If you love Vermont Gas Systems (VGS) and fossil fuel gas in perpetuity in Vermont, you will love S.5.  Please do not be misled.

by Annette Smith

Since our beginnings in 1999 when Vermonters for a Clean Environment was formed by Vermonters to stop a huge natural gas power plant and pipeline project proposed for southwestern Vermont, VCE has remained vigilant when it comes to the gas industry in Vermont. We have been involved in the recent PUC case approving the VGS contract for landfill gas in upstate New York.  

Beginning in Nov. 2020 we have followed the Climate Council’s meetings closely, and recently reviewed the meeting notes and campaign strategy of the private working group that developed the Clean Heat Standard legislation outside of the Climate Council’s public meetings.  

The Clean Heat Standard was originally pitched by the Regulatory Assistance Project (RAP) 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 people who were also legislative appointees to the Climate Council.  The idea was first presented to the SNRE committee by VGS and RAP in Feb. 2021 before the first mention of a Clean Heat Standard in a Climate Council subcommittee the following day.  No substantive analysis of the standard took place within Climate Council meetings.

S.5 is all about paper credits that benefit VGS at the expense of other fuels and customers.  S.5 enables VGS to use paper credits from out-of-state landfills, farms and wastewater treatment plants to claim that it is delivering “Renewable Natural Gas” (RNG) to Vermont customers while continuing to supply fossil fuel gas to Vermonters.  VGS intends to increase the RNG in its Vermont portfolio over time.  Yes, this is complicated.  Please read on.  

RNG supply is limited, and it is all very expensive –10x the cost of fossil gas.  If S.5 passes, VGS will “socialize” the high cost of RNG 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.  This is not like RECs in the electricity markets which are limited to specific geographical regions. The company admits they can’t track the RNG and it may not get to Vermonters.  RNG is methane and it leaks just as much as fossil fuel gas does.  VGS says their RNG will displace fossil gas but there is no requirement that happens, so it is more likely it will be addititive to the fossil fuel gas.   The recently-approved VGS contract (currently under appeal to the Vermont Supreme Court) for RNG in New York allows VGS to buy and sell not only the physical gas but also the “environmental attributes” (i.e. credits) in the nascent thermal and transportation markets.  Those credits would be used by VGS to meet their obligations under the Clean Heat Standard.

In the EAN/RAP/VGS pitch in 2020, Rich Cowart mentioned that fuel dealers in Vermont might be buying credits from VGS.

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 #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, 
• kerosene (the primary fuel for mobile homes that simply cannot use any other type of fuel, including heat pumps) was not even mentioned.  
• Only 30% of Vermont homes are appropriate for heat pumps
• VGS said twice they have not seen a reduction in fossil fuel consumption as a result of heat pump installations

S.5 relies heavily on additional biofuels which are increasingly in demand as numerous states and countries adopt policies that require them.  These biofuels come from GMO 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 wood burning, which has CO2 emissions higher than coal and serious public health issues, but those emissions are not counted in the state’s GHG inventory.  

If enacted, S.5 will result in higher costs for rural Vermonters.  This 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.  VGS gets to play in the credit market without any requirement that the RNG is displacing fracked fossil gas.  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 RES 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.  H-Q just announced that their output cannot meet consumption resulting from electrification.

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 or not S.5 passes.  Testimony has also been overwhelming in describing the limitations — the workforce does not exist to weatherize and install different technologies in the time frame and at the scale envisioned by S.5 to reduce emissions to comply with the GWSA mandates.  Reducing consumption isn’t even a goal of 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 ANR Sec. 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 credits.

Many Vermonters understand that S.5 is not good energy policy.  31 organizationsand individual Vermonters have articulated issues with S.5 who agree that it “would undermine Vermont’s efforts to meet its climate goals and come with serious environmental consequences.”

Winners and Losers.  RAP is now marketing (i.e. monetizing) the Clean Heat Standard to Massachusetts ($200,000 contract), Maryland, and Europe.  In addition to the RNG language in S.5 that enables VGS to play in the credit games for the brand new RNG credit markets, VGS has indicated its intention to use credits in BED’s proposed new district heating system which, if it happens, will enable the increase in wood burning.  Rural fuel dealers will see increased costs and threats to their business’s continuing operations, all passed along to customers many of whom (like me) have no options to help our fuel dealers earn credits stay in business.  

When carefully reviewed and understood, S.5 smells as bad as the Seneca Meadows Landfill in Waterloo, New York that is poised to enable VGS to claim credits to meet the requirements of the Clean Heat Standard and sell those credits to Vermont’s other fuel dealers while not displacing fossil gas or reducing emissions, and overburdening our already-too-busy Public Utility Commission with too much work in too little time.

If you like gimmicks and games, S.5 is great.  If you want real climate change policy, S.5 fails.  The details matter.

The author is Executive Director of Vermonters for a Clean Environment.