Green Mountain Times

On January 15, 2025, the Vermont Public Utilities Commission (PUC) released its final report on the proposed Clean Heat Standard. The report indicates that implementing this standard would lead to an increase in heating fuel costs, with prices rising by 8 cents per gallon in the first year (2026) and 58 cents per gallon by the tenth year (2035).

The report marks the conclusion of a two-year process initiated by Act 18 in 2023, which tasked the PUC with developing an implementation plan for the Clean Heat Standard.

The PUC's analysis reveals that while greenhouse gas reductions could be valued at $477 million, program-related costs are projected at $956 million. These costs exclude expenses borne by homeowners or businesses for improvements, focusing instead on revenue raised and redistributed through the program.

Ultimately, the PUC suggests that due to administrative complexity, a simpler per-gallon tax might be more effective for funding emissions reduction projects.

The Clean Heat Standard aims to reduce greenhouse gas emissions from heating sources according to targets set by Vermont's Global Warming Solutions Act. The goal is a reduction of emissions from heating to 40% below 1990 levels by 2030 and 80% below those levels by 2050. This would involve creating a credit market where fossil fuel wholesalers and dealers can lower carbon intensity or fund efficiency projects.

However, as highlighted in the report, "the cost of the improvements far exceeds the benefits from the associated GHG reduction."

Three price impact scenarios were modeled by the PUC, showing similar increases for residential propane and heating oil: between 8-9 cents per gallon in year one and between 56-65 cents in year ten. For natural gas, increases range from 9-10 cents initially to 78-88 cents by year ten.

Detailed modeling for commercial and industrial customers was not included. Concerns have been raised about higher fuel prices affecting "hard-to-decarbonize" sectors like agriculture and manufacturing as supply costs rise.

Some observers note that administrative costs related to establishing a credit market system were not fully captured in this analysis. Previous estimates suggested potential price hikes ranging from $1.70 to $4 per gallon.

Further legislative action is needed to implement these recommendations fully. Governor Phil Scott remains opposed to the mandate. A full repeal of the Clean Heat Standard has been introduced in Vermont's General Assembly by Rep. Jim Harrison (Chittenden), referred to as Bill Status H.16.

Taxpayer-funded lawsuits under the Global Warming Solutions Act could potentially enforce carbon reduction standards if legislative action stalls.