This commentary is by Annette Smith, executive director of Vermonters for a Clean Environment.
An open letter to Vermont legislators: Since our beginnings in 1999, when Vermonters for a Clean Environment was formed by Vermont citizens to stop a huge natural gas power plant and pipeline project proposed for southwestern Vermont, our organization has remained vigilant when it comes to the activities of the gas industry in Vermont. We assisted towns and citizens when the Vermont Gas Systems pipeline expansion in Addison County took place, and have been involved in the recent PUC case approving the Vermont Gas contract for landfill gas in upstate New York. Since November 2020, we’ve followed the Climate Council’s meetings closely, and recently reviewed the meeting notes and campaign strategy (be sure to look at the links at the bottom of the page to see the recent youth rallies are part of the campaign being coordinated by Energy Action Network) of the private working group that met weekly to develop the Clean Heat Standard legislation outside of the Climate Council’s public meetings. We have also closely monitored testimony in the Senate Natural Resources and Energy Committee and House Energy and Environment committees leading up to the Legislature’s vote.The Clean Heat Standard was originally pitched by Vermont Gas Systems and the Regulatory Assistance Project at an Energy Action Network summit in Oct. 2020. Following that private event, appointments were made to the Climate Council and the private working group formed, including some people who were also legislative appointees to the Climate Council.
The private working group began its weekly meetings before the first meeting of the Climate Council and that is where all the substantive discussions about the pros and cons of the Clean Heat Standard were discussed and the policy was developed. The idea was first presented to the Senate Natural Resources and Energy Committee by Vermont Gas and the Regulatory Assistance Project in February 2021, before its first mention in a Climate Council’s subcommittee the following day. No substantive analysis of the standard took place within Climate Council meetings.With that background, I write to offer the following insights to assist in understanding the extremely complicated legislation that is before you. Sen. Dick McCormack referred to it as a Rube Goldberg machine, and that may be an understatement. The legislation is even more complicated than most people realize due to the way it disproportionally benefits Vermont Gas while overly burdening our rural fuel dealers. This is not something that has been explored in committee testimony, and it is surprising that Vermont’s mainstream environmental groups are supporting legislation that was crafted by and benefits Vermont Gas.S.5 is all about credits. The language in S.5 enables Vermont Gas to use credits from out of state landfills, farms and wastewater treatment plants to claim that it is delivering “renewable natural gas” to its Vermont customers. Vermont Gas intends to increase renewable natural gas in its Vermont portfolio over time. There are two problems: In-state RNG is limited, and it is all very expensive, like 10 times the cost of fossil gas.
If S.5 passes, Vermont Gas will “socialize” the high cost of renewable natural gas and spread the cost among all its customers. But those customers will not actually be getting RNG (except maybe a few molecules). The RNG will be on paper. S.5 does require there to be a physical pathway for the RNG, but realistically that means the entire interconnected national pipeline system. The company admits that it can’t track the gas and it may not get to Vermonters. Renewable natural gas is methane and it will leak, just as fossil gas does. Vermont Gas says its RNG will displace fossil gas but there is no requirement that happens, so it is more likely it will be additional to the fossil gas. The recently approved contract (currently under appeal to the Vermont Supreme Court) for renewable natural gas in New York allows Vermont Gas to buy and sell not only the physical gas but also the “environmental attributes” (i.e. credits) in both the nascent thermal and transportation markets. Those credits would also be used by Vermont Gas to meet its obligations under the Clean Heat Standard. In the Energy Action Network/Regulatory Assistance Project/Vermont Gas pitch in 2020, Rich Cowart mentioned that fuel dealers in Vermont might be buying credits from Vermont Gas.Rural Vermont has not been represented in the private working group or on the Climate Council. Most of rural Vermont is served by fuel dealers who sell No. 2 fuel oil, propane and kerosene to keep us warm.
The private group’s meeting notes contain acknowledgement that there is no renewable alternative to propane, and kerosene (which is the primary fuel for mobile homes that simply cannot use any other type of fuel, including heat pumps) was not even mentioned. S.5 relies heavily on additional biofuels that are increasingly in demand as numerous states and countries adopt policies that require them. At best these biofuels come from GMO (genetically modified organisms) soy grown in Nebraska and Kansas, potentially displacing food production and requiring more land conversion. Palm oil will fill in around the edges as biofuel demand increases, even if it is excluded for use in Vermont.S.5 also relies heavily on increased burning of wood, which has CO2 emissions higher than coal and serious public health issues, but those emissions are not counted in the state’s greenhouse gas inventory. If enacted, S.5 will result in higher costs for rural Vermonters. There really isn’t any disputing that point. It was acknowledged by the private working group, noting there will be winners and losers. Some parts of Vermont lack the grid infrastructure to support increased electrification. Vermont Gas gets to play in the credit market to its benefit. Rural fuel dealers must pay for credits or invest in a new business model in competition with existing HVAC and other businesses. Some people will pay less for heating fuels, but there is no guarantee that increasing electrification will not also increase costs. Recent testimony from the utilities regarding updating the renewable energy standard noted they are coming back for rate increases regularly now as a result of a variety of factors. What is being pitched as “affordable” today may not be if S.5 is enacted.
S.5’s promise of emissions reductions is unrealistic. Testimony has consistently shown that Vermonters are adopting heat pumps, weatherizing homes, swapping out fossil fuel furnaces, installing wood pellet stoves, and all the things envisioned in S.5. This will continue regardless of whether S.5 passes. Testimony has also been overwhelming in describing the reality of our limitations — the workforce does not exist to weatherize and install different technologies in the time frame and at the scale envisioned by S.5. Vermont is doing a lot on climate change. Please do not be misled to believe that we are doing nothing. As detailed by Agency of Natural Resources Secretary Julie Moore (pages 31 to end), Vermont is dedicating nearly $250 million to climate initiatives. Without S.5, Vermont is on a trajectory that is in line with the Climate Action Plan and Comprehensive Energy Plan. Programs are in place to fully subsidize weatherization and heat pumps in low-income homes. That is where the money should be directed now — real action, not paper process and credits.Many Vermonters understand that S.5 is not good energy policy. 31 organizations and individual Vermonters have articulated issues with S.5; they agree it “would undermine Vermont’s efforts to meet its climate goals and come with serious environmental consequences.”
Winners and Losers. The Regulatory Assistance Project is now marketing (i.e. monetizing) the Clean Heat Standard to Massachusetts ($200,000 contract), Maryland and Europe. In addition to the renewable natural gas language in S.5 that enables Vermont Gas to play in the credit games for the brand new RNG credit markets, Vermont Gas has indicated its intention to use credits in the Burlington Electric Department’s proposed new district heating system, which, if it happens, will enable an increase in wood consumption and continuation of the polluting McNeil wood-burning electricity generating plant. On the other end of the spectrum, our rural fuel dealers will see increased costs and threats to their businesses’ continuing operations, all passed along to customers who may have no options, as heat pumps are appropriate in only 30% of Vermont homes, many of us rely on propane for which there is no renewable alternative, and upgrades from old polluting to newer efficient furnaces are not allowed to earn credits in S.5. When carefully reviewed and understood, S.5 is about as stinky as the Seneca Meadows Landfill in Waterloo, New York, that is poised to be the tool that enables Vermont Gas to claim credits to meet the requirements of the Clean Heat Standard.