Updated at 6:27 p.m.
Amid debates that have reached a fever pitch across the state, lawmakers in the Vermont Senate voted 19-10 on Thursday to advance a bill that aims to transform the way Vermonters heat their homes.
The bill, S.5, which would establish a clean heat standard in Vermont, is headed to the House, where it’s expected to pass. It will then go to the desk of Gov. Phil Scott, who expressed strong opposition at his weekly press briefing on Wednesday.
The Republican governor vetoed a similar bill last session, and lawmakers failed to override his veto by a single vote. Due to a supermajority of Democrats and Progressives in both chambers, the bill has better odds this time.
A recent amendment altered the bill so that it would not actually put the clean heat standard into place, but rather act as a blueprint, requiring the state’s Public Utility Commission to stand up a full program over the next two years. The plan would then come back before the full Legislature for another vote, or for potential modification.
In addition to the Public Utility Commission’s plan, lawmakers would likely have several more studies in hand before the plan returns to them.
Still, noise about the complicated piece of legislation has grown louder and louder in recent weeks as opponents have raised concerns about potential increases in cost that the program could cause Vermonters with low and moderate incomes.
On the Senate floor Thursday afternoon, tensions ran high.
“We don’t have time. My generation does not have time,” Sen. Becca White, D-Windsor, who is in her 20s, said as she urged senators to support the bill. “I ask you, as the youngest member of this body, for you to consider that time, and how the 2030 goals — I apologize, the 2030 requirements, and the 2050 requirements, will impact my life and the people younger than me.”
After several more speeches, Sen. Russ Ingalls, R-Essex, read a list of apologies to his constituents, saying that if the bill were to pass, he worried costs would rise.
“I apologize to all my constituents and fellow Vermonters who have done their part, making their voices heard like only a few times before in the modern times of this building, only to learn that they’re just going to do what they want to do anyways,” he said. “It doesn’t matter.”
At his Wednesday press briefing, Scott also raised concerns about a deficit in the workforce, which could complicate installation of new heat systems, along with concerns that the grid may not be ready for full-scale electrification of the thermal sector.
Advocates of the bill think differently about the program it creates.
“Vermonters are facing a heating emergency,” Sen. Chris Bray, chair of the Senate Natural Resources and Energy Committee, told lawmakers on the Senate floor on Thursday. Prices for heating fuels are at a record high, he argued, pointing to handouts with graphs from the state’s Department of Public Service. Vermonters should have options to transition away from those fuels, he said.
More than 30% of Vermont’s greenhouse gas emissions come from heating Vermont’s buildings, many of which are old, drafty and heated inefficiently. The goal of the bill is to address this problem, lowering greenhouse gas emissions and transitioning Vermonters to better-insulated homes and heating sources whose prices are more stable.
Prices of propane, kerosene and fuel oil have been volatile over the last 20 years, Sen. Anne Watson, D/P-Washington told lawmakers on the Senate floor. More renewable energy — wood pellets, wood chips and heat pumps — are comparatively cheaper, she said.
She acknowledged that upfront costs have presented a barrier for many Vermonters who want to install heat pumps and other measures.
“This bill is designed to bring down those upfront costs to a rate that is accessible for all,” she said. “This is the purpose of the credit market described in this bill.”
While short-term cost estimates of the program range considerably, it’s widely accepted that the measure would save Vermonters money in the long run. The Energy Action Network, an organization that tracks and analyzes the state’s greenhouse gas emissions, estimates that by 2030, the program could reduce heating costs for Vermonters by a total of $2 billion, or $7,500 per household.
Parties on both sides have said the market is already headed toward electric heat pumps and more efficient heating systems.
Opponents of the bill have largely focused on the short-term cost. How, they’ve asked, would low-income Vermonters afford to install new heating systems? And if they couldn’t afford to do so, would they have to pay more for heating fuel under the program?
The questions remain largely open. While some stakeholders, including Natural Resources Secretary Julie Moore, have penciled out rough estimates of the immediate costs of the program, no one knows for sure how much it will cost Vermonters in its early years. That’s the main point at issue for the governor and many who oppose the bill: Vermonters, they argue, should be able to understand the impacts of the program before lawmakers finalize it.
Advocates of the bill say it serves only as a blueprint. The state’s Public Utility Commission would stand up the complete program and analyze its costs and impacts before the full Legislature would give a final “yes” or “no” in 2025, and it would be implemented, at the earliest, in 2026. Until then, the program would not change the price of heat or require anything from Vermonters.
Bray, chair of the Senate Natural Resources Committee — which unanimously voted in favor of the bill — recently told VTDigger that the panel received more analysis than most of the other bills he’s worked on in his 15 years in the Legislature.
Vermont’s 2020 Global Warming Solutions Act requires the state to dramatically reduce carbon emissions by 2025, 2030 and 2050 or face potential legal action. When lawmakers enacted that law, they created the Vermont Climate Council, charged with determining how Vermont would meet its requirements. The clean heat standard was among their top recommendations, and so far, the state doesn’t have any alternatives at the ready.
How a clean heat standard would work
If it passes, the bill would set up a system designed to fund the transition to “clean heat measures,” such as weatherization, electric cold-climate heat pumps, advanced wood heating systems, the use of some biofuels and other measures.
Vermonters — including individuals and businesses — who help to install clean heat measures would earn credits.
In turn, businesses that import heating fuel into the state — including oil, propane, natural gas, coal and kerosene — would be deemed “obligated parties.” Each obligated party would need to obtain clean heat credits to offset the amount of lifecycle carbon emissions it was responsible for bringing into the state during the prior year.
They could earn credits by installing clean heat measures themselves, contracting someone else to do that work, purchasing credits from the open market or through a designated agency, which the state has not yet chosen.
Obligated parties include large fossil fuel dealers, such as Global Partners and Vermont Gas — but also hundreds of small retailers who deliver heating fuel around the state.
Lawmakers initially hoped to regulate only large, wholesale fuel dealers. But legal questions arose because most wholesale fuel dealers are not based in Vermont.
They settled on regulating fuel dealers who own the title to the fuel when it crosses over the Vermont border — but because most of Vermont’s small fuel dealers purchase their product out of state, the majority of those retailers would be regulated under the bill.
‘No real choice’
Scott’s concerns about the bill go beyond cost. He’s also concerned that the workforce is not robust enough to carry out the weatherization and electric heat pump installations required by the bill. Those caught waiting for upgrades may be exposed to higher fuel prices in the meantime, he argued on Wednesday.
“As most of you are aware, I’m an advocate for the transition to electrification,” he said. “I believe there will be long-term savings as a result. But we cannot ignore the fact that there are significant upfront costs which could be regressive and harmful to low-income Vermonters. A policy like this will require a lot of thought to ensure those who can least afford it are not punished because they have no real choice.”
He said he’s also worried about grid upgrades that need to take place before Vermonters can fully electrify their households. He cited mobile homes, some of which don’t have the electrical capacity to rely on heat pumps.
“People in mobile homes often have above ground tanks and have to buy kerosene at $6 per gallon to prevent gelling in the winter,” he said. “And if they want to electrify, they’ll need to make thousands of dollars in upgrades, and this is money they simply don’t have.”
Scott’s biggest ask from lawmakers — echoing the same request he made last year — is that the bill include an explicit clause requiring lawmakers to pass a separate piece of legislation once the Public Utility Commission has designed a program and analyzed its impacts.
While lawmakers in the Senate Appropriations Committee added a “check back” clause to the bill, Scott said it didn’t go far enough.
Moore, Scott’s natural resources secretary, said her agency has contracted with the Energy Futures Group to analyze costs of several measures, including the clean heat standard, that could be deployed to meet the requirements of the Global Warming Solutions Act.
She said she stands by an earlier “back-of-the-envelope” estimate of how much the program might cost, which included a possible 70-cent-per-gallon increase to heating fuel. Lawmakers, environmental organizations and energy analysts have said her estimate is much too high, while Matt Cota, who owns a consulting firm and lobbies for fuels dealers and others, believes her estimate is low.
Moore said the bill needs to be studied more closely to determine the best way forward. The problem with the Public Utility Commission’s analysis, which the bill would commission, is that it “is not going to provide a range of options,” she said.
“It is going to produce an answer, theoretically at this point, to be voted up or down,” she said.
Scott vetoed the Global Warming Solutions Act, though he told reporters on Wednesday that he supports the goal of reducing emissions in the thermal sector.
Asked whether he would support another bill, H.74, that would repeal the Global Warming Solutions Act, Scott said he wouldn’t. The bill is in front of the House Environment and Energy Committee, but hasn’t been discussed and is unlikely to advance.
“I vetoed the bill, as you know, for a lot of reasons,” Scott said. “I didn’t think it was constitutional. I still don’t think it’s constitutional. But at the same time, we’ve come a long ways. We’ve been at the table. We’re trying to find solutions, and I believe that we need to keep marching forward.”
Opposing views
Many of the state’s small fuel dealers are opposed to S.5. It’s hard for the business owners to understand how the program would pencil out and impact their bottom line, Cota said. While 3 in 5 fuel dealers in Vermont already install electric heat pumps, they guess many of their costs would increase — and they’d likely need to raise their prices for customers.
“You’re missing something when small businesses, who live in their communities, that pay taxes to the communities, that serve on the selectboard, that serve on the school board, that coach little leagues — when all of a sudden, they’re being shown the side door,” Cota said.
Fuel dealers have been particularly irked by the legislative process this session. On a frigid day earlier this winter, a number of fuel dealers traveled to the Statehouse to testify before the Senate Natural Resources Committee, and many cited concerns about complying with the bill.
Lawmakers didn’t incorporate their concerns and suggestions into the bill, Cota said, and lawmakers didn’t lean enough on small fuel dealers’ assessment of how the program would function within their businesses.
In response to a perceived dismissive attitude from lawmakers, fuel dealers organized themselves. Through television and radio ads, bill stuffers and other forms of outreach to their customers, fuel dealers asked Vermonters to call their senators and ask them to vote “no” on S.5. Most of the ads cited Moore’s rough projection of how much fuel prices would increase.
Cota said the campaign was intended to set the record straight.
“Not shockingly, the thing that generated the most attention was the analysis of what it would actually add to the gallon of eating fuel,” he said.
Lawmakers who supported the bill saw the campaign differently.
“The public narrative around this bill is simply wrong and misleading,” Bray said while he presented the bill on the Senate floor on Thursday. “If there’s one thing in this entire scenario that makes me angry and a bit disappointed, it’s that various interested parties have whipped up the public, creating fear and misunderstanding.”
Vermonters are receiving a “barrage” of unsubstantiated messages about the clean heat standard that have caused anxiety about the costs of the future program, Bray said. In turn, lawmakers are receiving a number of messages, as well. Sen. Bobby Starr, D-Orleans, said he’s received more than 1,000 calls and emails, and other lawmakers said they’d received hundreds of messages.
Some environmental groups oppose the program because of its endorsement of certain biofuels and renewable natural gas, which can often rely on large-scale farming practices and contribute to deforestation, exporting Vermont’s environmental burdens outside state and sometimes country lines.
Meanwhile, many of the state’s largest environmental, climate and social groups across the state enthusiastically support the program, saying it will speed up a necessary transition and switch Vermonters to more sustainable heating options.
Last session, Rights & Democracy, an organization that focuses on equity and social justice, opposed the bill due to concerns that it didn’t go far enough to protect low-income Vermonters in the transition. This year, the organization supports the bill.
Dan Fingas, who works on policy issues for the organization, points to new programs that make weatherization more affordable, such as the Weatherization Repayment Assistance Program, or WRAP, which allows weatherization costs to be financed over time on a homeowner or renter’s utility bill.
He also cites a provision in the bill that requires obligated parties to obtain a percentage of credits by working with low- and moderate-income Vermonters.
“The reason that we’re supporting this year’s bill is because affordability and equity were huge parts of everything that’s been worked on since last May,” Fingas said.
Sen. Mark MacDonald, D-Orange, said that since the Global Warming Solutions Act passed, lawmakers have moved forward “in thought,” they haven’t moved forward “in action.”
“Someone suggested not long ago that we needed a solution that was simple and inexpensive,” he said, citing a floor speech from another lawmaker who opposed the bill. “We wouldn’t be here today, 880 days after we passed the Global Warming Solutions Act, if there was a solution that was simple and inexpensive.”