On May 18, 2023

The underlying issue with S.5: The means whereby

 

Dear Editor,

 Only three years after red-tagging above ground heating oil tanks for replacement to the tune of $1,800-$2,400, S.5, called the Clean Heat Act or the Affordable Heat Act, is adding another heating-related headache to Vermont households and buildings that requires the removal of heating oil tanks altogether.

S.5 states right up front the urgent need to reduce greenhouse gas emissions from fossil heating fuels, in a way that “minimizes costs to consumers  and “recognizes that affordable heating is essential for Vermonters. It shall minimize adverse impacts to customers with low income and moderate income and those households with the highest energy burdens.” The overall goal is to meet the Legislature’s mandated renewable energy Clean Heat Standard in increments by 2025, 2030, and 2050, as determined by the Paris Climate Accords of 2015, which then Governor Peter Shumlin signed on behalf of Vermont. Fossil-based heating fuel is pegged as comprising 72% of Vermont’s “thermal energy use.”

Proponents of S.5 continue to try to drown out opposing arguments, by saturating media with the two main talking points: desirability and affordability. The Vermont Natural Resources Council asserts on its website that “S. 5 is a policy designed to ease the transition to clean energy by helping ensure that every Vermonter can access cleaner, more affordable heat…”

Who could argue with that? Who would not want it, all things being equal?

But all things are not equal. The upfront out-of-pocket cost to Vermonters looks to many like a gamble that may or may not pay off as promised, and possibly not within a lifetime for many.

Legislature.vermont.gov offers the bill (disingenuously renamed the Affordable Heat Act) as introduced, as “An act relating to affordably meeting the mandated greenhouse gas reductions for the thermal sector through electrification, decarbonization, efficiency, and weatherization measures.”

The act outlines a sweeping arrangement to induce (read: social engineering) every user of any heating appliance to “transition” to electricity (read: generated by wind, sun, water) in the interests of saving the planet sometime in the indeterminate future. The argument is that of an investor: by paying now, we will get paid back later … but much later, and not in dollars.

It’s like buying lunch for a friend, who then disappears and is never heard from again. And as we all know, there is no free lunch.

The fine print is full of technical climate jargon, redirecting less informed readers to the all-important “affordability” claim. The Public Utility Commission will evaluate the level of credits available to low- and moderate-income households who participate in other social welfare programs.

In general, the cost of transition from fossil to renewable fuels would be covered by means of “a system of tradeable clean heat credits earned from the delivery of clean heat measures that reduce greenhouse gas emissions…. An obligated party may obtain the required amount of clean heat credits through delivery of eligible clean heat measures, through contracts for delivery of eligible clean heat measures, through the market purchase of clean heat credits, or through delivery … by a designated statewide default delivery agent.”

Let’s unpack the jargon.

“Clean heat measure” means a system that is not fossil fuel-based. Examples are weatherization, cold-climate heat pumps, building thermal systems, solar or controlled electric hot water heaters, sustainably sourced biofuels, and advanced wood heating systems, renewable natural gas or green hydrogen, installed at homeowner expense. The Commission will review and update requirements every 10 years, so each device must last at least 10 years. Their ability to lower the owner’s energy bill is determined by the Technical Advisory Group.

“Clean heat credit” means the amount of greenhouse gas reduction achieved through “clean heat measures.”

“Obligated party” means the provider that currently delivers natural gas or “other fuels” to customers.

“Default delivery agent” means “the entity designated by the [Public Utility] Commission to provide services that generate clean heat measures” – in other words, forced compliance.

“Decarbonization” means keeping as much carbon emission out of the atmosphere as possible.

Clearly, there must be a disincentive to burning fossil fuels. S.5’s “clean heat credits” are the cookies that make this worthwhile for investors, and boost the alternative energy industry. To qualify for a clean heat credit under S.5, the energy provider must show that they reduced carbon emissions by an amount set annually by the Public Utility Commission. And to do that, entire heating systems must be replaced.

Casey Cota, president and owner of Cota & Cota in Brattleboro, since 1995, said the biggest problem with S.5 is “diving headfirst into it without understanding the costs.”

How is the value of the credit determined? That is figured annually based on the equivalent of carbon dioxide emissions that are “avoided” due to use of the particular clean heat measure. Each dealer must register annually with the state and must report gallons sold in the state of Vermont.

“They want to know every single gallon you sold,” Cota said, even though the state already receives the sales tax records. “If you sold 90,000 gallons last year, and you sold 100,000 gallons the year before, you will prove that you have sold less of your product than the year before.” The irony is, he points out, that there are other reasons for a drop in sales: a warm winter, lost customers, fuel prices.

Dealers who already sell and service heat pumps, for example, have the advantage. Smaller dealers would not be able to invest in new products due to cost, lack of familiarity with the product, and a shortage of qualified employees. Even though they may have been servicing many households for decades, they may go out of business, Cota said.

Clean heat credits have a current value of 70 cents per gallon. Credits can be issued and resold through a credit exchange.

“It’s redistribution of money from one entity to another entity,” Cota said. “If I didn’t sell heat pumps, I would have to buy credits from electricians who do install heat pumps to offset the 70 cents, because if I did not, I would owe the 70 cents to the Public Utility Commission. You are going to pay your competition to put you out of business.”

The credit is paid to the state of Vermont, which to Cota’s mind constitutes a tax. The payment passes from dealer to the state to the renewable energy program and results in rate increases to the dealer’s customers. Cota sees another irony: while incentivizing people to use less fossil fuels and helping to implement the program faster, the credits also fund rebates “for something that is going to cost you $20,000-$30,000.”

If a dealer (“obligated party”) either sells its credits or fails to meet the annual requirement, the Commission reserves the right to appoint a “default delivery agent,” which will be a “single statewide entity capable of providing a variety of clean heat measures and contracted for a multiyear period through a competitive procurement process.”

Cota said S.5 shows a lack of insight. Heat pumps struggle below 20 F. In mobile homes, the heat ducts run under the unit along with the water lines, which will freeze and burst, ruining the subfloor and potentially the home.

When power goes out anywhere, without a woodburning unit or a fuel-based generator, there is no heat.

Many households have backup generators for life support in the home.

Casey Cota’s grandparents started Cota & Cota in Brattleboro in 1941. “The million-dollar question is, we are changing wants to meet our needs,” he said. “From his perspective, it doesn’t make sense to set the way we live back 100 years.

 Julia Purdy,

Rutland 

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