The Clean Heat Standard is too complicated to implement

Nearly a year after passage the most basic concepts around “the plan” remain unaddressed.

The Clean Heat Standard (CHS), the “Rube Goldberg” carbon tax on home heating fuels, became law almost a year ago over the veto of Governor Scott. The Democrat/Progressive supermajority that passed the CHS did so without providing – or even considering in any significant detail – how it would work or what it would cost. Instead, they kicked that can into the laps of the Public Utilities Commission with the charge to just figure it all out – by September 2024 (fifteen months) for review before a legislative vote in January 2025.

So far, the only thing we’ve figured out is that this thing can’t be figured out. Certainly not by September 2024/January 2025 and probably not ever. Here’s some evidence for my hypothesis….

First, the PUC grabbed the reins of this project in June 2023. It took them until mid-February 2024 – seven of their fifteen months – just to establish the 15-person, volunteer Technical Advisory Group (TAG) and the 10-person Equity Advisory Group (EAG), both of which were required under the law to, as their titles imply, advise the PUC on how to implement specific aspects of the CHS. So real work couldn’t really begin on “the plan” until these councils were in place. And it didn’t. Effectively, two months later it still hasn’t.

Case in point number one: The most basic aspect of the Clean Heat Standard, which requires “obligated parties” to obtain “clean heat credits” generated by “clean heat measures” such as installing heat pumps, weatherizing buildings, or other greenhouse gas reducing activities, is who initially owns the credit when it is produced. The person or entity who paid for the measure? The business entity that did the work? This should be a quick decision, no? Seriously, if you all can’t agree within the first ten minutes, flip a coin!

Nope. it’s been two months since the TAG and EAG started meeting – now nine months into the overall timeframe – and we still don’t have an answer or even a recommendation about this first and most simple of questions.

So, doing the math, there are now just five months to go before a complete draft plan is due. The TAG and the EAG each meet twice a month. That’s ten meetings to go. Pictured below is the timeline of decisions that need to be made and tasks that need to be completed by the TAG, EAG, and PUC. Establishing who owns a credit isn’t even on this chart, and not making a decision on that point has consumed so far four full group meetings of both councils, and two sub-group meetings on the topic.

Even allowing for the probability that these groups become more efficient as they figure out how to operate, I’m willing to bet a significant sum of money that 90 percent of the stuff on this chart doesn’t get done, because almost everything on this list is far more complicated than who owns a credit.

Here’s what Justin Johnson, a public commenter at the April 4 TAG sub-group meeting who cited his own experience working with the International Emissions Trading Association, said to remind everyone of what the genuinely complicated aspects of establishing a carbon credit market truly are. “From the outset, you should treat the credit like a financial instrument. If you want to see what happens when you don’t, look at the beginnings of the European Emissions Trading System ten or twelve years ago. It was a disaster. They are a financial instrument. They are basically the same as money, so you need to track them like that. There should be a single registry for credits, and they should all have unique identifiers…. And the final thing, I’d say, is there should be an annual review of market activity. It seems like overkill on day one, but it is really important to understand what is happening in the credit market to make sure that it's being operated above board….”

Yeah, all that. And much more. Good luck hammering out the details of how to create, track, and regulate what is essentially a new crypto-currency during a three hour Zoom meeting! This is not the fault of the TAG or the EAG, it’s the fault of the morons who passed this law with this time frame with this bureaucratic framework without doing anywhere near the due diligence necessary to determine if this were possible.

More evidence that the CHS simply isn’t happening: the first task the PUC had to accomplish was setting up a registry of fuel dealers in order to establish a list of “obligated parties” under the law. This was supposed to happen by January 31 of this year. It didn’t, so the PUC agreed to a grace period for dealers to register instead by the end of February. Well, that date came and went!  

It's now mid-April and the PUC finally posted their dealer registry. It boasts 115 registrants. Less than that if my suspicions prove correct that several entries such as “Sam's Service Center & U-Save Fuels, Inc.” and “Sam's Service Center and U-Save Fuels, Inc.” are actually the same company being counted twice. (If this is the level of green eyeshade oversight we can expect for this new financial marketplace we are truly screwed.)

Based on my recollection of testimony during the debate over of the Clean Heat Standard law, 115 is not anywhere close to the actual number of entities that buy and sell home heating fuels in Vermont, so, though willing to be corrected regarding that count, I’m going to chalk this one up as a “MAJOR FAIL.” If you can’t establish who the obligated parties are under the CHS, you can’t run the program.

 S. 305 - An act relating to miscellaneous changes related to the Public Utility Commission is being voted out of the House Committee on Environment and Energy this week, and will likely come to the floor. It deals with changing some of the internal dates in the Clean Heat Standard. Someone should insist on changing the final deadline in the law as well. I’d suggest to “never.”  

• Rob Roper is a freelance writer with 20 years of experience in Vermont politics including three years service as chair of the Vermont Republican Party and nine years as President of the Ethan Allen Institute, Vermont’s free market think tank.

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Media Notes: Rob Roper will be on WVMT’s Morning Drive on Thursday, April 18, 7:00 am. Tune in at 620AM, 96.3FM, or streaming HERE.

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