A legislative effort to spur all-electric new construction in Burlington, Vt., has evolved into a broader push to phase out fossil fuel use in all buildings as the state pursues an ambitious 2030 climate goal.

Burlington lawmakers are exploring regulations to reduce greenhouse gas emissions in large commercial buildings, city-owned properties and major renovation projects. The agenda leverages Burlington's recently obtained authority to regulate thermal energy systems. It also expands the city's initial, narrower focus on discouraging fossil fuel combustion in new commercial buildings.

Natural gas in particular is in the crosshairs; Burlington sits at the center of the state's only gas service territory, operated by Vermont Gas Systems Inc., or VGS. It is also the state's most populous city by a wide margin, and its policies could spread to other cities in VGS's territory.

The expanding policy push reflects the city's aggressive climate goals: Burlington is aiming for net-zero emissions from the heating and ground transportation sectors by 2030, with ambitions to eventually eliminate fossil fuel consumption in buildings and vehicles. It also demonstrates how cities are developing diverse approaches to building decarbonization three years into a movement to prohibit gas use in buildings.

Burlington expands building decarbonization ambitions

Beginning in 2020, Burlington began pursuing a pair of novel building electrification policies. The first would impose a $100-per-ton carbon fee on new buildings that choose to connect to fossil fuel infrastructure, thereby incentivizing all-electric construction. The second, dubbed the primary renewable heating ordinance, would require new commercial buildings to meet at least 85% of their design heating load with renewable energy, including wood, biogas and electric power from Burlington's 100% renewable grid.

The primary renewable heating ordinance went into effect in September 2021, but Burlington determined it needed authority from the state legislature to collect the carbon fee. After receiving that authority in April, the city did not immediately take steps to implement the policy. Instead, lawmakers passed a resolution directing the city's municipal electric utility, Burlington Electric Department, or BED, to develop policies capable of decarbonizing the entire building sector by 2030.

Key to that resolution was the state's decision to allow Burlington to regulate thermal energy systems in both new and existing buildings. "This now gives us a huge opportunity to really, I think, lead the country in this area," City Council Member Jack Hanson said during a May 9 meeting, where he introduced the resolution.

In a July 18 report, BED said it was researching building performance standards adopted in Boston and New York City to decarbonize existing buildings. The policies require building owners to meet emissions reductions targets that get tougher every five years. BED also researched a Denver ordinance that pairs building performance standards with a mandate to replace end-of-life fossil fuel systems with electric alternatives when cost-effective.

The department is leaning toward a stand-alone building performance standard because it allows owners freedom to choose the best way to hit their emissions reduction targets, BED General Manager Darren Springer said in an interview.

City takes multiple approaches in residential buildings

That mindset carries over to BED's exploration of decarbonization for new buildings and existing residences, according to Springer.

For new commercial buildings, BED proposed expanding Burlington's primary renewable heating ordinance for space heating to water heating, cooking and clothes drying. The city could also pursue the carbon fee as an alternative compliance pathway, with a portion of the fee earmarked for emissions-reduction projects benefiting low- and moderate-income households and disadvantaged communities, a priority established in the May 9 resolution.

Asked about the change in strategy, Springer said Burlington wants to give developers options to decarbonize economically. "We are looking to be as flexible as possible in implementing what will be very ambitious policies," Springer said. "So everything we can do to add options while still reducing emissions is something that we're interested in doing."

Burlington has pursued decarbonization by providing incentives to buy electric heat pumps for existing low-rise residences and small multifamily buildings, and through mandatory weatherization of rental properties, Springer noted.

BED is not currently considering a straightforward prohibition on new gas hookups. Unlike many cities and states, BED is taking a renewable fuels approach, not an infrastructure approach, Springer told lawmakers July 18.

Gas, fuel oil stakeholders preach caution on carbon pricing

When asked about VGS' view on BED's latest proposals, a spokesperson for the local gas utility called Burlington's decarbonization efforts "inspiring."

"We're proud to partner with the city's municipal leaders and the team at the Burlington Electric Department to help customers reduce greenhouse gas emissions," Dylan Giambatista, who leads public affairs at VGS, said in an email. "We welcome their collaborative approach to policymaking."

VGS and the Vermont Fuel Dealers Association, or VFDA, have framed the primary renewable heating ordinance as an acceptable alternative to more strident policies. It preserves a role for gas, propane and fuel oil as backup energy sources, and it allows fuel dealers and VGS to enter long-term contracts with large commercial building operators for biodiesel and renewable natural gas.

Yet Giambatista warned that allowing municipalities to regulate thermal energy could "potentially reduce the effectiveness of statewide energy policy." Some local policies may not align with Vermont's Global Warming Solutions Act and could further increase customer costs, which are already expected to rise during the energy transition, the spokesperson told state lawmakers.

VFDA Executive Director Matt Cota had urged state lawmakers to deny Burlington broad authority to regulate thermal energy systems when the city sought permission to implement the carbon fee. During a January hearing, Cota warned that future mayors and city council members could adopt less nuanced policies. If granted the same authority, other local governments could create a patchwork of fuel taxes, the executive director said.

Cota and Giambatista said lawmakers should instead focus on decarbonizing Vermont buildings by adopting a clean heat standard. The policy would require VGS and fuel sellers to progressively reduce emissions tied to fossil fuel combustion by purchasing clean heat credits or generating them through activities approved by state utility regulators, such as biofuel purchases or production. The Vermont General Assembly passed clean heat standard legislation in May, but Gov. Phil Scott vetoed the bill, saying lawmakers failed to adequately outline the program or forecast its cost to ratepayers.

Where Burlington-style efforts could spread next

By facilitating the sale of biofuel, the renewable heating ordinance actually presents a growth opportunity for fuel dealers in Burlington, where fuel oil is losing market share, Cota told state lawmakers.

That runs counter to the state's energy profile. About three in five Vermont households burn fuel oil, kerosene or propane for heat, according to the U.S. Energy Information Administration. But because many Vermonters live in Greater Burlington, one in five Vermont households has gas utility service.

That makes Burlington's policy choices highly consequential for VGS. Nearly 15,000 of the company's 55,000 customers live in Burlington, and its service territory encompasses three counties in Northwest Vermont. In 2017, it completed a 41-mile project to expand service to Addison County. TC Energy Corp. pipes gas into VGS' service territory from Canada.

VGS' direct owner, Northern New England Energy Corp., also operates the region's electric utility, Green Mountain Power Corp.

In an interview, Cota said he does not expect fossil fuel restrictions to gain traction in Vermont's many small towns that rely on propane and fuel oil, in part because of the challenge of enforcing the policy there. However, he anticipated more Burlington-style efforts along Vermont's gas transmission line, where environmentalists will seek to block gas use in large building developments and climate committees advise city councils and town select boards.

That is already playing out in South Burlington, where Cota sits on the city council.

On Aug. 1, the South Burlington Climate Action Plan Task Force asked the city council to follow Burlington's lead in adopting an ordinance to regulate fossil fuels in new construction. The task force invited Hanson, the Burlington council member, to present the city's primary renewable heating ordinance.

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