THE VERMONT CLEAN HEAT STANDARD

The Clean Heat Standard (CHS) is the most consequential government regulation for the distribution of heating fuels ever contemplated in Vermont.  On February 24, the House Energy Committee passed the bill on a 7-2 vote. In March, all 150 House Members will vote on this proposal.

CLICK HERE to read the bill (H.715)


What is the Clean Heat Standard?  

The Clean Heat Standard (CHS) is a policy recommended by the Climate Action Council to regulate sales of heating fuel. In order to compel heating fuel and heating service companies to sell fuel and install heating equipment that lowers greenhouse gas emissions, a CHS would provide credits to any company that can demonstrate that their product or service reduces emissions. 


If a company gets paid for reducing emissions, who writes the check?

Almost everyone that sells heating oil, kerosene, natural gas, and propane. Under a CHS, wholesalers of heating oil and propane and/or “importers” that take ownership of fuel when it crosses into Vermont will be considered obligated parties that will have to purchase “credits” obtained from those that sell both low carbon fuel and emissions reduction services. 


How many retail fuel companies “import” heating fuel into Vermont?

About 80% of all retail providers. Unless you drive a delivery truck that only loads under a terminal rack located within the borders of Vermont, you are an “obligated party” and must acquire credits or make a quarterly “alternative compliance” payment.


Is this a tax on heating fuel?

It will increase the cost of fossil fuels used for heat.


What is the increased cost?

We have no idea. The legislature does not set the rate. The three appointed members of the Vermont Public Utility Commission (PUC)  set the rate.


Does the PUC know who delivers heating fuel in Vermont?

They do not. Tom Knauer with the Vermont Public Utilities Commission (PUC) testified that the PUC does not know who the obligated parties would be under a Clean Heat Standard. And when it comes to enforcement? “I am sorry to say, that I don’t have an answer to that question, as to what tools are needed and whether the PUC possesses those tools.”


Is it legal?

Vermont Assistant Attorney General Laura Murphy said that there are no guarantees that the bill is constitutional under the federal dormant commerce clause, but that the AG’s office supports the CHS and will enforce if it becomes law.


Why is this happening?

The Vermont Global Warming Solutions Act requires a 40% reduction in emissions by the end of the decade.  The Climate Council believes a CHS is necessary in order to achieve that mandate. If the Clean Heat Standard does not pass, the state of Vermont will likely be sued for failure to comply with the law.


What counts as a lower carbon fuel or service?  

That will be decided through a regulatory proceeding at the PUC. Biodiesel blended heating oil and wood pellets will likely count as a lower carbon fuel under a rule-making proceeding. Weatherization, cold climate electric heat pumps, wood stoves/boilers, and geothermal heat pumps would definitely qualify.


How long will this take?

Two years. If the Clean Heat Standard becomes law, the Vermont Public Utility Commission will begin the process of regulating heating fuel dealers and emissions from the fuels they sell. The credit market and price of the alternative compliance payment won't be determined until July 2024. The first payments will be due January 1, 2025.