By Rob Roper
Dear Senate Committee on Natural Resources & Energy,
You asked today what is a “Clean Heat Credit.” Good question. You didn’t really receive a clear answer from your witnesses, so I hope you find the following helpful.
A Regulated Financial Asset. The Credits obligated parties will be required to obtain through the Clean Heat Standard (CHS) are a buyable, tradeable financial commodity that will have to be regulated as such. How this will be done and at what cost is a question your committee should delve into.
“Mined” not “Minted.” A key characteristic of the Credits under the CHS is that they are “mined” (created organically through authorized but unorganized activities of individuals acting on their own initiative) as opposed to being “minted” (issued by a central authority and made available for purchase.)
RGGI credits, for example, are “minted” – issued by RGGI Inc, auctioned off quarterly to obligated parties, who can then trade them on secondary markets. CHS credits, on the other hand, are created whenever someone, for example, installs a heat pump, or weatherizes a building, or switches from oil to bio-fuel. I hope it is obvious that the latter way of creating credits is INSANELY more complicated than the former. This is a problem for the viability of the program.
Please consider that according to analysis presented to the Climate Council, there will be about 250,000 such actions necessary by 2025 and nearly 500,000 by 2030 in the thermal sector alone to meet the GWSA goals. Each of these actions would generate one or more Clean Heat Credits, with credits having different shelf lives. These credits, thus generated, can then be bought and sold on a secondary financial market. Which gets us to the next question…
How is the PUC going to be able to verify that these half a million actions take place all over the state, assign a unique credit value and shelf life to each, and, once this is done, broker sales, track the ownership of, and then retire those credits when they expire? If you want to see how complicated this process is, check out the latest RGGI financial compliance report.
This CHS process will be significantly more complicated – and more expensive — than RGGI to administer, and RGGI costs multiple millions of dollars a year to administer with those costs shared by the multiple states in the RGGI coalition. Not just little ole’ Vermont.
Not Enough Miners. A further complication to the CHS (and the Climate Action Plan as a whole) is the fact that there is not a labor force in Vermont large and skilled enough to do the work necessary to generate all these credits.
As Jared Duval could have told you (guess he forgot), The Energy Action Network reported, “Vermont currently has about 700 weatherization workers. We have good reason to anticipate that … we will likely need somewhere in the range of 5,000 weatherization workers by sometime around the middle of this decade if we are to achieve the weatherization recommendations of the Climate Action Plan.” (1/6/22)
That’s 4,300 workers short, or 14% of where we need to be — on just weatherization. These people are not going to just materialize. Is there an actual viable plan to attract them? No. So, what happens if the credits obligated parties need to buy are never created in the first place? Are they stuck paying a penalty through no fault of their own? What happens to consumers who may wish to swap out their furnace for a heat pump to escape the rising costs of fossil fuels exacerbated by the CHS, but can’t because no one is available to do the work?
I hope in the weeks to come your committee will explore these issues in depth and bring some measure of reality to this debate.
The author, a Stowe resident, is a member of the Ethan Allen Institute Board of Directors.
Categories: Commentary, Environment
The only sectors of labor that Vermont is flush with are in the non-profit and public sectors. Labor for anything useful will be in short supply as long as our Legislature keeps coming up with ways to give away free money in the form of excessive public assistance and unearned tax credits. There is not much incentive to work in a “workers paradise” like the Peoples’ Republic of Vermont.
A long lasting home must breathe. The blow tests, spray foam and cellulose insulation may lead to less carbon emissions in heating sources but what emissions are produced in the building and demolition of houses twice as often? Efficiency vermont is a joke and a great example of inefficiencies produced by bureaucratic government interference. No thanks. I’ll burn another sustainably harvested cord of wood/year and my house will still be sound for another generation.
When will the Legislature ban emissions from burning wood to heat our Vermont homes? Or is that already in the “tiny print”?
Since the felling of timber, processing onto firewood and transportation involve fossil fuels, it may be subject to their scrutiny. Whereas the production of solar panels using slave labor with lax environmental protections in China is ok.
Thank you so much as usual Rob. Your depth of understanding and wisdom related to this topic are incredibly appreciated and impressive. Here was my letter to the committee. Hoping they will see through this Bill
Dear Respected Senators of the Natural Resources and Energy Committee
Hope you are enjoying the weekend. Thank you all very much for your hard work and efforts at the Statehouse. I just wanted to share a few thoughts if you don’t mind.
The Clean Heat Standard Bill- H715 is a nightmare. I cannot believe it passed the House. Not sure where you stand on this but please consider voting NO.
– this will destroy small businesses, farmers and the people. Either all or one or the other will pay for this. This makes zero sense in VT. Yes we need diversification of energy but making heat from electricity is highly inefficient and won’t even do the trick in negative numbers during the winter nights. This are expensive systems with a short life span. Has there been an actual, proper cost analysis done with regards to purchase, repair and to run these systems for Vermont homeowners and businesses?
– my understanding with regards to the details is that one single out of state contractor will be awarded 5 million dollars to provide an evaluation/assessment plan for municipalities who decide to pay in and sign up for this program. Alternatively, we could be doing this on a local level and use that money to provide efficient resources, systems and means to tighten up and supplement primary energy sources for town buildings and individual homeowners. We could provide rebates to homeowners or energy businesses who purchase/sell these systems, if they even actually make sense or alternatively steps to reduce use of energy by improving insulation and loss of heat in homes and businesses could be taken to offer real solutions related to efficiency and energy conservation. The science is heavily divided on these electric heat systems and there is so much unknown with regards to their impact and possible benefit.
My hope is that this Bill 715 does NOT pass – if it does- Has there been a test run? Are we certain these systems make sense in VT? What sort of protections are offered to small businesses and homeowners if goals and benchmarks are not met? Ultimately this is the problem with the global solutions committee – they are an unelected government within a government. This is regulation not environmental action. It is disguised as environmental action.
Also my understanding is this is all based on using Carbon as a “metric” to determine status and success. This is completely bogus. Carbon is life. I have taught biology, human biology and nutrition on a college level for over 20 years. Life is based on Carbon and the earth is heavily equipped with the means to naturally regulate carbon (oceans, fungi in the ground, plants and trees -these are all Carbon sinks). This is not the metric we should be using but there is an entire market that has developed on carbon over the past several decades. We have the Carbon cap and trade program and we have big banks who have being buying up Carbon credits for decades to use in the cap and trade program. If industry and humans can be regulated by Carbon then who is set to gain. I have tried to talk to many Representatives about these fundamental questions and there is a disturbing unawareness of the big picture. The small Vermont businesses will be forced to purchase essentially Carbon credits(with a different name) from efficiency VT unless they can create enough of their own. And where does efficiency Vt get them from? There are a lot of unanswered questions here but essentially the businesses, farmers and people will suffer and we will be ushering in illegitimate and inappropriate Carbon regulation to push out one industry and make way for another that makes zero sense on many levels. It would make more sense to measure the use of the chemicals and land clearing in big Agriculture and biotechnology as well as in the skies. Or at least provide grants and funding directly to the town or people for “energy efficiency” measures.
– climate change has always been happening – chemicals and toxins need to be regulated, destruction of the land by big industry needs to be regulated. To force this “green” inefficient technology on Vermonters and VT small businesses who have been providing a reliable energy and heat source for VT is wrong. Basing improvements and success on Carbon is inappropriate and completely debated -we cannot start playing that game- it is an ideological program not a science based program. Businesses do not to be regulated by efficiency Vermont or the global solutions committee, especially when the science on Carbon as a metric and green technology in general is absolutely heavily disputed and unclear.
Here is a farmer’s perspective and concerns on H715. Please take a moment.
Colburns: Climate Action Plan will put VT farmers out of business – Vermont Daily Chronicle
Thank you for your time as usual. This bill will be a nightmare if it passes. I am not sure where you stand on this but I felt the need to share my research and understanding. If you need any further information that I can help with, please let me know. Thank you so much.
Have a great weekend
If you want the Weatherization and other related trades workers you will need to provide affordable training to them plus pay them a liveable wage. To expect them to just magically materialize and be willing to do hard dirty difficult work and not make enough money to ever buy a home here is unrealistic.
And it would help overall if our community colleges were more like those in many other states and offered training in the trades such as HVAC, plumbing, welding etc. Our community colleges are mostly devoted to offering inane classes in diversity and similar studies or courses that will enable a student to transfer to a 4 year college. They don’t offer any meaningful affordable training in the trades.