Vermont Enacts Clean Heat Standard

Overview

Vermont has enacted S.5, or the “Affordable Heat Act,” which establishes a clean heat standard to reduce climate pollution and help Vermonters transition to cleaner, more affordable heating practices. Vermont is one of at least 25 states in 2023 that has introduced legislation to reduce emissions and increase energy efficiency in buildings.

• Why it matters: Currently, commercial and residential buildings account for 13% of greenhouse gas emissions and 29% of energy consumption in the United States, with heating accounting for large shares of energy consumption in buildings. Fossil heating fuels have also proven to be more expensive and price-volatile compared to cleaner heating options such as heat pumps. Moving away from fossil fuels to power and heat our buildings can reduce overall energy demand in the U.S. while providing a range of benefits such as cost savings and job creation, carbon pollution reduction, and improved indoor air quality.

Key Components of Vermont’s Clean Heat Standard

The clean heat standard in Vermont’s Affordable Heat Act is a performance standard for the heating fuel sector that will reduce climate pollution over time and increase the equitable deployment of cleaner heat options. Here’s how it works: 

• Clean Heat Standard: A Clean Heat Standard is established which will incentivize companies that make or import fuel within the state to reduce pollution from the thermal (heating) sector over time, consistent with the state’s emission reduction goals.
• Compliance: The state’s Public Utility Commission (PUC) is responsible for designing and establishing a marketplace, in which companies that make or import fuel must annually purchase or generate a certain number of “clean heat credits” equivalent to the amount of fossil fuels they delivered in the previous year. 
• Clean Heat Credits and Measures: A clean heat credit represents the total reduction of greenhouse gas emissions from specific “clean heat measures” delivered to end-use customers, such as the installation of heat pumps or home weatherization improvements.
• Equitable Distribution: The clean heat standard must be designed in a way that allows all Vermonters – regardless of income, location, building type, or homeowner status – an equitable opportunity to participate in and benefit from clean heat measures. 
• Finalizing the Clean Heat Standard: By 2025, the PUC must produce a report estimating the economic impact of the program on customers. At which time, the legislature must pass a second law to enact the full clean heat standard.

Bill Sponsors

The primary sponsor of the Affordable Heat Act (S.5) is Vermont State Senator Christopher Bray.