The proposed bill establishes the "Rhode Island Clean Heat Standard Act," which aims to reduce greenhouse gas emissions in the thermal sector by implementing a system of tradeable clean heat credits. The act defines "clean heat credits" as tradeable commodities representing the amount of greenhouse gas reduction achieved through clean heat measures, which include technologies and fuels that reduce emissions but exclude switching between fossil fuels or using renewable natural gas or hydrogen.

Obligated parties, including natural gas utilities and entities making the first sale of heating fuel in the state, will be required to retire a specified number of clean heat credits each year to meet emissions reduction targets set for 2030, 2040, and 2050. The council will establish the annual requirements based on each obligated party's contribution to the thermal sector's lifecycle CO2e emissions from the previous year.

The act emphasizes social equity by mandating that a substantial portion of clean heat credits retired by each obligated party must come from measures delivered to low-income and moderate-income customers, with at least 20% sourced from each demographic.

The Rhode Island executive climate change coordinating council will oversee the implementation of the clean heat standard, including the establishment of rules and regulations for credit generation, compliance, and the designation of a default delivery agent to provide clean heat measures. The council will also create a registration system to facilitate the tracking and transfer of clean heat credits, ensuring that all eligible measures delivered in Rhode Island can contribute to the state's emissions reduction goals.

Additionally, the council may adjust annual requirements for good cause and will maintain a public list of registered entities while ensuring that noncompliance payments are directed towards providing clean heat measures to low-income customers. The act will take effect upon passage.