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Clean Heat Standard


Act 18 (the Affordable Heat Act) became law on May 24, 2023.  Act 18 established the framework for the Public Utility Commission to design a Clean Heat Standard for approval by the Vermont General Assembly in 2025. The Clean Heat Standard is intended to be the mechanism that facilitates thermal sector greenhouse gas emissions reductions as defined in the Global Warming Solutions Act of 2020 (GWSA) by creating a market incentive and programs that reduce Vermont’s residential, commercial, and industrial thermal sector greenhouse gas emissions.  The thermal sector primarily consists of heating and hot water for Vermont’s buildings.  

Act 18 requires the Clean Heat Standard to enhance social equity by including a provision prioritizing energy savings measures for customers with low and moderate incomes and those households with the highest energy burdens. A minimum of one-third of emissions reduction measures is required to benefit low- and moderate-income households. In addition, the design is intended to maximize the use of available federal funds to the greatest extent possible. 

Under a Clean Heat Standard, obligated entities, defined as fossil fuel wholesalers and dealers who sell or import fuel into Vermont to ultimately be used in homes and businesses, will be required to reduce emissions to meet GWSA targets.  To do so, they will need to retire “Clean Heat Credits,” which can be created through facilitating customers to switch to a lower-emitting renewable energy source, or by installing equipment that avoids emissions.  For example, switching from Natural Gas to Renewable Natural Gas or to electricity, or replacing an oil boiler with a cold climate heat pump, would generate Clean Heat Credits.  Alternatively, obligated entities can pay a statewide default provider called the “Default Delivery Agent” instead of implementing measures themselves.  The Public Utility Commission is currently designing the rules for how credits are valued and calculated, how obligations are set, and how compliance is verified, among other program design details. 

The concept of a Clean Heat Standard is explained in more detail in a white paper by the Energy Action Network (EAN)Act 18, and the Vermont Comprehensive Energy Plan

A study of Vermont's thermal energy sector was conducted in 2023 to analyze various policies and scenarios related to the GWSA, including a Clean Heat Standard. 


- Public Service Department Process and Resources 

- Thermal Sector Carbon Reduction Potential Study 

- Public Utility Commission Process and Resources