While misinformation and early numbers abound, Vermonters still don’t know how much a clean heat standard would cost

For years, lawmakers, state officials, fuel dealers and members of the public have wondered, and worried, about the cost of Vermont’s proposed clean heat standard, a regulatory standard designed to reduce climate emissions that come from heating homes and businesses.

The policy had largely faded from public discussion after May 2023, when state lawmakers overrode Gov. Phil Scott’s veto of S.5 , a bill that set up, but did not implement, a clean heat standard .

Instead, that bill, which is now Act 18 , directed the state’s Public Utility Commission and two appointed advisory groups to flesh out the program’s details. In the next legislative session, lawmakers plan to look closely at the commission’s plan and decide whether to implement it, change it, or abandon the clean heat standard altogether.

As that consequential decision approaches, discussion about the policy — particularly its price tag — have resurfaced.

Those conversations have appeared in two forms. First, Americans For Prosperity, a super PAC founded by billionaires Charles and David Koch, announced in late May a “major five part mail and digital campaign” set to run throughout the summer that urges lawmakers to oppose the clean heat standard. Some of the organization’s mailed materials contain incorrect information about the proposed policy.

Second, the Technical Advisory Group, which is working to craft the details of the clean heat standard, has received new, preliminary information about the economy-wide cost and benefits of the proposed program. Those preliminary numbers are already expected to change in substantial ways in response to feedback from the public.

Supporters of the policy, which its authors named the “Affordable Heat Act,” say it would soften a transition that’s already underway to cheaper heating systems that pollute less. Doing nothing, they say, poses a greater threat of leaving vulnerable Vermonters behind.

“The energy transition is happening, whether we like it or not,” Rep. Laura Sibilia, I-Dover, who has championed the policy in the Legislature, told VTDigger. “We in Vermont will be affected by the changes that that transition is having on markets.”

The clean heat standard is “a way of putting some government regulation into the transition of the fossil fuel heating market in Vermont,” she said.

Opponents of the policy, including Gov. Phil Scott, say it could drive up prices for people who choose not to switch from fossil fuel heat to less-polluting systems.

At a press conference in July, Scott was asked about the campaign by Americans for Prosperity. While he said he hadn’t seen the group’s mailed material, he said he believes “heating costs will rise as a result of this action.”

Most experts agree that implementing a clean heat standard in Vermont would significantly reduce emissions that come from heating buildings, which accounts for about a third of Vermont’s greenhouse gas emissions. That’s important, because Vermont passed a law in 2020 called the Global Warming Solutions Act that legally requires the state to reduce climate emissions in 2025 , 2030 and 2050 or face potential lawsuits .

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But the policy’s complexity and political controversy have made it harder for Vermonters to gain a clear understanding of how the program could impact them.

A clean heat standard: the basics

The clean heat standard would require businesses that bring heating-related fossil fuels into Vermont (including fuel oil, propane, kerosene, coal and natural gas) to help finance the transition to new heating systems that pollute less, called “clean heat measures.”

The program would operate through a credit market. Every year, businesses regulated under the law would owe a certain number of credits to offset the emissions footprint associated with fossil fuels they imported into the state.

At the same time fuel dealers could earn credits by implementing clean heat measures. Those include installing cold-climate electric heat pumps, insulating a building or sealing windows, installing advanced wood heat or solar hot water systems, using some biofuels, and other activities.

The system would likely allow fuel dealers to fulfill their credit obligation in two ways: by implementing clean heat measures, or by paying a fee. Money collected from those fees would be funneled toward clean heat measures, lowering their cost and incentivizing people to adopt them. Act 18 requires 16% of that money to be designated for people with low incomes, and an additional 16% to be designated for people with low or moderate incomes.

The financial impact of the clean heat standard would vary significantly for different people, depending on their specific heating system, income and the efficiency of their building, among other factors.

Misinformation

Throughout the summer, the super PAC Americans For Prosperity has been sending Vermonters mailed postcards, urging them to tell lawmakers to oppose Act 18 in the 2025 legislative session.

Postcards have included slogans such as, “Vermont was the land of the free; but now it’s freedom with a price tag. Stop top-down mandates and higher costs by telling your lawmakers to oppose Act 18!”

Another reads: “Utility bills in Vermont are expensive! Can you afford your energy bills to Skyrocket? Tell your lawmakers to OPPOSE Act 18 to lower costs for Vermonters!”

While most of the postcards include general claims that energy bills will rise, at least one postcard described the program incorrectly.

That postcard incorrectly claimed that the program “forces severe restrictions on natural gas”, “imposes tax on home heating oil,” and “mandates heat pump installations.”

Act 18 does not propose different regulations for natural gas than other fossil fuels used for heating. It notes that, in order for renewable natural gas — which might come from a landfill or manure digester on a farm — to be considered a clean heat measure, the regulated business must show that it can physically deliver the product to its customers.

While fuel dealers who sell heating oil would be regulated by the clean heat standard, the policy would not impose a tax on heating oil. If that fuel dealer owed the state credits, the dealer may choose to raise prices for the consumer, but is not required to. Unlike a tax, the price increase could vary based on the business and its obligations.

The clean heat standard would not require individuals, businesses or industries to install any particular clean heat measure, including heat pumps. Rather, it’s designed to incentivize people and businesses to transition to heat systems that pollute less, because fuel dealers can earn credits by offering people financial incentives for installing qualified clean heat measures.

Americans for Prosperity’s campaign prompted a response from Vermont House Speaker Jill Krowinski, D-Burlington. On July 24, she issued a statement calling the campaign “misinformation and the influence of dark money that aims to promote confusion and fear.”

“The goal of the Affordable Heat Act is to help insulate Vermonters from fossil-fuel price swings, and to make it easier and more affordable for them to transition — if they want to — to more sustainable renewable energy sources,” she said.

Ross Connolly, Northeast region director for Americans for Prosperity, issued a statement in response to Krowinski’s statement on July 25.

“The real misinformation here is the legislative leadership’s belief that addressing energy solutions requires punishing its citizens with a program that is simply unaffordable, extremely burdensome to Vermonters, and financially impossible to implement,” he said in the statement. “We reject the idea that a clean environment can only be achieved with economic pain – to the contrary, a clean environment and energy abundance and affordability go hand-in-hand.”

“Our grassroots organization remains committed to educating Vermonters about the negative consequences of this bad policy and will continue to hold lawmakers accountable for their lack of transparency,” he said.

Americans for Prosperity declined VTDigger’s request for a phone interview with Connolly, instead instructing a reporter to send questions via email. The organization did not respond to the emailed questions.

‘A distraction’

Sibilia, who has seen postcards that Americans for Prosperity sent to her husband at their shared address, said she understands that Vermonters are feeling economic pain right now.

“The solutions to the challenges that we are facing are not easy. They’re really hard, and they are multiple,” she said.

She has “less and less patience,” she said, for “pointing the finger and saying we can’t do anything because it’s not affordable, and not coming in and saying, ‘we’ve got to figure out how to fix this and how to create affordability.’”

“Doing nothing is not affordable,” she said. “Doing nothing is going to increase our costs in the future. We have to get in, we have to fix, we have to support, we have to try and adapt.”

Matt Cota, who sits on the clean heat standard Technical Advisory Group and represents fuel sellers, said he was “annoyed” by the postcards.

“It just sort of didn’t have anything to do with what we were doing,” he said. “There are factual errors in it, and number two, it was a distraction.” It drew attention away from small fuel dealers, he said, many of whom are likely to be regulated by the policy.

Cota said, as part of the advisory group, he’s working to ‘“develop the best possible policy, and let it stand on its merits, or not.” Still, he’s worried that the policy is being driven by Vermont’s legal climate deadlines, rather than what’s in Vermonters’ best interest.

“We aren’t, in fact, designing a program to succeed regardless of whether it meets the mandate,” he said. “We are designing a program to meet the mandate, and that’s where the real friction is.”

Cost estimates

To date, Vermont’s Department of Public Service has hired two consulting firms to assess the cost of reducing emissions related to heating systems.

In November 2023, the Hinesburg-based Energy Futures Group published a 94-page report on the subject, which estimated that fuel prices would increase by an average of 1 to 2 cents per gallon per year from the date the program takes effect until 2030. It also estimated that the program could save thousands of dollars in total for low-income families that switched from propane or fuel oil to heat pumps, but that the transition could be less cost-effective for low-income families who used natural gas to heat their homes.

More recently, the department hired the Florida-based consulting firm NV5 to assign an economy-wide price tag to the clean heat standard program. At a meeting on July 25, the firm presented its draft findings for review by the technical advisory group: The clean heat standard would cost roughly $17.3 billion from the time it’s implemented until 2050. The same analysis estimated the clean heat standard would come with $20.9 billion in total societal benefits, or $3.6 billion in net benefits.

Brian Cotterill, energy program specialist for the Department of Public Service, said in an email the $17.3 billion estimate is “certain to change.”

It represents a total figure, or the gross cost, to meet the deadlines of the Global Warming Solutions Act for residential, commercial and industrial heating, he said, not the “net cost” of the clean heat standard.

“For example, the gross cost does not subtract existing state programs and federal funds currently available to support programs in the thermal sector,” he said in an email.

The Department of Public Service has confirmed that NV5 plans to change the assessment based on feedback from Jared Duval, executive director of the Energy Action Network, which analyzes data related to Vermont’s climate emissions.

Duval submitted comments to the department in his capacity as a member of the Vermont Climate Council, a group charged with proposing ways to meet the Global Warming Solutions Act deadlines.

Duval pointed to two main problems with the analysis. First, NV5 was using 1990 data as a reference for determining how much the state needs to reduce emissions in the heating sector when it should have been using 2018 data, per a decision from the Vermont Climate Council, he said. Second, the model did not use updated and accurate emissions data, in which some emissions that had previously been attributed to the heating sector were moved to the transportation sector.

Taken together, “NV5 modeled a scale of greenhouse gas emissions reduction from the thermal sector that is nearly twice what is actually required by January 1, 2030,” Duval told VTDigger. That could significantly change both the $17.3 billion figure and the estimated societal benefits, he said.

On the other hand, feedback from other parties could prompt NV5 to alter the model in ways that could increase the program’s cost, Cotterill said in the email.

“While costs will ultimately change in the final version, we can’t say yet whether the impact will be a reduction in the cost figure,” he said. “Some comments suggest cost estimates be added for things like electric panel upgrades, workforce development, program non-incentive and administrative costs, which would increase the total costs.”

The department expects to publish the firm’s final results on Aug. 30, according to Cotterill.

Meetings, documents and overviews related to the clean heat standard are available to the public on the Public Utility Commission’s and Department of Public Service’s websites.

Correction: A previous version of this story inaccurately described what percentage of fees collected from fuel dealers will be set aside to fund incentive programs that encourage low income households to adopt measures that reduce carbon emissions.

Read the story on VTDigger here: While misinformation and early numbers abound, Vermonters still don’t know how much a clean heat standard would cost .