This commentary is by Larry Satcowitz of Randolph. He is a Democrat representing the Orange-Washington-Addison District in the Vermont House of Representatives, and the ranking member of the House Environment Committee.
The clean heat standard, envisioned as a part of Act 18 of 2023, had the overall aim of reducing the use of fossil fuels used for heating in Vermont. It would do this primarily by providing incentives for the air sealing and insulating of buildings and the adoption of alternative heating technologies. Act 18 did not implement the clean heat standard, but instead required the Public Utility Commission to study the idea and issue a detailed report.
Given the current political reality in Vermont, the clean heat standard is not going to move ahead in its present form, but I want to write about how we got here and the implications for future policy.
The Commission released its report on Jan. 15. It found that the initial cost of the program would be about 8 or 9 cents per gallon of heating fuel, a far cry from the projections from folks who opposed the bill, who predicted the increase in fuel costs to be anywhere from 70 cents to $4 or more per gallon. The report’s projection is very much in line with the estimates that proponents of the bill had originally anticipated and much less than was feared by many.
In addition, costs are only one part of the equation. Equally important are the benefits. Given these relatively modest costs, the benefits of the program would have likely greatly outweighed them. We would have seen otherwise untapped savings in efficiency, more stable prices for heating, and more money kept in our local economy.
The clean heat standard is opposed primarily by two groups.
The first is the deep-pocketed fossil fuel industry. This is no surprise, as the proposed law would have accelerated the transition away from their products and cost them some future profits. They did a fine job of scaring Vermonters with wildly exaggerated projections for price increases and is a great example of an industry that successfully puts its interests above that of ordinary people.
I’d like to note here that there are many local fuel dealers in the state who have started diversifying their businesses on their own and supported the clean heat standard, as they saw it as a way for them to both ease their transition away from fossil fuels and a way to help their customers do so as well.
The other group is composed of folks who believe that markets will naturally solve most of our problems and that government action is usually misguided at best, and terribly harmful at worst.
Markets can be a powerful tool for allocating scarce resources, but markets that are not properly regulated are prone to abuse. Monopolies that enrich themselves at the expense of everyone else are the most obvious example of this, but there are many others. A core responsibility of our government is to set the rules for how markets behave so that the benefits of our economy are broadly enjoyed and not appropriated by small groups. Unfortunately, recent statistics on income and wealth inequality show that we’ve been abdicating this responsibility. Life is quite good if you’re in the top 10% or so, but much harder as you move down the economic ladder. All markets have rules that govern them. Some are set by private interests and some by the government. A great deal of the power in our society lies in who controls those rules.
The energy sector in Vermont is a nice case study in the difference between highly and lightly regulated markets. The electric power companies and their prices are highly regulated; oil prices are not. A result of this is that cost increases for power tend to be modest and predictable. Contrast this with oil prices, which can easily change dramatically from year to year — sometimes with disastrous consequences — especially for families with modest incomes. Of course, not all aspects of our economy need to be tightly regulated. Some parts work rather differently than other parts. We need to be judicious and recognize that the world is always changing. We must pay attention and be responsive.
Governments don’t always get policy right. It’s not hard to find examples of enacted laws that did exactly the opposite of their intent. This does not mean the governments should shy away from their responsibility to be a strong vehicle for our collective action. In many ways this is what democracy is all about.
The big issues we are facing today: housing, health care, education and climate resilience are not going to solve themselves. We must take collective action, and this will largely mean changes in state policy. We will need to make hard choices, we will need to stand up to narrow interests and fight for the common good, we will need to be creative and brave. We will make mistakes. We always have. We will need to learn from them, do better and move on. That is how we progress.
Read the story on VTDigger here: Rep. Larry Satcowitz: The clean heat standard and implications for future policy.