 Hello and welcome to Under the Dome from Town Meeting TV. My name is Bobby Lucier. Thank you so much for joining us tonight. Under the Dome is Town Meeting TV's coverage of the Vermont Legislature. In this series we speak with legislators and advocates about the bills that are being considered in this legislative session and what they might mean for you and your neighbors. Tonight we're focused on the Affordable Heat Act. This bill aims to affordably reduce greenhouse gas emissions that are generated from the heating of our homes and buildings. And to do that, this bill will require fossil fuel importers and fuel dealers in Vermont to either sell less fossil fuels and support households in installing heating systems that lead to less carbon emissions or pay a fee into a fund that will support those transitions within the state. This approach was formed at the recommendation of the Vermont Climate Council, a body that includes heads of state agencies and legislative appointees, which was established by the Global Warming Solutions Act in 2021, a bill that was also, that was passed through by overriding Governor Scott's veto. And that body informs Vermont's pathways to meeting its now mandatory emissions reductions goals. A version of this bill was introduced last year in the legislative session. It passed the House and Senate, but the governor vetoed that bill citing uncertainty around the financial impacts of the bill on Vermont families and the legislature's effort to override that veto fell short by just one vote in the House. This year, the bill again passed the House and Senate, slightly modified in a couple of ways, passed the House and Senate, and again was vetoed by Governor Scott just last week. And so now legislators are gearing up for another override vote sometime this week, probably. So there are some significant disagreements among our state's leadership clearly and how this bill might actually impact Vermont families and residents. And so tonight we have two perspectives in the studio here to help us understand those differences. We're joined by Jared Duvall from the Climate Council, Vermont Climate Council, as well as Matt Koda from the Vermont Fuel Dealers Association. Thank you both for joining us. Thank you, Bobby. Thanks, Bobby. Awesome. So we have some questions for Jared and Matt, but if you have any questions as well that you'd like us to ask either of them, you can call in at 802-862-3966, 802-862-3966, and we will take your call and prioritize it and put it right on the air. But for now, we'll start with you, Jared. So you serve on the Climate Council and that body recommended this approach to reducing emissions in the heating sector. So tell us what this bill will do in as simple of terms as you can. And then tell us why it's the approach that the Climate Council recommended. Great. So a lot of this comes back to the Global Warming Solutions Act, which was passed in 2020. And one of the things that that act did was say that Vermont was going to meet its legal obligation, many would argue a moral obligation, to meet the science-based targets that the international scientific community has set to avoid the most dangerous impacts of changing climate. And so there's different targets by different years, but one of them is a 40% reduction in our statewide climate pollution by 2030. And so then the Climate Council, which created by the Global Warming Solutions Act, was charged with the responsibility of writing a climate action plan that can actually meet those requirements. And when you do that, we need to look at where does our climate pollution come from. And a number of counselors were also looking at other factors, not just where does the pollution come from, but where are our energy costs and how do we make this as cost-effective and equitable of a transition as possible. And when you look at those questions, the root of the problem, whether it's where most of our climate pollution comes from or where most of our energy cost burden comes from, the root of that problem is the same. It's our dependence on fossil fuels for transportation and for heating. And the way that we heat our homes and buildings in Vermont is now, as of the latest Vermont Greenhouse Gas Inventory, which was just released last week, the single largest source of climate pollution in Vermont. And when we look out to that 2030 legal obligation, is expected to be the single largest sectoral cause of the climate pollution that we need to reduce. So again, whether the problem is meeting our legal and moral obligation to do our part, to confront the climate crisis, or whether it is how do we reduce energy costs for Vermonters for whom they've been too high for too long, that the direction points the same. It's we need to finally hold fossil fuel importers responsible for doing their part in a way that we have long done for electric utilities. So really a lot of this to me is about basic fairness and leveling the playing field. Vermont has passed policies to require our electric utilities to reduce emissions over time. And that has successfully occurred with policies like the Renewable Energy Standard and with the Regional Greenhouse Gas Initiative. But for too long, those same responsibilities have not gone to the fossil fuel importers as well. And so this is saying, if we're gonna get to the root of this problem, we all need to be in, we all need to do our part to reduce pollution and we can do it in a way that reduces energy costs from Vermonters by getting off of the high priced, really priced volatile roller coaster of fossil fuel prices that we've seen. And I'll just, I wanna end, but say one thing that's really important, between November of 2021 and November of 2022, there was a $2 a gallon increase in the price of fuel oil. I provided a chart. I don't know if we have that to share, it'd be good to share it at some point. But if you compare the cost of heating in Vermont over time, what you see is on average, the highest costs are the fossil fuels. You see the propane in gray, you see kerosene in pink, fuel oil in purple, and that there's certainly much more price volatility there. Now that's not the same story for all fossil fuels. Fossil gas, also sometimes known as natural gas and pipeline gas is more price stable and generally lower cost compared to those other fossil fuel alternatives like propane kerosene and fuel oil. But most of what we're talking about that would qualify in the clean heat standard as reducing emissions also has a major opportunity to reduce energy costs because those heating sources are much lower cost over time and much less price volatile. Things like wood pellets, things like cold climate heat pump systems, et cetera. Thanks Jared. Matt, thank you so much for being here as someone from the Vermont Fuel Dealers Association. You've expressed some concerns about this bill. So could you just tell us what in your understanding of the bill, what this bill does and what impact it'll have on Vermont? Well, so let's start at the point of agreement because I think that's important in today's debate in today's society. So when Jared and others first came to us back in 2020, 2021 thing, let's create a performance standard in which heating fuel suppliers who also have service can help with our mission, which is to reduce greenhouse gas emissions and reduce the energy burden on consumers. And immediately the answer wasn't no, it was let's talk because we have been reducing consumption, the heating fuel dealers of Vermont, reducing consumption in Vermonters homes for decades, right? Better built homes, better fuels, lower sulfur fuel, better equipment. Vermont's fuel suppliers can sell less to their customers. What they have to do is be able to provide a service. And so that's why this conversation about performance standard was immediately something that we're interested in. Supplying customers with a lower carbon fuels, yes. Supplying customers with more efficient equipment, yes. That's something that we can do, something that we do do. Many, many Vermont heating fuel companies are also in the service business. Most also install electric heat, cold climate heat pumps that provide air conditioning in the summer and also reduce the burden or the amount of heating oil or propane people burn in the wintertime. But they're really merging towards a whole home service provider model, which yes, they still sell fossil fuels, but they may also sell biofuels. They may also sell wood pellets and they also perform heating service. So from the outset, there was a conversation with the regulated utilities, with the fossil fuel providers, with the heating service community about how this program would work best. Our concern as it developed, as it progressed is that we didn't have a good handle on what those costs would be, the cost of compliance and the cost of the credits, which are embedded into this clean heat standard. A fossil fuel dealer, and they're all importers, almost all of them are importers because we don't have a pipeline and we don't have a sea terminal. We gotta go across the border to Albany or to Springfield Mass or Ports with New Hampshire to Quebec and bring it into Vermont and then deliver it to the customers where they burn it for heat, hot water and cooking. The concern was, is how do we make sure that we know what the law says? The law says 40% reduction, just as Jared said, by 1990 levels, by the end of the decade. So as this gets implemented, what is the cost that we are going to have to pay for these credits in order to ensure that our customers who may have a perfectly functioning heating system that burns fossil fuels, how do we get them to change their heating system over? What type of incentives would we have to offer them to not use the fuel that we sell? What type of incentives would our competitors have to do to get them to not use the fuel that we sell? And as we start to think about what those costs are, there's obvious concern because we're not selling a luxury product here. We're selling a necessity, an essential commodity that people of Vermont need in this rural state to stay warm, to stay alive. And so as these costs, as we fear that there wasn't a cap to these costs, that most of the discussions about how can this work with us? How can this work for our customers? That conversation turned away. And then there's also this focus on electrification. Electrification will absolutely play an important part in our thermal and transportation future. We understand this, we know this, but it won't be completely. We need biofuels, we need fossil fuels. We need liquid and solid and gaseous biofuels in order to accommodate that. Our concern was that this became more of a focus on electrification. How can we ensure that all homes are using electric heat? And at that point, it becomes less of a compelling reason for heating service providers to participate because they're not part of that process anymore. So Jared, I'll turn it back to you to just, let me get back to this original question of what exactly does this bill do? It sets up a credit market, but that's kind of a confusing term. What, in as simple terms as possible, does this bill do? Yeah, so this bill, well, there's a difference between what it could do and what it does. What it could do, we will not know until 2025 because of the checkback. What we know it will do, if the Senate and House override the governor's veto, it will begin a two-year rule-making process where the PUC will develop proposed rules that by January 1st of 2025 would have to go back to the legislature, go through a whole other process of enactment through both chambers, House and Senate, and be signed vetoed, overridden, whatever the end of the process would be. But so all this bill would do is start the process at the Public Utility Commission of gathering the information, beginning the public engagement and outreach, doing some of the studies, having fuel importers register with the PUC so we know how much fuel is coming into the state so that the program could be stood up in 2025 if a future legislature decides to do that. If the bill was to go into force in 2025 then what a clean heat standard would do would be to require the importers of fossil-based heating fuels into Vermont, primarily fuel oil, propane, fossil gas or natural gas, but also things that are smaller volumes but still need to be covered like coal and kerosene, to reduce emissions over time and that'll be based on their annual sales and the way in which that will be tracked is they can either directly provide services that reduce pollution or they can contract with others and purchase the resulting clean heat credits from that activity. There is the bill envisions that there would be a statewide entity that would be what's called the default delivery agent to provide these clean heat services, and a fossil fuel importer that doesn't wanna do this work themselves or doesn't wanna kind of independently contract with folks to provide these clean heat services, they can just work through whoever that entity will be but what the goal is to do is to set up a market system that will achieve the most cost-effective way to achieve these emissions reductions and give Vermonters options. This doesn't require anybody to do anything. There's been so much misinformation out there about like this is telling Vermonters you have to install heat pumps. Vermonters, I think this is one of the things that Matt and I agree on is that there are so many different situations in terms of different homes, different buildings, their current heating sources and what opportunities are available to them. And I actually think another area of agreement that we have is that we don't wanna see anybody dependent on a single heating source. In a climate like Vermont's, in this time of really needing climate resilience, we need to have backup sources of heat and supplemental heating sources. So this should not be a conversation about one solution and it's not, there's options across the board depending on what type of home you're in, what type of building you own and that's what the clean heat system would set up. It's also, Matt might disagree with this, but it was very consciously designed from the beginning to recognize that our fuel dealers in Vermont are service providers who provide the vital service that he talked about, keeping Vermonters warm. We agree with that. We just wanna make sure that there are ways to keep Vermonters warm that aren't just about continuing to sell fossil fuels when we know that scientifically, morally, that is an untenable position to continue into the future without any recognition of a responsibility that we have to move away from those fuels because of the pollution harm they create. Thanks, Jared. Well, indeed, that's the way the market's going. I mean, when I say that three out of every five heating oil and propane dealers install cold climate electric heat pumps that reduces the sales of their core product which is heating and propane, that's true and more are getting into it. When prices are high, we also sell wood, chunk wood, wood pellets. Vermonters, and I would say New Hampshire and Maine and upstate New York as well, whereas this might be odd for someone coming in from Florida or North Carolina or New Jersey to have more than one heating system, it's actually quite common in Vermont, particularly in these older homes that have gone through several different stages of HVAC systems, maybe not in the newer neighborhoods of South Burlington and Williston and all, but you look at an older home and we have an old building stock here and some of the home might be weatherized, some of it might not be, some of it might, you close off part of your home just because you can't keep it up to temperature. Some areas you might have a wood stove but you also have a propane backup or heating oil backup. It's very common to have multiple heating systems and a lot of these homes are hydronically heated, which means there's a boiler in the basement, right? There's a fire, it's heating water, that water's going through three, three quarter inch copper pipes throughout the house and because of that, they don't have ducting, ductwork, right? So these homes can't easily be modified to provide air conditioning, right? So you think about a furnace which is blowing hot air that creates warmth. You also might have a compressor outside that's using that same ductwork to blow cold air in the summer. And what are we finding? People want to be comfortable in the summers, summers that are increasingly warm and so in order to get air conditioning, if they have a boiler and they don't have ductwork because they don't have a furnace, they're either using the old window rattlers that you can get at Walmart or they're installing cold climate heat pumps. That's why our membership, the same heating oil truck drivers and heating equipment installers are the ones that are doing a line share of the work in installing cold climate heat pumps. First as air conditioners, now as they become more advanced to provide warmth in the colder months as well. All right, so Matt, as you're familiar with some of the primary service providers that allow a lot of remotors to heat their homes, what do you anticipate the impact of this bill will be on the services that they provide? And Jared listed a couple of options, that the heat service providers, fuel dealers will have to comply with a potential clean heat standard. What do you anticipate? What choices do you anticipate they'll make and what options do you see that they'll have? Yeah, so what's interesting about our industry and Jared has come to know very well is that it runs the gamut. We've got one truck operators, a cell phone and a truck and a fishing rod in the summertime and that's all they do is they work their tail off in the wintertime and we have large multinational corporations that also provide this service and everything in between. And because of where we're situated in Vermont, in some areas it's quite simple. You have one terminal located in Vermont in Burlington right down on Flynn Avenue and you pick up there and you deliver to your customers in Chittenden County. But for the rest of Vermont, most of that fuel is coming in from other parts of the state. So for instance, if you're in Bennington County, all of your fuel is coming from the 12 different wholesale terminals that are in Albany. Every company there from the largest propane provider to the smallest one truck operator is pulling product right out of the terminal in Albany where they have lots of choices and price choices for them. They'll all be importers under the designation of this and they'll all have to either pay a fee to the designated default agent or they'll have to purchase credits in a credit exchange or they'll have to earn credits themselves by doing the services that this bill wants them to do, that they want them to do more of. Some will be able to adapt, some will not. My fear, and I think the fear for everyone that in rural areas is that in certain pockets of Vermont, the heating fuel providers will not be able to adapt and the technology will not be available for consumers and will have energy deserts just like we have food deserts where there are certain areas where choice will diminish and that will not be good for competition which is good for pricing. Right, Jared, is that also what you anticipate will happen? How do you anticipate, what choices you anticipate for those filters will have after this bill has passed? I see it a little bit differently. I mean, I think some of what Matt talked about in terms of the dynamic of how his industry works is absolutely right, but I think that overall, one of the biggest concerns that I've had about this debate is that when it comes to the question of costs, it's been very one-sided and we're missing the whole other side of the equation. And so in terms of what Matt was just saying, there's as much opportunity here as there is risk. So whenever any business in Vermont helps a customer reduce emissions by reducing their fossil fuel use, whether that's providing weatherization, whether that's installing cold climate heat pumps or heat pump water heaters or selling B100 biodiesel or a biodiesel blend rather than fuel oil, all of these things are gonna have to be assessed on an apples to apples comparison. What are the emissions pre? What are the emissions post? You get credit based on the emissions reduction that's achieved. That's a massive business opportunity for businesses that see their purpose as being heating service providers, not fossil fuel providers. Because the extent to which you are providing weatherization for your customers, installing heat pumps, delivering biofuels, delivering wood pellets, delivering wood chips, those are all going to be eligible measures in the clean heat standard. And so that is a, and so let's talk about what this cost question is because there's been a lot of questions about what might the potential effect be on the price of fossil fuels. Regardless of what that number is, I think the numbers have been wildly inflated and I'm happy to talk about why I think they're so wrong. But regardless of what that number is, I wanna be really clear about what it means. This is not money that's going to the government to decide how to spend. Any and every cent that comes in that a fossil fuel importer has to pay for clean heat credits, where will that go? It goes to the other side of the equation that is not being addressed, lowering prices of the cleaner alternatives. So let me give an example. In Oregon, they had a very similar policy to this, a fossil fuel performance standard. It was on transportation fuels, not the thermal sector, but the basic architecture of it was exactly the same. They have similar emissions reduction requirements to us. What did they find? Yes, there was a slight increase in the price of fossil fuels, about five to six cents a gallon for gasoline and diesel. What they also found, though, is that the price of the cleaner alternatives went down dramatically, over 60 cents a gallon for biodiesel made from soybeans, over $1.16 a gallon for biodiesel from recycled restaurant oil. The price of electricity went down. And so where does that money, whatever, is it five cents, is it six cents, is it something higher? Where does that money go? It's going to lower the prices of the cleaner alternatives so that people can get off of the fossil roller coaster, have more options to reduce their heating costs. And do you feel confident that, you know, so that's the ideal. That's the ideal. That's not necessarily true. So as of January 1 of 2023, if I am a heating fuel dealer and I blend biodiesel into my fuel, I've already sold it, I've got the receipt, if I'm a heating fuel dealer and I install a cold climate heat pump into a customer's home, no incentive, I provided the service, I've got the receipt, I have earned that credit. Customer didn't get a discount. Those credits do not, the discounts do not have to be passed on to the customer. In an area where we have very few workforce, where we have supply chain problems, why would you discount to the customer? That's the fundamental question. Because this is a competitive market and your consumers, you know, whether they're home owners, building owners are gonna have choices for who does a weatherization project or who installs their heat pump. But in the ones that provide greater incentives to make it more economically attractive are gonna do better in that market. There is a six month backlog to get service from your heating fuel company or from a heating service provider. There's a three month backlog, I'm just making these. There could be a number of things that happen that if I'm a consumer and I want something to happen, I gotta wait in line. We have a lack of workforce for weatherization. We have a lack of electricians that can hook these cool climate heat pumps up to the service board. We have a serious deficiency in terms of both truck drivers and in heating service and licensed heating service technicians. I'd like to say that there is an enormous workforce that is, and there's enormous supply of all this equipment that's ready to go to it and we just have to discount it in order to get it installed. But the reality is, is that's not where we're at. Do you anticipate that the workforce will grow and be supported or are you concerned in the way that Matt is about it? I mean, I think that there certainly are workforce challenges in Vermont that need to be addressed. I do think that too often we think too narrowly about what the opportunity is here. The folks who can be employed to do this work aren't just people who are currently unemployed of which there are not many in Vermont. They are folks who are currently doing other jobs but are really well skilled, including a lot of the folks that Matt represents that can do this work. They're folks who are underemployed in other sectors that can do this work. We have more people moving to Vermont. I hear all the time about folks who really want a meaningful, well-paying career and this meets both of these, whether you're doing an electrician or whether you are an HVAC technician or whether you are doing weatherization services, there are real opportunities there. So I don't think that the existing nature of the market is fixed. I think that markets are dynamic and that's why this was developed as a market-based program to try to achieve the most cost-effective, equitable ways to reduce emissions and send that signal that there's a real demand to increase this type of work, which hopefully many of Matt's members will do. Continue doing it. And to any young people, listen, you heard it from Jared DeVall, you heard it from Matt Coda, I think you heard it from Bill McKibbin. We need electricians. Getting an electrician's license is incredibly valuable. It's also incredibly difficult in ways that we can encourage both people merging from high school, people that are changing workforce and those that have a certain set of skills such as the person that installs boilers and furnaces to also then cross-train in order to do that work is something that I will be focused on and I know Jared will partner with us in trying to figure out how we can train this 21st century workforce that can do these clean heat measures. We don't have the workforce now, we need them in the future in order to meet these mandates. I wanna shift our lens a little bit here as we only have a few minutes left and I wanna bring in a little bit of a climate justice, environmental justice, racial justice lens to this conversation. The conversation across the country about climate and environmental justice is demanding that climate solutions to be developed in collaboration and community with those most impacted by climate disaster and clean energy transition, especially black and indigenous people and other people of color. A letter from the Vermont Renews BIPOC advisory council in 2021, which was written around the time that the climate council started its work, addressed state leaders to request that racial justice be centered in any climate solutions that are proposed and that policies brought forth by BIPOC communities be prioritized and meaningfully reviewed. So Jared, a question for you as a member of the climate council. Was this approach driven by BIPOC leaders? Is it developed alongside BIPOC communities? Do you think that the process successfully met the request from the BIPOC Renews Council? I think this is such an important question. There's always more that can be done to improve outreach and engagement. I do think that one of the things that was centered from the very beginning because of the design of the Global Warming Solutions Act is that the climate council has a Just Transitions subcommittee that has been looking at these issues throughout and there are people of color who have been participating on the council and participating in the subcommittees. I think there's always a desire for more participation, right? But for me, this does go back to a climate justice reasoning both in Vermont and nationally and globally, right? Because the folks who are at most risk both of climate impacts and are most exposed to high cost energy tend to be lower income people, tend to be communities of color. And so, Matt mentioned a little while ago that a lot of his members are already doing a lot of this work. So why is a law like this necessary? My response to that would be a lot of the work that's already happening is driven by upper income, upper middle income Vermonters who have the disposable income to make these investments without the added incentives that we expect will come from this law. The thing that this law would do for the first time, I believe, and it certainly isn't the case with our renewable energy policy on the electricity side, is require that a progressive share of these clean heat services go to low and moderate income Vermonters. So, and that will likely add some cost of compliance because lower and moderate income Vermonters are gonna require higher incentives to be able to do the work that we wanna see. But if we don't do that, the status quo is going to be this divergence where the people who are able to reduce their energy costs are just the wealthy folks who are able to make these upfront investments. That's what this law was designed to avoid was this energy injustice, this energy kind of two Vermons where we need to make sure that lower and moderate income Vermonters can take advantage of these energy solutions that can save them money over time as well, not just wealthier folks than the first adopters of a lot of this technology. Matt, do you see any alternatives to this approach that better center racial and environmental justice? I think the description just to paragraph with Jared said, which is how do you focus not on those that have the most money and the most inclination to do this work, but how do you help those that can at least afford to take measures that reduce their energy burden? And I think we do see that in the transportation sector. So when we structure electric vehicle incentives and not just electric vehicles, but high mileage vehicle incentives, there are adders for those who show that their income is below a certain amount. So I think that policy in conjunction with any policies that we have that direct, and we've supported that for a very long time. Since 1980, we've had a low income weatherization program long before it became fattish and it became adopted by other states. We funded that through a gross receipts tax and then a fuel tax on heating oil propane, but also on electricity and natural gas and kerosene and coal. And that program is exactly like that, which is it directs the money towards those that can least afford the energy burden that helps them weatherize their homes. We had had discussions about how to augment those programs, how to improve those programs to focus not just on weatherization, but other measures. I think those discussions will continue, but for the next two years, most of the debate will be outside the state house and inside the four walls of the Public Utility Commission as they design this program and figure out whether or not it is ready to fly in 2025. There are so many more questions that I would like to ask both of you, but we are already over time. So I'm just gonna ask one more quick question, which is where do you suggest that people watching go to find more information about this bill and the impacts of this bill and the clean energy transition and Vermont will start with you, Jared. Yeah, I would suggest that there's two places. I mean, one, the Vermont legislature has a website. You go to their front page and you can enter the bill number right S5 and you can read the version of the bill. There's so much misinformation and disinformation out there about this bill. There was actually, I saw a commentary recently that said just read the bill. But for folks who don't have the time to go through that, we did put together, there's a broad, diverse group of people who've been working on this that put together an FAQ. It's now over 30 questions and answers on the Energy Action Network website. So if you go to eanvt.org, it'll be at the top of the news section of our front page. There's a frequently asked questions document that gets into a lot more information than we were able to cover here. So I'd highly recommend that. And I always recommend people go to vermontfuel.com, v-r-o-m-o-n-t-f-u-e-l.com where they can find their fuel dealer, they can find a heating service provider and they can learn more about what they can do to save energy and save money. Great, Matt, Jared, thank you both so much for joining us tonight. Thank you, Bobby. And that's all for this episode of Under the Dome. So thank you for watching. Under the Dome will continue through and beyond the end of the legislative session, connecting you with your representatives in my computer. And you can find this program and others on our website, ch17.tv, or on our Town Meeting TV YouTube channel. Thanks for watching and sharing. Under the Dome from Town Meeting TV. Have a great night.