Reporter debrief: Vt. lawmakers are weighing historic regulations on fossil fuel companies
Right now, Vermont lawmakers are weighing a policy that would bring major changes to the way Vermonters heat their homes and businesses. The idea is to create a clean heat standard that would slowly change the existing fossil fuels-based market to reduce emissions — without crushing small businesses along the way.
The state’s Climate Action Plan says clearly: the Legislature needs to pass a bill that gets the ball rolling this session.
VPR's Anna Van Dine and Henry Epp talked through the details with VPR climate and environment reporter Abagael Giles. Their conversation below has been edited and condensed for clarity.
Anna Van Dine: First, what is a clean heat standard, and how would it work?
Abagael Giles: Basically, the clean heat standard is a regulatory tool that would slowly push the companies at the top of Vermont’s fossil fuel supply chain — think Vermont Gas, but also the companies that sell wholesale heating oil, propane or kerosene to your local fuel dealer — to slowly reduce the greenhouse gas emissions that their products produce over time.
In many cases, we can’t make these fuels less polluting. They are what they are. So the state of Vermont would create a marketplace where companies could buy and sell so-called "clean heat credits."
"CHS is the most consequential government regulation for the distribution of heating fuels ever contemplated in the history of Vermont.”- Matt Cota, president of Vermont Fuel Dealers Association
And every year, those fossil fuel companies would be required to earn or purchase credits at a rate proportional to how much fossil fuel heat they sell.
Year over year, wholesalers will have to earn more and more credits.
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The hope is that will push them away from selling fossil fuels as a business model, but also that it will create a growing market for more efficient heating options.
Henry Epp: And how would fuel wholesalers earn these credits?
The way companies would create credits is by doing things or paying other people to do things that reduce home heating emissions.
The bill calls out, as examples, insulating homes and installing cold climate heat pumps or high efficiency pellet stoves here. But it also calls out supplying renewable natural gas and biofuels, which, depending on where they come from, are not always low carbon. Of note: there is some debate around these options from climate activists.
Right now, lawmakers are looking at a requirement that a third of the credits companies earn each year come from projects that serve low-income households, those with incomes at or below 185% of the federal poverty level.
Anna Van Dine: Wow — I mean, we are asking these companies to completely change what they do, right? Why?
Heating buildings accounts for about 35% of our emissions as a state. Vermont has some of the oldest housing stock in the country — and it's often poorly insulated. Plus, almost two-thirds of households in the state are low and moderate income. And to change your heat source or weatherize is expensive, even if you save in the long-term.
“You know, those are things that someone with savings or good credit can invest in, and it’s a smart economic decision for them," said Jared Duval, a member of the Climate Council and executive director of Energy Action Network.
"But folks who don’t have savings, or who are living paycheck to paycheck, or who have bad credit, those are the folks I think — speaking as a member of the council — we need to ensure that they’re getting higher incentives."
To meet the state’s climate goals we have to help those homes produce fewer emissions. To do that, advocates for this solution say we need to create a market that makes fuel switching profitable and attractive.
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Henry Epp: What do the people and businesses who will be regulated under this policy think?
Vermont Gas says they support a “well designed program." It's also important to note Vermont Gas’s president and CEO was part of a working group that heavily informed the policies in this bill, as were folks from the Department of Public Service and climate advocacy groups, among others.
The Vermont Fuel Dealers Association isn’t sure yet. Both say they want to see market stability. They know change is coming, and would rather know now the market they can adapt to in the long term, rather than see a hodgepodge of outright bans in the coming years.
"... Folks who don’t have savings, or who are living paycheck to paycheck, or who have bad credit, those are the folks I think — speaking as a member of the council — we need to ensure that they’re getting higher incentives.”- Jared Duval, climate councilor
Some fuel dealers have actually been around so long, this isn’t the first home heat transition they’ve been part of. But, they want lawmakers to know this won’t be easy for them.
“CHS is the most consequential government regulation for the distribution of heating fuels ever contemplated in the history of Vermont," Vermont Fuel Dealers Association President Matt Cota said.
And notably, both Vermont Gas and the fuel dealers acknowledge the role their products play in contributing to climate change. So I think there is support for a standard that doesn’t terribly raise prices for their customers. Ultimately, the cost isn’t yet known.
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But it’s also important to note: electric utilities have been required to reduce their emissions for several years — and it’s worked. So in a way, we’re now in a place, without this policy, where some of the fuels that are contributing most to our emissions as a state are the least regulated.
Anna Van Dine: Have any other states done something similar, or would Vermont be the first?
Vermont would be the first state in the country to regulate all fossil fuel-based home heating fuels.
In 2021, Colorado adopted a clean heat standard that applies to just natural gas. California, Washington and Oregon have low carbon fuel standards that apply to transportation fuels, and so far, the results are promising.
But yes, Vermont would be the first.
"... Without clear legislative direction this session, it will be very challenging to meet the 2030 requirements.”- Julie Moore, secretary of Natural Resources
Anna Van Dine: What happens if this doesn’t pass? How likely is it to advance this session?
Without a clean heat standard passing this session, early modeling shows we just won’t be able to comply with the Global Warming Solutions act. We can’t fund our way out of this problem of cutting emissions from heating with public money.
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“And without clear legislative direction, it’s going to be extremely difficult to meet those requirements," Secretary of Natural Resources and climate councilor Julie Moore told lawmakers. "And I would go even further and say without clear legislative direction this session, it will be very challenging to meet the 2030 requirements.”
The bill is still in the House Energy and Technology Committee.
Find agendas and watch committee meetings here.
If it passes into law, then it goes to the Public Utilities Commission to work out details. The bill calls for the program to roll out in 2024.
Now: it's too soon to know if this will advance. The governor hasn’t weighed in yet, but he was against joining a regional market that would have done something similar for gasoline and diesel. And if it doesn’t pass? Another option is mandates. And Moore warned lawmakers: those are harder and less equitable.
Have questions, comments or tips? Send us a message or get in touch with reporter Abagael Giles @AbagaelGiles.