S.5 An act relating to affordably meeting the mandated greenhouse gas reductions for the thermal sector through efficiency, weatherization measures, electrification, and decarbonization has passed the Senate and is now in the House. I wrote about this bill extensively last year, including numerous pieces which are on my website at http://www.laurasibiliavt.com. As one of the lead sponsors of the House version of this proposal, I’m supportive of enacting this market mechanism for helping all Vermonters reduce their exposure to volatile fossil fuel heating fuel costs.
I will be hosting an online forum on the Affordable Heat Act tomorrow Saturday April 8th from 11:30-12:30 to talk about the bill and answer questions.
As passed the Senate, and as requested by the governor, the bill requires a check back and affirmative vote with the legislature in 2025 before a Clean Heat Standard can be implemented. A section by section breakdown of the bill can be viewed here though it should be noted the bill is being edited in our committee. The current timeline is here. I introduced the bill concept and its importance to the committee. My comments are here.
An important note: In 2020, Vermont passed the Global Warming Solutions Act. This law did two important things:
- First, it committed Vermont to meeting the emissions reductions that had been agreed to as part of the 2015 Paris Accords. Vermont’s 2020 Global Warming Solution Act requires our state to reduce greenhouse gas pollution to 26% below 2005 levels by 2025. Emissions would need to be 40% below 1990 levels by 2030 and 80% below by 2050.
- Second, it required the creation of a Climate Action Plan created using public input to meet those goals. A Clean Heat Standard, designed to reduce thermal emissions, was proposed as a part of the Climate Action Plan.
Here are three reasons why I am motivated to pass S.5 and establish more structure in our thermal energy transition:
- Fixed income Vermonters, rural Vermonters and low and moderate income Vermonters are being exposed to greater and greater financial and health risks as a result of the unregulated and volatile thermal heating fuels critical sector. Vermonters with means are getting off fossil fuels to save money.
- Local, state and national governments are exerting tremendous legal pressure to reduce greenhouse gas emissions as part of the 2015 Paris Accords.
- This activity is changing markets and will impact Vermonters.
Additional background information that may be helpful follows below. If you aren’t able to join me on Zoom tomorrow, reach out with your questions!
Monitor the bills I am sponsoring and recorded roll call votes.
As always, if you have suggestions, concerns or critiques please be in touch so we can schedule time to discuss. Please do not hesitate to contact me if you need assistance navigating government services at (802) 384-0233 or lsibilia@leg.state.vt.us. Follow my regular posts online at http://www.laurasibiliavt.com
Rep. Laura Sibilia – Dover, Jamaica, Somerset, Stratton, Wardsboro
Political ad on the right: these claims are alarming, based on exaggerated information and were inserted in Vermonters fuel bills. Monday a new round of sensationalized television ads paid for by the fossil fuel industry will begin playing on TV and radio.
Fiscal Note on S.5 from the Vermont Legislatures Joint Fiscal Office:
Read more at Vermont Energy Action Network
From the Joint Fiscal Office Fiscal Note on S.5:
The bill would establish the Clean Heat Standard to reduce Vermont’s greenhouse gas emissions from the thermal (heating) sector. The Public Utility Commission would administer the Clean Heat Standard with assistance from two advisory groups: the Technical Advisory Group and the Equity Advisory Group. The Department of Public Service would be a partner in providing assistance and in verifying and evaluating clean heat credit claims.
Background and Details
Under the Clean Heat Standard, each year obligated parties must retire clean heat credits – a tradeable, non tangible commodity that represents the amount of greenhouse gas emissions reductions caused by a clean heat measure. Clean heat credits may be retired by delivering fuel and technologies that reduce greenhouse gas emissions (clean heat measures) or by contracting out or purchasing clean heat credits. The Commission would establish the number of clean heat credits obligated parties must retire each year to set a pace for Vermont’s thermal sector to achieve the greenhouse gas emission reductions required by 10 V.S.A. § 578(a)(2) and (3), as amended by the Vermont Global Warming Solutions Act of 2020.
Impact on Vermont’s Economy
The Vermont Pathways Analysis Report 2.04 estimated that reducing greenhouse gas emissions in Vermont as outlined by the Vermont Climate Council, in line with the Global Warming Solutions Act requirements, would offer $6.4 billion in net benefits by 2050 compared to “business as usual.” The Clean Heat Standard plays a prominent role in that analysis by reducing greenhouse gas emissions in the thermal sector. Although additional costs and investments will be required to reduce emissions as required in the Global Warming Solutions Act, the avoided costs for fossil fuels together with the avoided economic, health, and environmental damages are expected to yield significant net benefits by 2050.
In the near term, it will be important to monitor how the Clean Heat Standard is implemented and administered and how the State can ameliorate possible negative effects on households and businesses, with special attention to households with low and moderate incomes. Many participants will have critical roles to play in achieving the required reductions in greenhouse gas emissions, including the Public Utility Commission and Department of Public Service, the wholesale fuel dealers and natural gas utilities, and the households and businesses that choose to make structural and heating system changes. The General Assembly will have an important oversight role in monitoring implementation and reviewing and responding to the frequent reports and recommendations from the Commission.
Obligated parties include regulated natural gas utilities serving customers in Vermont, entities that import other heating fuels for
consumption within Vermont, and entities that produce, refine, manufacture, or compound other heating fuels within Vermont
for consumption within Vermont.
Examples of how Vermonters are expected to be impacted by S.5 from the Vermont Energy Action Network
The Affordable Heat Act will result in more clean heat options becoming available to Vermonters at lower cost – everything from weatherization to heat pumps and heat pump water heaters to advanced wood heating options to biofuels
In order to comply with the Affordable Heat Act, importers of fossil fuel will have to purchase and retire clean heat credits, the value of which is directly proportional to the amount of emissions reduction achieved. In order to acquire clean heat credits, fossil fuel importers will have to pay for them. This means that Vermonters – especially lower and middle income Vermonters – will get increased incentives to do things that reduce pollution (i.e., lower cost weatherization, more heavily incentivized heat pumps and heat pump water heaters, etc.), paid for by fossil fuel importers (those fossil fuel importers, in turn, will likely pass some of that cost on to their fossil fuel customers). At the same time, fossil fuel importers will also have a powerful incentive to uncover and deliver the lowest cost means of reducing climate pollution. And the prices of lower emitting fuels, such as qualifying forms of B100 biodiesel, are expected to decline in price.
Scenario A: The Anderson family is a lower-income family that lives in an apartment. They pay the utilities for the apartment but the property owner is responsible for the appliances. The propane water heater that heats their water dies. Instead of replacing it with another propane water heater, the property owner takes advantage of a clean heat credit supported incentive that lowers the upfront cost to install a new heat pump water heater to below the cost of installing a new propane water heater. This allows the Anderson family to save nearly $500 a year.
Scenario B: The Bertrand family is a middle-income family. They live in an average size home and heat with a fuel oil furnace. They make too much to qualify for free weatherization through the Weatherization Assistance Program that supports the lowest income Vermonters, but they don’t make enough to go ahead with weatherization without additional incentives. Due to the incentives made available by the Affordable Heat Act, the Bertrand family can finally afford to comprehensively weatherize their home. Any remaining upfront investment of the weatherization that is not covered by expanded incentives is financed by the Weatherization Repayment Assistance Program, paid back over time on their electric bill. The project results in a 25% reduction in fossil fuel use, which lowers their average annual fuel oil bill from $2,000 a winter to $1,500 a winter, saving them an average of $500 a year in fuel costs, or $5,000 over the next decade.
Scenario C: The Cassidy family is a lower income family who owns a small home that is well-insulated because they previously had it weatherized by the Weatherization Assistance Program. However, they still have trouble with the high cost of their propane bills. Because their home is small and well-weatherized, their heating contractor let them know that they could heat their whole home with heat pumps (while leaving their existing heating system in place as a backup). Thanks to the incentives created by the Affordable Heat Act, the Cassidy family installs the heat pumps and proceeds to save about $1,000 a year in heating costs.
Scenario D: The Diaz family is a middle-income family who had a new fuel oil boiler installed 5 years ago. Because they are invested in keeping their relatively new boiler, they decide to simply switch their heating fuel from fuel oil to B99 biodiesel, made from recycled restaurant oil. Because of the Affordable Heat Act and the value of a B99 biodiesel that is 5x lower emitting than fuel oil, the cost of the biodiesel becomes lower than fuel oil. The Diaz family keeps their boiler but pays less per year in fuel than before.
Scenario E: The Edmonds family lives in an old home that is twice the size of the average home in Vermont. They decide to replace their old propane boiler, which was costing them an average of $5,000 a year, or over $50,000 in total fuel costs over the past decade. Instead, thanks to the Affordable Heat Act, the upfront cost to install a new advanced wood heating pellet boiler is brought down to less than the cost of installing another propane boiler. After installing the pellet boiler, the Edmonds family saves an average of $2,000 a year in fuel costs as a result of using wood pellets rather than propane.
Overview from EAN: A Clean Heat Standard would require fossil fuel corporations and utilities that import heating fuels in Vermont to reduce their climate pollution over time, in line with Global Warming Solutions Act requirements. Fossil fuel importers will be able to meet the performance standard either by selling cleaner heating fuels or by paying for work done by others that helps Vermonters use clean heating options (such as weatherization, heat pumps, or advanced wood heat). The goal of the Clean Heat Standard is to both reduce climate pollution and reduce costs of home and building heating over time.
Vermont State Representative Laura Sibilia 