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, non-tangible commodities representing the amount of greenhouse gas reduction caused by clean heat measures. Obligated parties, including natural gas utilities and entities selling heating fuels, 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 number of credits required based on each party's contribution to the thermal sector's lifecycle CO2e emissions.

The act emphasizes social equity by ensuring that low-income and moderate-income customers benefit from clean heat measures, mandating that at least 20% of the credits retired by each obligated party come from measures delivered to these demographics. The Rhode Island executive climate change coordinating council will oversee the implementation of the clean heat standard, including the establishment of rules for the tradeable clean heat credits and the designation of a default delivery agent to provide clean heat measures. The council will also maintain a registration system for entities seeking to earn credits and will ensure that a substantial portion of clean heat measures is directed towards low- and moderate-income customers.

The act requires the council to coordinate with energy efficiency programs, prioritize energy efficiency and weatherization, and establish a system for recognizing clean heat credits. It also outlines the responsibilities of the council in terms of compliance, including the imposition of noncompliance payments for obligated parties that fail to meet their credit retirement requirements. The act is designed to take effect upon passage, promoting a coordinated approach to achieving the state's greenhouse gas reduction goals while prioritizing energy efficiency and equitable access to clean heat solutions.