A Heating Equipment Feebate

by Energy Futures Group:  Gabrielle Stebbins, Managing Consultant, and Christ Neme, Principal

Abstract

Vermont has a number of energy policy goals and requirements related to reducing greenhouse gas emissions and increasing energy efficiency and renewable energy. While headway towards these goals
is being made in some areas, particularly in the electric sector, others have seen little progress or even backsliding. The thermal sector (mostly for space and water heating used in our buildings) produces more than a third of Vermont’s greenhouse gas (GHG) emissions.

This report focuses on one specific policy approach, often referred to as a “feebate”, that could assist in reducing the consumption of fossil fuels and related emissions from equipment used for space and
water heating in our residential and small commercial buildings.  An equipment feebate program is a revenue-neutral approach to incentivize the purchase of products that are aligned with policy goals (e.g., more efficient and lower-GHG emitting products such as heat pumps, automated wood pellet systems and heat pump water heaters) with rebates, lower sales taxes and/or other financial incentives while discouraging purchases of products that are not aligned with policy goals (e.g., furnaces and boilers – particularly inefficient models – that use gas, kerosene, propane and fuel oil) through higher sales taxes and/or other fees.