derailed on the 3rd and finally today on the 15th they’ve told the people to drink bottled water!
        Yeah Frank, people are effin’ stupid today.
        It pains me to say this, but look around.
        Do you know how many people I meet that seem oblivious to the fact that how they vote is directly connected with what we see going on..
        Like you say, they don’t get it.
        They voted for high gas prices and high egg prices!
        They voted to destroy our economy!
        They voted to eat bugs and own nothing!

        “We are being led by unserious people that are obsessed with fake problems.”

  12. These people are insane and incompetent.

    This is a perfect example of shining the light on them. All these bill are just handed to them, they don’t write them. Who does should be the people’s next question.

    Zoom , may be the best thing out of the pandemic!

    Great work!

    It has NEVER been about the environment! That is how you win.

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