The Clean Heat Standard – a proposed route to reducing emissions in the fight against climate change

Thetford’s representative Tim Briglin is at the center of a legislative vortex these days. In the spring of 2020 he championed the Global Warming Solutions Act in the House of Representatives, and the bill survived a veto from Governor Scott. Tim is also the chair of the House Committee on Energy and Technology that considers all matters relating to energy in Vermont. And energy, especially how it is generated, is where the rubber hits the road when it comes to carbon emissions.

Last week Tim Briglin’s committee heard testimony on a new initiative to reduce emissions from the heating sector – the proposed Clean Heat Standard. A white paper detailing the implementation of a recommended Clean Heat Standard was produced under the auspices of the Energy Action Network, guided by a cross-section of experts from the fuel delivery sector, the pipeline gas and electric utilities, legislators, the Department of Public Service, the Public Utility Commission, and many others.

At present, heating buildings with fossil fuels like oil, propane, and fracked natural gas accounts for 34% of Vermont’s climate-warming carbon emissions. That’s a figure the Clean Heat Standard proposes to reduce. According to the State’s 2016 Comprehensive Energy Plan, in three years’ time (2025) we are supposed to have dropped our energy use by at least 15% and increased our use of renewable energy to account for 25% of our total energy consumption. In reality we are nowhere near those figures.

The Global Warming Solutions Act requires Vermont to cut “no less than 26%” from the 2005 level of greenhouse gas emissions by 2025 and “not less than 40%” from 1990 greenhouse gas emissions by 2030.

The conundrum is how to achieve this without forcing people to meet specified reductions in emissions, for instance by mandating the purchase of fuel-efficient new heating systems. The Clean Heat Standard says it can achieve the same goal through a Credit system that requires the conversion to “Clean Heat” in a more roundabout way.

The Clean Heat Standard would be aimed at the fuel providers – Vermont Gas Systems and wholesale suppliers of fuel oil, propane, and other fossil fuels sold in Vermont. The law would require fuel providers to earn a certain number of state-certified Clean Heat Credits per year. They could do this in a variety of ways. The most direct way would be to sell enough “clean” fuel to earn their quota of Credits. The supplier would have a clear incentive to find and purchase “clean” fuel on the wholesale market. This increasing demand for clean fuel would put pressure on the market to make the transition away from fossil fuel.  

Alternatively, fuel providers could avoid switching to “clean” fuel and instead purchase Clean Heat Credits from others, for instance from businesses that obtain Credits by installing efficient, advanced wood pellet furnaces or clean electric heat pumps. The purchase transfers the Credit to the fuel supplier, and money flows in the other direction, to the furnace or heat pump installer, thus lowering their installation costs.  

Because Vermont’s housing stock is among the oldest and least energy-efficient in the nation, businesses that insulate and weatherize homes would also earn Clean Heat Credits that they would sell to the fuel providers. Thus fuel providers would subsidize home weatherization.

The annual number of Credits that must be earned by fuel suppliers would be increased each year with the intent of pushing the heating market toward providing more “clean” fuel, thereby phasing out fossil fuel and hopefully, by doing that, lowering emissions. It is proposed that the Public Utility Commission (PUC) would have authority to adjust the number of Credits that must be earned “in sync with climate requirements.”

What the Clean Heat Standard does not aspire to do is curb energy consumption directly. Quoting from the white paper: “…the Clean Heat Standard seeks to add clean heat services to the thermal sector without putting a limit on how much heat is delivered or consumed.”

The Clean Heat Credit system is a model similar to the RECs (Renewable Energy Credits) that are earned when solar panels or wind turbines generate clean electricity. All but a tiny fraction of RECs are sold to out-of-state utilities so those companies can comply with their state’s Renewable Portfolio Standard while continuing to sell fossil-fuel generated electricity.  

This Clean Heat proposal would set the stage for various technologies and fuels to compete for earning Clean Heat Credits. The prediction is that, as the PUC requires fuel providers to earn more Credits each year, it will stimulate the market for heat pumps, high-tech “clean” wood heat, and biofuels, which in turn will drive down prices,

As always, the devil’s in the details. What exactly qualifies fuels as “clean” could have a significant impact on whether the Clean Heat Standard’s Credit accounting approach will reduce real-world greenhouse gas emissions. Take biofuels derived from plants that include wood pellets and plant oil-derived biodiesel. The production and transporting of biofuels can be energy-intensive and/or release lots of emissions. And they still produce carbon dioxide when burned. The challenge the legislature faces now is passing new laws to ensure all of the emissions associated with the heating of buildings in Vermont are counted.

Tim Briglin’s Energy and Technology committee heard testimony for four days last week from  Energy Action Network, the authors of the Clean Heat Standard proposal, the Agency of Natural Resources, Vermont Gas Systems, and other entities that deliver or regulate heating energy in the state. Testimony was also heard from nonprofits and agencies engaged with weatherization programs, as well as two environmental organizations. The Committee’s agenda for this week is filled with more testimony from the Legislative Council, the Union of Concerned Scientists, Burlington Electric, Vermont Electric Power Company, Vermont Electric Cooperative, the PUC, The Attorney General’s office, VT League of Cities and Towns, and the Agency of Natural Resources.

At some time in the near future the committee is expected to develop a Clean Heat Standard Bill.