A first-in-the-nation policy that seeks to reduce the amount of fossil fuels Vermonters use to heat their homes would add an estimated 58 cents per gallon to the cost of heating fuel over the next 10 years, according to a report issued this week by a key regulatory body.
The clean heat standard, as the policy is known, was set in motion in 2023 after Democrats in the House and Senate overrode a veto from Republican Gov. Phil Scott. The law became a political wedge during the most recent election cycle, when Scott and other Republicans used the issue to sow fear over Democrats’ sweeping plans to reduce greenhouse gas emissions in the state’s thermal sector.
Shortly before midnight Wednesday, the Public Utility Commission issued highly anticipated proposed rules for the clean heat standard. The fuel-cost projections, which commission members emphasize are “very difficult to estimate,” fall well short of the $4-per-gallon price hike that Scott warned voters about. But Senate Minority Leader Scott Beck said Thursday that the estimates — which range from an 8-cent per-gallon increase in 2026 to 58 cents in 2035 — are more than many residents can bear.
"While the (clean heat standard) … is theoretically workable … the commission does not believe that this program is well suited to Vermont."Vermont Public Utility Commission
“I’m not supportive of … making Vermonters’ lives more unaffordable,” Beck said.
The clean heat standard still requires affirmative votes in both chambers of the Legislature in order to move forward. And the new partisan dynamic in Montpelier — Republicans picked up 25 seats in the Legislature on Election Day and now have enough votes to sustain the governor’s vetoes — mean it’s exceedingly unlikely that the measure will be adopted as Democrats had conceived.
“Based on the numbers that we have in the House and the Senate, related to who has already agreed that they would never vote, or have pledged that they would never vote, for a clean heat standard … we don’t have the votes to pursue this,” said Windsor County Sen. Becca White, a Democrat who serves as assistant Senate majority leader.
Democrats, however, say elected officials will need to find alternative mechanisms to help low- and moderate-income Vermonters reduce their reliance on price-volatile fossil fuels.
“It is cheaper in general to heat and drive using renewable sources, so it’s really just a cash flow issue,” said Washington County Sen. Anne Watson, the Democratic chair of the Senate Committee on Natural Resources. “If we can get Vermonters over that hump to get to those cheaper alternatives, it will benefit Vermonters.”
The clean heat standard would reduce the use of fossil fuels in home heating by asking companies that import heating fuels to help their customers transition to greener heating technologies.
If those companies can’t or won’t engage in that work, then they’d have to buy clean heat credits from the state. Money from the sale of those credits would be used to subsidize the cost of weatherization activities, or the installation of cold climate heat pumps, or other projects that would reduce greenhouse gas emissions from homes.
The Public Utility Commission advised lawmakers in its report against moving forward with the clean heat standard, but not because its members are worried about an associated increase in energy costs.
The commission’s chair, Ed McNamara, told lawmakers Thursday that estimated benefits from the program — those include savings from the switch to renewable energy sources, as well as “societal” benefits from avoided carbon pollution — will total about $1.5 billion. That’s more than the estimated $955 million in costs over the first 10 years of the program.
The problem, McNamara said, is that the clean heat standard would require an administratively complex framework for a heating-fuels industry that doesn’t fit neatly into existing regulatory schemes.
“After nearly 18 months of work on the clean heat standard, the commission concludes that, while the CHS … is theoretically workable … the commission does not believe that this program is well suited to Vermont,” the commission wrote in its 274-page report. “Our state has a long history of implementing innovative and effective programs to reduce energy use; it would be more effective to support this existing work rather than introduce a complex new regulatory layer that would disrupt existing programs.”
The PUC offered possible alternatives to lawmakers, including a fuel tax on heating fuels that would generate new revenue to subsidize existing thermal efficiency programs at the Vermont Office of Economic Opportunity.
“We continue to believe that increasing this fuel tax is an efficient, practical, and well-understood mechanism for achieving a greater level of thermal sector emission reductions,” the commission wrote.
Another option, the commission said, is to institute a new “efficiency” surcharge on heating fuels, akin to electricity ratepayer assessments used to fund organizations such as Efficiency Vermont.
Many Democrats say they’re interested in exploring the commission’s proposed alternatives. Aides to the governor say he’s unlikely to support any legislation that includes a new tax or other assessment on heating fuels.
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