Clean Heat Standard Nears Key Vote, Impact on Manufacturing Uncertain

As discussed previously, S.5 would create a Clean Heat Standard program, developed by the Public Utility Commission by 2025, under which fossil fuel sellers (those who initially own the fuel imported into Vermont for sale) would have to purchase tradable credits in order to sell non-highway transportation fuels.  They could also earn credits through supporting efficiency or fuel switching projects.  What these credits will cost is not truly known and will not be until the program is developed – as currently drafted, the Legislature will not have input on or have to approve the initial cost of credits, and there is no cap to any costs in the bill.  A very rough estimate from ANR earlier this year was that the initial price could be 70 cents a gallon (this is a generalized estimate across fuel types like oil and natural gas), but higher estimates have been suggested.

During the bill’s development, the language of the bill and the policy discussion has focused on heating and heating fuel.  It has become clearer recently that the intention of the bill’s supporters is to include process and off-road fuel as well.  However, there has not been the necessary testimony or discussion about the economic impact of including these fuels or the merits of including them in the first place, given that opportunities to mitigate costs through efficiency or fuel switching are not available for these applications to the extent that they are for space heating.

While AIV does not support S.5 or the inclusion of process fuels as the bill is currently drafted, the most immediate concern is that there is no requirement that the final program design and cost has to be approved by the Legislature in a bill that will be sent to the Governor.

S.5 is currently in the Senate Appropriations Committee, which is expected to act on the bill as soon as this coming Tuesday, after which it would go to the Senate floor for action this coming week. AIV is strongly urging the Appropriations Committee and the Senate as a whole, at a minimum, not support S.5 unless it includes a requirement that the Legislature needs to approve the final proposal of the PUC by law (meaning passing a bill that is sent to the Governor – not simply a review by the Legislative Committee on Administrative Rules, not a simple resolution that doesn’t require the Governor’s signature).  There are plenty of reasons to simply reject S.5 as it is currently drafted outright, but if Senators do not simply vote no, this requirement for full and formal legislative approval in law is critical.

To contact your Senators about this issue, click here to identify them and find their contact information.