Fuel Dealers and Environmentalists Are Fired Up Over the Clean Heating Bill | Environment | Seven Days | Vermont's Independent Voice

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Fuel Dealers and Environmentalists Are Fired Up Over the Clean Heating Bill


Published March 2, 2022 at 10:00 a.m.
Updated July 26, 2022 at 9:57 p.m.

Brian Hyde of Energy Co-op of Vermont sealing gaps in a Colchester attic - FILE: KEVIN MCCALLUM
  • File: Kevin Mccallum
  • Brian Hyde of Energy Co-op of Vermont sealing gaps in a Colchester attic

The late flurry of opposition to the centerpiece of Democrats' climate agenda had an air of desperation.

In the days before a House committee vote last week on creating a "clean heat standard" in Vermont, fossil fuel interests, powerful business groups and Republican lawmakers made last-ditch pleas to derail or delay the effort.

The bill — aimed at reducing Vermont's greenhouse gas emissions — would require fuel dealers to decrease the amount of fossil fuel they sell over time, or to offset those sales by selling more biofuels or installing heat pumps and weatherizing homes to cut down on fuel use. The Public Utility Commission would be directed to regulate companies that deliver heating fuels in trucks to people's homes as intensively as businesses that sell and distribute electricity over power lines.

Matt Cota, a lobbyist who serves as executive director of the Vermont Fuel Dealers Association, told the House Energy and Technology Committee that he feared half of the 100 companies that sell fuel oil, propane and kerosene might not survive a regulatory scheme sure to trigger "chaos" in the heating market.

"Some companies will thrive; others will be done," Cota told lawmakers.

Prominent trade groups, including the Vermont Chamber of Commerce, the Vermont Farm Bureau and the Vermont Retail & Grocers Association, followed suit and urged lawmakers to protect them against higher fuel costs from a move to cleaner heat sources.

In a letter to legislators, they sought assurances that the PUC, as it designs the regulations to accelerate the shift away from fossil fuels, would "address potential social and economic impacts to mitigate and minimize negative consequences" of the bill.

Then, just before last Thursday's vote, the two Republican members of the committee said they couldn't support a bill whose impacts are so unclear.

"We don't have any idea if it's going to change the cost of heating fuel in 2024 by $1 or by $10!" said Rep. Sally Achey (R-Middletown Springs), who later penned a letter opposing the bill that was shared widely by the Vermont GOP. Rep. Heidi Scheuermann (R-Stowe) shared Achey's unease.

"How is it going to be paid for? Who's going to pay for it? And how much is that?" she asked.

The barrage of questions, as well as predictions of industry disruption and fears of higher fuel costs, have so far failed to slow the progress of the clean heat standard bill, which aims to transform a heating fuel sector that accounts for 34 percent of Vermont's greenhouse gas emissions.

Cota called the bill "the most consequential government regulation for the distribution of heating fuels ever contemplated in the history of Vermont." Supporters use equally sweeping language to describe an initiative they view as essential to reducing emissions from the heating of homes, offices, stores and factories. Only transportation produces more climate-changing emissions in Vermont.

"Right now, this is the highest-impact, most important policy recommendation that Vermont can move on to meet our climate responsibilities," said Jared Duval, a member of the state Climate Council and head of a group that tracks Vermont's emissions reductions.

The transition to a lower-carbon economy is already under way, but the bill aims to accelerate the shift in a way that is "coordinated, sustained and predictable," according to Rep. Tim Briglin (D-Thetford), chair of the energy and tech committee.

Waiting to act will only leave Vermonters with fewer options and more vulnerable to the price volatility that fossil fuels are already experiencing, he said. He noted that fuel oil prices in Vermont are up by 40 percent over last year, and lawmakers have an obligation to protect residents from price swings that are sure to intensify in coming decades, regardless of state regulations.

"In 10 years, if we do nothing, we're going to be faced with [choices] that are more costly, less equitable and more disruptive," Briglin told Seven Days.

The bill passed out of committee on a 7-2 vote. If it is endorsed by the Appropriations Committee as expected, the bill must still be considered by the full House and then by the Senate. Gov. Phil Scott's office was noncommittal about whether the governor would sign the measure, citing potential costs.

"Vermont faces an affordability crisis, and the Governor won't support measures that make it worse," spokesperson Jason Maulucci said in a statement.

Despite the bill's apparent momentum, nagging questions remain about precisely how it would help wean Vermonters off fossil fuels without tanking an entire industry or leaving lower-income residents in the lurch.

That's partly because the bill would delegate the job of crafting many of the details to the PUC, which would have until January 1, 2025, to structure and launch the program.

Democratic lawmakers say they need to lay out the broad strokes of the transition now and leave the highly technical work — such as the analysis of the carbon intensity of various fuels — to professional utility regulators and energy analysts.

Scientists agree that global emissions need to be cut in half by 2030 and reach zero by midcentury to avoid the worst impacts of climate change. A report this week by the Intergovernmental Panel on Climate Change described in the greatest detail yet the scale of the global devastation and human suffering in store for the planet without immediate, dramatic action.

Adding to the pressure is that Vermont's climate goals became legal requirements with the passage of the 2020 Global Warming Solutions Act. The law gives anyone the right to sue the state for failing to take sufficient steps toward cutting emissions by 15 percent by 2025, 40 percent by 2030 and 80 percent by 2050.

"If we're going to meet our Global Warming Solutions Act targets, we have to begin this process," said Rep. Katherine Sims (D-Craftsbury). "We need to move with urgency and also thoughtfulness."

The bill calls for that work to begin by August 31, 2022. It authorizes regulators to hire consultants to help manage public outreach efforts — at least six public meetings and two workshops to gather testimony from a wide range of groups directly affected by the law, as well as input from an equity committee. The bill contains $1.2 million to pay for the public outreach and regulatory processes.

Following the collapse of a multistate effort to reduce transportation emissions, the clean heat standard now stands as the state's best chance to reach those goals, said Ben Edgerly Walsh, climate and energy program director at the Vermont Public Interest Research Group.

"For the first time ever, this is going to require fossil fuel companies to actually be part of transitioning Vermont to a low-carbon economy," Walsh said.

Here's how it would work. Fuel wholesalers and some retailers who import fuel would need to buy or generate an increasing number of "clean heat credits" every year. The credits would need to equal a yet-to-be-determined percentage of the previous year's fossil fuel sales. For example, a fuel oil dealer selling 1 million gallons of home heating fuel annually might be required to obtain credits sufficient to offset 5 percent — 50,000 gallons — of fossil fuel sales the following year. The next year, the same dealer might need to come up with credits to offset emissions from burning 100,000 gallons, and so on. The obligations would increase to 400,000 gallons by 2030.

Bourne's Energy biofuel hub in Morrisville - FILE: KEVIN MCCALLUM
  • File: Kevin Mccallum
  • Bourne's Energy biofuel hub in Morrisville

Dealers could meet such requirements in several ways. They could just sell less fossil fuel every year, though that's not viewed as a sustainable business model. They could switch to selling biofuels. Or they might be able to generate credits by reducing demand for their products by weatherizing homes and buildings, installing cold-climate heat pumps, or upgrading customers to modern woodstoves.

While some Vermont businesses already deal in biofuels — heating oil and biodiesel generated most often from soybeans or used cooking oil — there would be supply challenges in ramping up to make them a bigger part of the home heating mix.

"Do we eat enough French fries and Chinese food in order to fuel our furnaces in Vermont? The answer is no, and we will not," Cota said. For larger volumes of biodiesel to be sold in Vermont, dealers would have to tap biofuel supplies from large-scale soybean production in the Midwest, something some environmental activists oppose.

Stuart Blood of Thetford helped author a letter imploring the committee not to allow biofuels to qualify for credits when they displace fossil fuels. He and others argue that biofuels usually don't emit less carbon than fossil fuels when their entire life cycle is considered. Nearly 400 people have signed the letter.

Similar questions abound about the "renewable natural gas" that Vermont Gas Systems buys from local sources, such as Vanguard Renewables' massive new digester in Salisbury, a landfill in Québec and a wastewater treatment plant in the Midwest.

It's unclear how those fuels would be counted under the "clean heat" standard, but the question is expected to get close scrutiny during the PUC process. The House bill requires regulators to carry out a life-cycle analysis of the carbon emissions of various fuels. This should ensure that dealers won't get credit for feel-good measures that don't really reduce total emissions, VPIRG's Walsh said. Vermont Gas president Neale Lunderville said his company would make sure that the renewable gas it buys would qualify for clean heat credits.

Some fuel dealers are already diversifying the services they offer. Brian Gray, general manager of Energy Co-op of Vermont, said his Colchester-based organization started out selling fuel oil and kerosene but shifted to clean energy services that now represent 40 percent of sales. The credits the co-op would generate from such work not only would offset fossil fuel sales but also could be sold to other companies that need them, in a type of carbon-trading market.

Gray told lawmakers that if the transition away from fossil fuels is structured so that residents can afford the up-front cost of cleaner energy options, they'll save money in the long run. As written, the bill provides subsidies to help low- and moderate-income families change their heating systems.

"For most homeowners who make the switch to biomass or heat pumps, their overall heating costs should be less than they are today with oil and propane," he said.

That's great for people who can make the switch, but for those who can't or don't want to, they face a future of higher heating costs as dealers pass their increases on to their customers, said Cota, the fuel dealers' lobbyist.

"If you look at what the clean heat standard fundamentally does, it raises the cost of fuels for people that do not want to switch from their fossil-based system, and it lowers the cost for those that do," he said. "That's the hand of government to change the marketplace."

If the clean heat standard becomes law, companies can earn and bank credits retroactive to January 1, 2022. That should help ease the transition by keeping the cost of compliance modest, Briglin said.

Companies that don't want to do anything differently would have to pay an increasing fee to the state every year. How much that would be, and how many credits companies would earn from various clean heat projects, are all yet to be determined.

"The clean heat standard will be disruptive to business models that have been based on just selling as much fossil fuel as you want," said Duval, the member of the climate council, "regardless of the social and environmental consequences."

The original print version of this article was headlined "Temperature Rising"