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1 H.96
2 Introduced by Representatives Stebbins of Burlington, Sibilia of Dover,
3 Anthony of Barre City, Arsenault of Williston, Austin of
4 Colchester, Bartholomew of Hartland, Black of Essex, Bluemle
5 of Burlington, Bongartz of Manchester, Brady of Williston,
6 Brown of Richmond, Burke of Brattleboro, Burrows of West
7 Windsor, Campbell of St. Johnsbury, Carroll of Bennington,
8 Casey of Montpelier, Chesnut-Tangerman of Middletown
9 Springs, Christie of Hartford, Cina of Burlington, Coffey of
10 Guilford, Cole of Hartford, Conlon of Cornwall, Cordes of
11 Lincoln, Dodge of Essex, Durfee of Shaftsbury, Elder of
12 Starksboro, Garofano of Essex, Goldman of Rockingham,
13 Headrick of Burlington, Holcombe of Norwich, Hooper of
14 Burlington, Houghton of Essex Junction, Hyman of South
15 Burlington, James of Manchester, Jerome of Brandon,
16 Kornheiser of Brattleboro, Krasnow of South Burlington,
17 LaLonde of South Burlington, Logan of Burlington, Long of
18 Newfane, McCann of Montpelier, McCarthy of St. Albans City,
19 McGill of Bridport, Mihaly of Calais, Mrowicki of Putney,
20 Nicoll of Ludlow, Notte of Rutland City, O’Brien of Tunbridge,
21 Ode of Burlington, Pajala of Londonderry, Patt of Worcester,
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1 Pouech of Hinesburg, Rachelson of Burlington, Rice of Dorset,
2 Satcowitz of Randolph, Scheu of Middlebury, Sheldon of
3 Middlebury, Stevens of Waterbury, Stone of Burlington, Toleno
4 of Brattleboro, Torre of Moretown, Troiano of Stannard, and
5 Williams of Barre City
6 Referred to Committee on
7 Date:
8 Subject: Climate change; air pollution; renewable energy; heating; fuel
9 Statement of purpose of bill as introduced: This bill proposes to establish the
10 Clean Heat Standard to reduce Vermont’s greenhouse gas emissions from the
11 thermal sector. The Clean Heat Standard shall be administered by the Public
12 Utility Commission with assistance from the Clean Heat Standard Technical
13 Advisory Group and the Equity Advisory Group.
14 An act relating to affordably meeting the mandated greenhouse gas
15 reductions for the thermal sector through electrification, decarbonization,
16 efficiency, and weatherization measures
17 It is hereby enacted by the General Assembly of the State of Vermont:
18 Sec. 1. SHORT TITLE
19 This act shall be known and may be cited as the “Affordable Heat Act.”
20 Sec. 2. FINDINGS
21 The General Assembly finds:
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1 (1) All of the legislative findings made in 2020 Acts and Resolves
2 No. 153, Sec. 2, the Vermont Global Warming Solutions Act of 2020
3 (GWSA), remain true and are incorporated by reference here.
4 (2) Under the GWSA and 10 V.S.A. § 578, Vermont has a legal
5 obligation to reduce greenhouse gas emissions to specific levels by 2025, 2030,
6 and 2050.
7 (3) The Vermont Climate Council was established under the GWSA and
8 was tasked with, among other things, recommending necessary legislation to
9 reduce greenhouse gas emissions. The Initial Vermont Climate Action Plan
10 calls for the General Assembly to adopt legislation authorizing the Public
11 Utility Commission to administer the Clean Heat Standard consistent with the
12 recommendations of the Energy Action Network’s Clean Heat Standard
13 Working Group.
14 (4) As required by the GWSA, the Vermont Climate Council published
15 the Initial Vermont Climate Action Plan on December 1, 2021. As noted in
16 that plan, over one-third of Vermont’s greenhouse gas emissions in 2018 came
17 from the thermal sector. In that year, approximately 72 percent of Vermont’s
18 thermal energy use was fossil based, including 29 percent from the burning of
19 heating oil, 24 percent from fossil gas, and 19 percent from propane.
20 (5) To meet the greenhouse gas emission reductions required by the
21 GWSA, Vermont needs to transition away from its current carbon-intensive VT LEG #365142 v.2
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1 building heating practices to lower-carbon alternatives. It also needs to do this
2 equitably, recognizing economic effects on energy users, especially energy-
3 burdened users; on the workforce currently providing these services; and on
4 the overall economy.
5 Sec. 3. 30 V.S.A. chapter 94 is added to read:
6 CHAPTER 94. CLEAN HEAT STANDARD
7 § 8121. INTENT
8 It is the intent of the General Assembly that the Clean Heat Standard be
9 designed and implemented in a manner that achieves Vermont’s thermal sector
10 greenhouse gas emissions reductions necessary to meet the requirements of
11 10 V.S.A. § 578(a), minimizes costs to customers, and recognizes that
12 affordable heating is essential for Vermonters. It shall minimize adverse
13 impacts to customers with low income and moderate income and those
14 households with the highest energy burdens.
15 § 8122. CLEAN HEAT STANDARD
16 (a) The Clean Heat Standard is established. Under this program, obligated
17 parties shall reduce greenhouse gas emissions attributable to the Vermont
18 thermal sector by retiring required amounts of clean heat credits to meet the
19 thermal sector portion of the greenhouse gas emission reduction obligations of
20 the Global Warming Solutions Act.
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1 (b) By rule or order, the Commission shall establish or adopt a system of
2 tradeable clean heat credits earned from the delivery of clean heat measures
3 that reduce greenhouse gas emissions.
4 (c) An obligated party may obtain the required amount of clean heat credits
5 through delivery of eligible clean heat measures, through contracts for delivery
6 of eligible clean heat measures, through the market purchase of clean heat
7 credits, or through delivery of eligible clean heat measures by a designated
8 statewide default delivery agent.
9 (d) The Public Utility Commission shall adopt rules and may issue orders
10 to implement the Clean Heat Standard program.
11 § 8123. DEFINITIONS
12 As used in this chapter:
13 (1) “Carbon intensity value” means the amount of lifecycle greenhouse
14 gas emissions per unit of energy of fuel expressed in grams of carbon dioxide
15 equivalent per megajoule (gCO2e/MJ).
16 (2) “Clean heat credit” means a tradeable, nontangible commodity that
17 represents the amount of greenhouse gas reduction attributable to a clean heat
18 measure. The Commission shall establish a system of management for clean
19 heat credits pursuant to this chapter.
20 (3) “Clean heat measure” means fuel and technologies delivered and
21 installed to end-use customers in Vermont that reduce greenhouse gas VT LEG #365142 v.2
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1 emissions. Clean heat measures shall not include switching from using one
2 fossil fuel to another fossil fuel. The Commission may adopt a list of
3 acceptable actions that qualify as clean heat measures.
4 (4) “Commission” means the Public Utility Commission.
5 (5) “Default delivery agent” means the entity designated by the
6 Commission to provide services that generate clean heat measures.
7 (6) “Energy burden” means the annual spending on thermal energy as a
8 percentage of household income.
9 (7) “Entity” means any individual, trustee, agency, partnership,
10 association, corporation, company, municipality, political subdivision, or any
11 other form of organization.
12 (8) “Fuel pathway” means a detailed description of all stages of fuel
13 production and use for any particular fuel, including feedstock generation or
14 extraction, production, transportation, distribution, and combustion of the fuel
15 by the consumer. The fuel pathway is used in the calculation the carbon
16 intensity value and lifecycle greenhouse gas emissions of each fuel.
17 (9) “Heating fuel” means fossil-based heating fuel, including oil,
18 propane, natural gas, coal, and kerosene.
19 (10) “Obligated party” means:
20 (A) a regulated natural gas utility serving customers in Vermont; or VT LEG #365142 v.2
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1 (B) for other heating fuels, the entity that makes the first sale of the
2 heating fuel into or in the State for consumption within the State.
3 (11) “Thermal sector” has the same meaning as the “Residential,
4 Commercial and Industrial Fuel Use” sector as used in the Vermont
5 Greenhouse Gas Emissions Inventory and Forecast.
6 § 8124. CLEAN HEAT STANDARD COMPLIANCE
7 (a) Required amounts.
8 (1) The Commission shall establish the number of clean heat credits that
9 each obligated party is required to retire each calendar year. The size of the
10 annual requirement shall be set at a pace sufficient for Vermont’s thermal
11 sector to achieve lifecycle carbon dioxide equivalent (CO2e) emission
12 reductions consistent with the requirements of 10 V.S.A. § 578(a) expressed as
13 lifecycle greenhouse gas emissions pursuant to subsection 8125(f) of this title.
14 (2) Annual requirements shall be expressed as a percent of each
15 obligated party’s contribution to the thermal sector’s lifecycle CO2e emissions
16 in the previous year with the annual percentages being the same for all parties.
17 To ensure understanding among obligated parties, the Commission shall
18 publicly provide a description of the annual requirements in plain terms.
19 (3) To support the ability of the obligated parties to plan for the future,
20 the Commission shall establish and update annual clean heat credit
21 requirements for the next 10 years. Every three years, the Commission shall VT LEG #365142 v.2
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1 extend the requirements three years; shall assess emission reductions actually
2 achieved in the thermal sector; and, if necessary, revise the pace of clean heat
3 credit requirements for future years to ensure that the thermal sector portion of
4 the emission reduction requirements of 10 V.S.A. § 578(a) for 2030 and 2050
5 will be achieved.
6 (4) The Commission may temporarily adjust the annual requirements for
7 good cause after notice and opportunity for public process. Good cause may
8 include a shortage of clean heat credits or undue adverse financial impacts on
9 particular customers or demographic segments.
10 (b) Annual registration.
11 (1) Each entity that sells heating fuel into or in Vermont shall register
12 annually with the Commission by an annual deadline established by the
13 Commission. The form and information required in the registration shall be
14 determined by the Commission and shall include all data necessary to establish
15 annual requirements under this chapter. The Commission shall use the
16 information provided in the registration to determine whether the entity shall
17 be considered an obligated party and the amount of its annual requirement.
18 (2) At a minimum, the Commission shall require registration
19 information to include legal name; doing business as name, if applicable;
20 municipality; state; type of heating fuel sold; and the volume of sales of
21 heating fuels into or in the State for final sale or consumption in the State in
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1 the calendar year immediately preceding the calendar year in which the entity
2 is registering with the Commission.
3 (3) Each year, and not later than 30 days following the annual
4 registration deadline established by the Commission, the Commission shall
5 share complete registration information of obligated parties with the Agency of
6 Natural Resources and the Department of Public Service for purposes of
7 conducting the Vermont Greenhouse Gas Emissions Inventory and Forecast
8 and meeting the requirements of 10 V.S.A. § 591(b)(3).
9 (4) The Commission shall maintain, and update annually, a list of
10 registered entities on its website that contains the required registration
11 information, except that the public list shall not include heating fuel volumes
12 reported.
13 (5) For any entity not registered, the first registration form shall be due
14 30 days after the first sale of heating fuel to a location in Vermont.
15 (6) Clean heat requirements shall transfer to entities that acquire an
16 obligated party.
17 (7) Entities that cease to operate shall retain their clean heat requirement
18 for their final year of operation.
19 (c) Early action credits. Beginning on January 1, 2023, clean heat
20 measures that are installed and provide emission reductions are creditable and
21 shall count towards the future clean heat credit requirements of an obligated VT LEG #365142 v.2
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1 party. Upon the establishment of the clean heat credit system, entities may
2 register credits for actions taken starting in 2023.
3 (d) Equitable distribution of clean heat measures.
4 (1) The Clean Heat Standard shall be designed and implemented to
5 enhance social equity by minimizing adverse impacts to customers with low
6 income and moderate income and those households with the highest energy
7 burdens. The design shall ensure all customers have an equitable opportunity
8 to participate in, and benefit from, clean heat measures regardless of heating
9 fuel used, income level, geographic location, or homeownership status.
10 (2) Of their annual requirement, each obligated party shall retire at least
11 16 percent from customers with low income and 16 percent from customers
12 with moderate income. At least one-half of these credits shall be from
13 installed clean heat measures that require capital investments in homes, have
14 measure lives of 10 years or more, and are estimated by the Technical
15 Advisory Group to lower annual energy bills. Examples shall include
16 weatherization improvements and installation of heat pumps, heat pump water
17 heaters, and advanced wood heating systems. The Commission may identify
18 additional measures that qualify as installed measures.
19 (3) The definitions of customer with low income and customer with
20 moderate income shall be set by the Commission in consultation with the
21 Equity Advisory Group and in alignment with other existing definitions.
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1 (4) The Commission may consider frontloading the credit requirements
2 for customers with low income and moderate income so that the greatest
3 proportion of clean heat measures reach Vermonters with low income and
4 moderate income in the earlier years.
5 (5) In order to best serve customers with low income and moderate
6 income, the Commission shall have authority to change the percentages
7 established in subdivision (2) of this subsection and the criteria used to define
8 customers with low income and moderate income for good cause after notice
9 and opportunity for public process.
10 (6) In determining whether to exceed the minimum percentages of clean
11 heat measures that must be delivered to customers with low income and
12 moderate income, the Commission shall take into account participation in other
13 government-sponsored low-income and moderate-income weatherization
14 programs.
15 (7) A clean heat measure delivered to a customer qualifying for a
16 government-sponsored, low-income energy subsidy shall qualify for clean heat
17 credits required by subdivision (2) of this subsection.
18 (e) Credit banking. The Commission shall allow an obligated party that
19 has met its annual requirement in a given year to retain clean heat c