Roper: Who owns that clean heat carbon credit?

More confusion and delay ahead for carbon credit banking scheme.

Picture by Charles Fettinger, via Flickr

by Rob Roper

My last article highlighted the fact that the Public Utilities Commission (PUC) is only now beginning to contemplate how to write the rules regarding how Vermonters can retroactively “bank” so-called “Clean Heat Credits” back to January 1, 2023, and continue to bank them until the Clean Heat Standard goes fully into effect sometime in 2025.

To recap, the credits are earned by performing so-called “Clean Heat Measures” such as installing heat pumps, insulating building spaces, etc. The credits will ultimately be ownable and saleable financial instruments with a monetary value, so knowing how to claim them – and a system for doing so that reliably prevents fraudulent claims — is kind of a critical detail.

But there is an even more important detail that is still unresolved: Who actually owns the credit?

Does the customer who paid for the clean heat measure (individual, business, or in the case of subsidized measures the state) have primary claim to the credit, or does the vendor who did the work? During legislative committee discussions my impression was that the intent of the lawmakers, or at least most of them, was that the person/entity paying for the measure would have primary claim to the credit, but the law itself, as passed, doesn’t say this.

So, I reached out to two lawmakers, Senator Anne Watson (D-Washington) and Representative Laura Sibilia (I-Dover), who each sit on a committee of jurisdiction for S.5/Act 18, to see if they could tell me who owns a carbon credit. (Thanks to both for quick and helpful replies to my emails!) And, yes, the law doesn’t say. That’s a problem.

What the law does say, Sen. Watson reminded me, is, “Credit ownership. The [Public Utilities] Commission, in consultation with the Technical Advisory Group [emphasis added], shall establish a standard methodology for determining what party or parties shall be the owner of a clean heat credit upon its creation. The owner or owners may transfer those credits to a third party or to an obligated party.” And herein lies another problem: the Technical Advisory Group (TAG) doesn’t yet exist and won’t for a while.

Invitations to apply didn’t go out until September 22, and applications aren’t due until October 9th. (FYI, according to the S.5/Act 18 timeline, putting the TAG together should have commenced on or before August 31, so already fumbling the ball here….) In other words, the PUC can’t make a decision about what procedures are necessary to bank a carbon credit until it is established who exactly has an ownership claim to that credit, and the PUC can’t decide that until the TAG is fully set up and functioning to weigh in on the topic. Some day.

What is the TAG? “The Clean Heat Standard Technical Advisory Group shall consist of up to 15 members appointed by the Commission. The Commission shall establish the procedure for the TAG, including member term lengths and meeting procedures.” It’s basically another Climate Council, made up of volunteers receiving per diem compensation and a handful (3) of paid representatives from administrative agencies. Given the Climate Council’s demonstrated inability to reach any consensus decision of consequence, this does not bode well for a quick resolution to this question.

The legislature put the retroactive carbon credit allowance in S.5/Act 18 because they didn’t want Vermonters delaying projects for two years, holding off in order to get the credit benefit. But by abdicating their responsibility to put forward a workable plan at the outset, and handing over to a couple of unelected bureaucracies, our lawmakers have created a total clusterbleep. And to add even further uncertainty to this whole situation, Rep. Sibilia reminded me that the legislature will review whatever rules the PUC and the TAG come up with in 2025 and can change them – in this case retroactively.

When Senator Dick McCormack called S.5/Act 18 a Rube Goldberg contraption, he was underselling what a mess the whole thing is. (He voted for it anyway!) I’ll be curious to see how they untangle this web in the months to come, but I won’t be the only one watching.

Back on June 20th, the Commodities Futures Trading Commission put out the following press release, which I re-print here in full because it’s all really interesting.

CFTC Whistleblower Office Issues Alert Seeking Tips Relating to Carbon Markets Misconduct

Washington, D.C. — The Commodity Futures Trading Commission’s Whistleblower Office in the Division of Enforcement issued an alert today notifying the public on how to identify and report potential Commodity Exchange Act (CEA) violations connected to fraud or manipulation in the carbon markets. Voluntary carbon markets, among other measures, can support the transition to a low-carbon economy through market-based initiatives in which high-quality carbon credits, also known as carbon offsets, are purchased and sold bilaterally or on spot exchanges. As with any market, there exists the potential for fraud and manipulation.  

“Alongside the continued growth of CFTC regulated carbon offset derivatives contracts, the agency is building upon its expertise to ensure the utility and reliability of these markets, as well as its ability to identify and pursue any potential fraud or abusive practices,” said Chairman Rostin Behnam. “Information from whistleblowers advances the Commission’s enforcement mission and, in turn, further builds integrity and trust in the carbon markets by rooting out fraud and manipulation.”

As described in the alert, the CFTC’s Whistleblower Office will work with market participants that report information related to potential fraud in the carbon markets including, but not limited to, manipulative and wash trading, “ghost” credits, double counting, fraudulent statements relating to material terms of the carbon credits, and potential manipulation of tokenized carbon markets. Individuals who submit such information through the CFTC’s Whistleblower Program may be eligible for certain confidentiality and anti-retaliation protections, as well as monetary awards if that information leads to the success of a CFTC enforcement action. [Emphasis added. Note: This could be more lucrative than collecting carbon credits!]

“As carbon credit markets continue to grow, we will act to foster the integrity of these markets by fighting fraud and manipulation,” said Ian McGinley, Director of the Division of Enforcement. “Whistleblowers are invaluable allies in these efforts.  We will diligently investigate all credible tips and complaints from whistleblowers relating to carbon credit markets.”


The voluntary carbon credit market is currently estimated to be $2 billion and is forecasted to grow to $250 billion by 2050, according to the Morgan Stanley Research paper Carbon Offset Market Trends and Growth 2050. Carbon credits are the underlying commodity for futures contracts that are listed on CFTC designated contract markets (DCMs). The CFTC has enforcement authority and regulatory oversight over DCMs and any trading in those markets.

The CFTC also has anti-fraud and anti-manipulation enforcement authority over the related spot markets for carbon credits. The CFTC’s jurisdiction also applies to carbon allowances and other environmental commodities products that are linked to futures contracts.

About the CFTC’s Whistleblower Program

The CFTC’s Whistleblower Program was created under Section 748 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. Since issuing its first award in 2014, the CFTC has granted whistleblower awards amounting to approximately $330 million. Those awards are associated with enforcement actions that have resulted in monetary sanctions totaling more than $3 billion. The CFTC issues awards related not only to the agency’s enforcement actions, but also in connection with actions brought by other domestic or foreign regulators if certain conditions are met.

Whistleblowers are eligible to receive between 10 and 30 percent of the monetary sanctions collected. All whistleblower awards are paid from the CFTC Customer Protection Fund, which was established by Congress, and is financed entirely through monetary sanctions paid to the CFTC by violators of the CEA. No money is taken or withheld from injured customers to fund the program. The CEA also provides confidentiality and anti-retaliation protections for whistleblowers.   

The CFTC’s Whistleblower Office issues Whistleblower Alerts as a way of communicating the priorities of the Division of Enforcement to the public, including potential whistleblowers and whistleblower attorneys. 

* * * * *

Anyone with information related to potential violations of the CEA or the CFTC’s rules and regulations can submit a tip electronically by filing a Form TCR (Tip, Complaint or Referral) online at

Go to for more information about CFTC’s Whistleblower Program.

The longer we persist with a carbon credit banking system with no rules in place to govern said system, the more open to fraud, abuse, and honest error that system becomes. So, friends at the PUC, the future TAG, and the future Default Delivery Agency, all I can say is you better be able to turn this Rube Goldberg mess in a secure, verifiable, rock solid carbon credit system. If not, the Feds are coming after you!

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.

Categories: Commentary

3 replies »

  1. This whole thing is a Fraud. Carbon Credits, C02, Climate Change, all of it is a Fraud. Political tools to scam people, to create mass chaos of finances, to destroy the middle-class, to take away our Constitutional and God-given rights of private property. Do Not Comply. Peaceful civil disobedience to All Fraud and Evil. Remember their motto from the WEF “you will own nothing and be happy” Oh, and don’t forget you will love “eating the bugs”, while freezing.

    Check this out, from Epoch Times: Official Website:

  2. Every single legislature who voted in favor of this “total clusterbleep” (epic phrase Rob) needs to be removed. The PUC is out of control. This will not end well and in the not so distant future the state will start seeing lawsuits for not reaching the emissions goal. Each legislature who supported this garbage should also be sued.

  3. I make heat and hot water burning wood that I get from people had trees down or that I cut in the national forest. Equity demands that I get a saleable credit for my work. Step up liberals and write it into law.