Clean Heat Standard (S.5) - March 21, 2023

On Tuesday the House Environment & Energy Committee began taking background testimony on S.5, beginning with Representative Sibilia providing a recap of what happened with H.715 (The Clean Heat Standard bill vetoed by the Governor) last year, and passage of the Global Warming Solutions Act (GWSA). The GWSA created the Climate Council which in turn created a Climate Action Plan. She emphasized that Vermont needs to reduce emissions from the thermal sector, and one recommendation was for a Clean Heat Standard. It did not quite make it last year, but a lot of work went into it, and here we are again with an “improved” bill.

She acknowledged that there is a lot of attention on this bill, and there is a lot at stake. Climate Change is already affecting our communities, she argued. The fuel dealers will have to change, and this is creating a lot of tension, she claimed. 

Sibilia stated they need to center their work around rural and low-income Vermonters (who have so far been ignored). She compared the transition away from fossil fuels to the transition away from land-line telephone technologies. Rural communities are being left behind. 

She noted that the state needs to slash two-thirds of carbon emissions by 2035. Reducing our state emissions to zero will not solve this, she acknowledged, but doing nothing is a losing proposition for Vermonters. 

Vermonters paid nearly $2 more per gallon this winter than the previous year for fuel oil. She is concerned about rural Vermonters, and we need to keep small fuel dealers in mind too. They are really stressed, she added, and they provide important services in our communities.

Julie Moore (Secretary of Natural Resources) spoke next about the Green House Gas (GHG) Inventory overview. The inventory establishes what our 1990 and 2005 baseline GHG levels were. These are what the state uses to measure progress in GHG reduction under the GWSA. This is a standard measurement tool used by other states as well as the IPCC, which allows us to compare what we’re doing here with other places.

The inventory accounts for methane and other GHGs, but all are all then translated into a standard measurement based on CO2 equivalent. This tool will be used to calculate the value of credits generated under the Clean Heat Standard and how many will be retired each year. The inventory usually lags a couple of years behind as they collect data, this could be an issue. 

The Inventory estimates gross emissions by sector. This is different from what is required in S.5, which calls for an analysis based on lifecycle emissions. Moore is not sure how these two things can be brought into harmony. Moving to a lifecycle analysis also comes with the challenge that they would no longer be able to compare ourselves to other states, which use the current formula.

Moore added that the state has a contract in place to evaluate lifecycle emissions for all the energy sources in the state, but this is being kept separate from the GHG inventory for now. There are also still lingering issues of confidentially around tax forms as S.5 tries to collect data on fuel sales for use moving forward.

Collin Smythe (Climate Change Progress and Data Analyst, Agency of Natural Resources) shared that there are a lot of factors that impact transportation fuel use – temperature, the economy, Covid in 2020, etc. and it can be difficult to unpack what is influencing the trends indicated by the charts in the presentation. The state inventory for transportation considers on-road emissions, non-road emissions, aviation gas and jet fuel.

Residential, Commercial, and Industrial inventory includes fuel use includes fuels for heating space, water, and for cooking. Notably different is that electricity counts emissions generated outside (as well as inside) the borders because we rely on more out-of-state generation than other states.

Representative Smith wondered if they count the use of tractors and other farm equipment for agricultural emissions. Smythe noted that it was not accounted for in the thermal sector, but rather in the non-road transportation sector.

Representative Patt asked how biogenic emissions are treated or not treated. Smythe acknowledged that it’s convoluted with agriculture. The idea is that emissions from wood burning, for example, are accounted for in the land use change of that wood being harvested. In the land-use sector there is a concept called “fluxes.” This basically works by looking how much carbon is being stored by a forest and how that changes when you cut down trees. It’s not straight forward at all, he admitted. Where the real problem lies, is coming up with a net value. There’s a lot of work being done on it, but the estimates aren’t fantastic at this point.

There were some questions about the volatility of electric emissions in previous years. Smythe responded that before the Renewable Energy Standard there were probably other factors involved that took precedent over emissions.

NOTE: A cursory look at the chart provided shows an emissions spike after Vermont Yankee closed between 2012-2014.

Jared Duval for (Energy Action Network) spoke next; he noted for the record that he is also a member of the Climate Council. As a member of Energy Action Network (EAN) he does not take a position on bills. He shared EAN’s Annual Progress Report for 2022, which he described as trying to make sense of complicated issues.

His key argument is that the state has a legal obligation to meet GHG reduction goals, and we are not on track to meet those goals. There were policies recommended in the Climate Action Plan (CAP) that have not been implemented by the legislature that could give the state a “higher degree of confidence” that we could meet the obligations. Vermonters will save an estimated $6.4B in savings and avoided damages by 2050, he claimed.

NOTE: This argument is suspect because the $6.4B in savings is an estimate of mitigated climate impacts to the state if the global average temperature is held to a 1.5 degree increase by 2050. This assumes that global emissions are able to be dramatically reduced. It is NOT tied to Vermont’s reduction in emissions or the $1.2B investment required to meet the CAP.

In 2020 the thermal sector passed the transportation sector in emissions for the first time in history (but that probably has more to do with the drop off in driving during Covid lockdowns). We’re already seeing a “snap back” in transportation, though not back to the same levels of pre-2020, he noted.

Duval explained why different baselines for different goals are included in the GWSA. The 2025 reduction goal is based on the Paris agreement (2005 level baseline), and 2030/2050 goals are based on the Kyoto Protocol (1990 levels). Ergo, the 2030 emissions requirement is significantly more than what’s required by 2025 as a result.

Yesterday, he shared, there was a major report from the IPCC, which claimed “we are going to cross a threshold this decade,” which requires slashing GHG emissions in half by 2030 and eliminate all GHG emissions by 2050. Duval argued we all have to do our part. Vermont has the second highest per-capita emissions in New England. He pointed out our rural nature which requires more driving, and our older housing stock which results in less efficient heating. However, lots of neighboring states have the same issues.

He acknowledged that there are upfront costs that need to be paid in order to move forward with this transition away from fossil fuels. But, he argued, there are long-term savings in the future if we do this.

NOTE: In the transportation sector this is clearly the case. The cost of operating EV’s is lower than their gas counterparts. However, this does not carry over to the thermal sector where alternatives are still more expensive to operate than existing systems.

Smith noted that the most expensive fuel is kerosene. Most people who heat with kerosene live in mobile homes and can’t have an underground fuel tank, nor can they use a heat pump. He questioned what S.5 does for these people. He questioned what S.5 does for these people. There was no clear answer to this.

It was noted that over the last number of years, fossil gas has been the cheapest way to heat a home. But oil and propane are getting more expensive. Heat pump water heaters show some promise, because the upfront costs are more expensive, but the lifetime cost to operate the machine is less.

Duval noted that lower income people spend a higher portion of their budgets on energy than the highest income households, even though they use less energy per capita. Additionally, we don’t produce fossil fuels in Vermont, so “75% of the money” we spend on it goes somewhere else. It was also noted that the tax burden on electricity is much higher that what we tax heating fuels.

The Vermont Electric Co-Op (VELCO) says they can handle “significant electrification” between now and 2030. After that, there is some uncertainty.


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