THE VERMONT CLEAN HEAT STANDARD
The PUC: "This Case is Closed"
TAG and EAG Dismissed
When Vermont lawmakers directed the Public Utility Commission (PUC) to design a Clean Heat Standard in 2023, they likely didn’t anticipate it would be stopped before it ever took effect. So, when the legislature refused to implement the complex credit system earlier this year, the PUC had to figure out how to wind it down. They have taken action by dismissing the Technical and Equity Advisory Groups, who helped design the policy, and have shut down the fuel dealer registry. In a memo released on July 7, the PUC states that since the legislature did not adopt or modify the policy, the terms of service for members of both advisory groups will end on July 15, 2025.
Does this mean the Vermont Clean Heat Standard proposal is officially dead? Not necessarily. A Climate Action Plan adopted in late June by the Vermont Climate Council includes a modified Clean Heat Standard. More about that here.
The Final Clean Heat Standard Report is here.
The PUC recommends the Legislature find another way to reduce greenhouse gas emissions in the heating sector, something far more easier to implement and less expensive. The program will cost nearly a BILLION dollars to implement and is anticipated to cost Vermonters an extra 58-cents a gallon to heat their home. A summary and details below.
The Public Utility Commission’s Check Back Report to the Vermont Legislature on the Clean Heat Standard
The Clean Heat Standard (CHS), outlined under Vermont’s Act 18 of 2023, aims to decarbonize the thermal sector in line with the state’s Global Warming Solutions Act targets. This complex regulatory framework mandates that obligated parties, including heating fuel dealers, procure and retire Clean Heat Credits (CHCs) tied to emissions reductions. These credits, representing greenhouse gas reductions from clean heat measures like biofuels, wood stoves, weatherization, and electric heat pumps, are expected to reduce overall carbon intensity in heating.
The Public Utility Commission has identified significant operational and financial challenges. Over its first decade, projected program costs total approximately $955 million. This high cost, passed to consumers, raises equity concerns as low-income households bear a proportionally higher burden. The program’s regressive cost structure necessitates targeted subsidies to mitigate financial impacts on vulnerable populations.
Technical and administrative complexity is another critical issue. The CHS requires a trading platform, credit verification, and coordination between default delivery agents, regulators, and participants. Modeling of impacts, which hinges on numerous assumptions, highlights uncertainties, particularly regarding cost containment and real-world adoption rates of clean heat technologies.
Ultimately, the Vermont Public Utility Commission questions the program’s suitability, advocating for streamlined approaches leveraging existing state initiatives. The CHS’s high costs and operational intricacies make it a contentious path toward decarbonization, warranting further legislative review and alternative proposals.
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THE VERMONT CLEAN HEAT STANDARD