Scott vetoes Clean Heat Standard bill

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Scott vetoes Clean Heat Standard bill

Fri, 05/06/2022 - 6:05pm -- tim

Vermont Business Magazine Governor Phil Scott today vetoed H.715, the Clean Heat Standard bill. The House passed the bill 88-37. Senate passed it 23-7. The House would need 100 votes to override. The Senate would need 20. The bill gives authority to the Public Utilty Commission to set policies and charges to fund measures to reduce greenhouse gases. Heating fuel dealers would provide most of the funds for the GHG reductions. The cost of clean heat credits would be established by the PUC and verified by the Department of Public Service.

Several environmental and business associations responded to the veto. See below.

Governor Scott sent the following letter to the General Assembly:

May 6, 2022

The Honorable BetsyAnn Wrask

Clerk of the Vermont House of Representatives

115 State Street

Montpelier, VT 05633

Dear Ms. Wrask:

Pursuant to Chapter II, Section 11 of the Vermont Constitution, I am returning H.715, An act relating to the Clean Heat Standard, without my signature because of my objections described herein:

As Governor and as elected officials, we have an obligation to ensure Vermonters know the financial costs and impacts of this policy on their lives and the State’s economy. Signing this bill would go against this obligation because the costs and impacts are unknown. The Legislature’s own Joint Fiscal Office acknowledges this fact, saying:

“It is too soon to estimate the impact on Vermont’s economy, households, and businesses. The way in which the Clean Heat Standard is implemented, including the way in which clean heat credits are priced and how incentives or subsidies are offered to households and businesses, must be established before meaningful analysis is possible. At the same time, those incentives or subsidies could be costly for the State, suggesting larger fiscal impacts in future years.” See JFO report below.

I understand the importance of reducing greenhouse gas emissions, which is why I proposed a $216 million dollar climate package and why my administration has engaged in this policy conversation since January. However, over the last several months it became very clear to me that no one had a good handle on what this program was going to look like, with some even describing it as a carbon tax on the floor.  

I have clearly, repeatedly, and respectfully asked the Legislature to include language that would require the policy and costs to come back to the General Assembly in bill form so it could be transparently debated with all the details before any potential burden is imposed. This is how lawmaking and governing is supposed to work and what Vermonters expect, deserve and have a right to receive.

What the Legislature has passed is a bill that includes some policy, with absolutely no details on costs and impacts, and a lot of authority and policy making delegated to the Public Utility Commission (PUC), an unelected board. And regardless of the latest talking points, the bill does not guarantee a full legislative deliberation on the policy, plan and fiscal implications prior to implementation. By design, this bill and the inadequate “check back” allows legislators to sign off on a policy concept – absent important details – and not own the decision to raise costs on Vermonters.

For these reasons I cannot allow this bill to go into law and strongly urge the Legislature to sustain this veto. 

Sincerely,

/s/

Philip B. Scott

Governor

VNRC, VPIRG, VCV and VBSR Respond to Governor Scott’s Veto of the Clean Heat Standard: 

With a late-Friday swoop of the pen, Governor Scott’s veto of the Clean Heat Standard (H.715) disregards years of hard work to design an approach to strategically and equitably transform the fossil fuel heating sector, undercutting implementation of Vermont’s first legally-required Climate Action Plan, which identified this policy as pivotal to making progress in reducing pollution in the thermal sector.

 

“Governor Scott is still pretending we live in a world where climate inaction is an acceptable option,” said Ben Edgerly Walsh, Climate and Energy Program Director with the Vermont Public Interest Research Group. “It’s not. This bill requires climate pollution cuts from thermal-sector fossil fuel companies, something we should have done years ago, and we look forward to the Legislature overriding the Governor’s shortsighted veto of it.”

 

“At a moment when most of the world’s leading climate scientists are, in effect, screaming ‘Now or never!’ on climate action, the Governor’s veto injects tremendous uncertainty at a time when we urgently need decisive action,” said Johanna Miller, energy and climate program director at the Vermont Natural Resources Council. “I thank the Vermont House and Senate leaders who voted overwhelmingly to advance this bill, and I look forward to celebrating their successful override.”

 

"The clean heat standard is a tremendous opportunity to cut pollution from Vermont’s thermal sector at a pace and scale that is not only commensurate with the science but also flexible enough to ensure a just transition for wholesale fuel providers, retailers, and consumers,” said Jordan Giaconia, Public Policy Manager, Vermont Businesses for Social Responsibility. “With millions of dollars in fossil fuel spending flowing out of our economy each year and oil and gas prices more volatile than ever, the Scott administration’s decision to veto this landmark climate bill represents a major environmental and economic misstep, and we urge the Legislature to overturn it.” 

 

“Meeting our state’s climate pollution reduction targets will require leadership from our elected officials,” said Lauren Hierl, Executive Director of Vermont Conservation Voters. “Governor Scott has abdicated his responsibility to act on climate by vetoing the Clean Heat Standard, and offering no alternatives to cut pollution as required to meet our legal and moral obligation to Vermonters. We thank the Legislature in advance for overriding this short-sighted veto and doing the hard work necessary to help Vermonters access more clean and affordable heating options – instead of keeping them tethered to volatile, polluting, and expensive fossil fuels.”

House Speaker Jill Krowinski issued the following statement: 

“In establishing the Clean Heat Standard (CHS), the legislature took real action to reduce our carbon footprint and address climate change. We know that greenhouse gasses from heating homes and businesses account for roughly one-third of Vermont’s carbon pollution. The Governor’s veto of Clean Heat clearly shows that he is not committed to meeting the challenges of climate change, and the impact it will have on our state. It is especially frustrating, given that we worked with his administration to add language to the bill that addressed his concerns in the spirit of collaboration and compromise. 

“The bill, H.715 - the Clean Heat Standard, is the single most consequential action we can take to reduce carbon emissions and transition our economy away from reliance on fossil fuels. The bill is structured to give Vermonters - especially low-income Vermonters - assistance and resources to transition to more efficient, cleaner heating options. At a time that we are seeing a dramatic rise in fuel prices, CHS also would reduce our vulnerability to the chaotic volatility of fossil-fuel prices. 

“It is disappointing to see this bill vetoed. The Clean Heat Standard was the top recommendation of the Vermont Climate Council that we established in the Global Warming Solutions Act, and would support the climate goals we all know are needed to protect the health and well-being of Vermonters and the future stability of our economy. We will continue to have conversations over the weekend, but my plan is to hold a veto override vote next week.”

Senate President Pro Tempore Becca Balint issued the following statement: 

"The Clean Heat Standard is an important tool to help transition Vermonters from the high price and volatility of fossil fuels, and instead keep us warm with more local, clean, efficient, and affordable energy supplies. It was one of the key components of the Climate Action Plan. In the face of the climate crisis, this is work that has to move forward.

"The Senate worked hard on the bill to both require pollution reduction in line with our state obligations and ensure a more equitable and affordable program. We believe the version of H.715 passed out of the Senate and concurred with by the House addresses the concerns outlined in the Governor's veto message. More importantly, it earned the votes of 23 Senators. We are coordinating with the House on a possible override next week."

Vermont Fuel Dealers Association

Vermont Fuel Dealers Association described the Clean Heat Standard as "a performance standard for businesses that provide home energy products and services. If this policy becomes law, every seller of oilheat, propane, kerosene, natural gas, and coal will have to register with the Vermont Public Utility Commission (PUC) and show how much fuel they bought and sold, where it came from and where it was delivered. A Technical Advisory Group (TAG) will assign a carbon intensity score to every fossil fuel, renewable fuel, and energy saving product and service. These scores will then be used as currency in a new “credit marketplace” which will also be designed by the PUC.  Fuel dealers and energy service providers will go to this new marketplace to buy and sell “clean heat credits” based on the fuels they sold and/or equipment installed in the prior year. Meanwhile, PUC will also have to figure out who sells energy products in Vermont and how to ensure that every gallon of fuel used for heat, hot water and cooking is counted. 

"And if the PUC can’t do all of this in 18 months? A Clean Heat Standard can not be implemented unless the Legislature and the Governor approve the program in 2024. While the PUC still has to design the Clean Heat Standard, it is ultimately up to the people Vermonters elect on November 8, 2022 that will determine whether it becomes law."

The Vermont Fuel Dealers Association will hold its annual meeting and trade show on Monday, May 9 at the Lodge at Spruce Peak in Stowe.

Ethan Allen Institute applauds defeat of Carbon Tax on all Vermonters heating with oil and gas

EAI President Meg Hansen said, “EAI believes that Vermonters can make their own best decisions about heating fuels without the benefit of an ever-rising carbon tax draining dollars out of their pockets, to subsidize a bunch of persons and businesses favored by the Vermont Climate Council. They realized just in time that the costs were too steep to justify the Clean Heat Standard.”

Joint Fiscal Office Bill Summary

April 7, 2022

The bill establishes the Clean Heat Standard to reduce Vermont’s greenhouse gas emissions from the thermal (heating) sector. The Public Utility Commission will administer the Clean Heat Standard with assistance from two Clean Heat Standard Advisory Groups: the Technical Advisory Group and the Equity Advisory Group. The Department of Public Service will be a partner in providing background information, verifying, and evaluating clean heat credit claims.

Fiscal Impact

JFO estimates the bill would have a $1.2 million fiscal impact on the General Fund for Fiscal Year 2023. The bill contains two appropriations from the General Fund for FY 2023:

  • • $600,000 for the Public Utility Commission to pay for three new FTEs, three consultants, per diems for public members of two Advisory Groups, and marketing and public outreach; and
  • • $600,000 for the Department of Public Service to pay for three new FTEs as well as other costs associated with verification and evaluation of the clean heat credits.

Background and Details

Under the Clean Heat Standard, obligated parties must reduce greenhouse gas emissions attributable to the Vermont thermal sector by retiring required amounts of clean heat credits to meet the thermal sector portion of the greenhouse gas emission reduction obligations of the Global Warming Solutions Act.

The following sections of the bill have a fiscal impact, summarized in Tables 1 and 2.

Section 2

Section 2 establishes the Clean Heat Standard and the system of clean heat credits that must be retired by obligated parties. Credits are based on the lifecycle CO2e emission reductions that result from the delivery of eligible clean heat measures to end-use customer locations in or into Vermont. The system of tradeable heat credits earned from the delivery of clean heat measures will be established through rule of order by the Public Utility Commission. The Commission will hire a consultant to develop various clean heat measures and assumptions, including CO2e lifecycle emissions analyses. The Department of Public Service is responsible for verification and evaluation of clean heat credit claims.

Section 2 also establishes the Clean Heat Standard Technical Advisory Group to assist the Commission with the Clean Heat Standard. Per diems and expenses are available to Advisory Group members whose employers do not reimburse time spent at Advisory Group meetings.

In addition, Section 2 establishes the Clean Heat Standard Equity Advisory Group to assist the Commission in ensuring that an equitable share of clean heat measures is delivered to low-income and moderate-income Vermonters. Again, per diems and expenses are available to those not otherwise compensated for meetings.

Section 3

Section 3 spells out how the Clean Heat Standard will be implemented. It involves hiring a facilitator to help with the public engagement process, advertising public meetings, and hiring a consultant to help with clean heat credits.

Section 4

Section 4 establishes three new positions in the Public Utility Commission and three new positions in the Department of Public Service.

Details of Appropriations

The $600,000 appropriation to the Public Utility Commission is allocated as illustrated in Table 1:

As seen in Table 1, per diems and expenses for Advisory Group members are estimated to be $10,120 and are to be funded from the appropriation for the Public Utility Commission. The per diems and expenses for members of the public (not State employees) who serve on the two Technical Advisory Groups are calculated as follows. The standard per diem is $50 per day, and the average expenses for travel and food are $76.50 per day. JFO assumes four members of the Technical Advisory Group and six members of the Equity Advisory Group will be members of the public and that each Advisory Group will meet eight times during FY 2023.

The $600,000 appropriation to the Department of Public Service is allocated as illustrated in Table 2:

Source of Funding

The appropriations of $600,000 to the Public Utility Commission and $600,000 to the Department of Public Service come from the General Fund.

Impact on Vermont’s Economy

It is too soon to estimate the impact on Vermont’s economy, households, and businesses. The way in which the Clean Heat Standard is implemented, including the way in which clean heat credits are priced and how incentives or subsidies are offered to households and businesses, must be established before meaningful analysis is possible. At the same time, those incentives or subsidies could be costly for the State, suggesting larger fiscal impacts in future years.