Author: Joe Uglietto

With each passing month, we get closer to many of the Northeast States’ self-imposed deadlines for developing and implementing market-based decarbonization programs for the thermal and transportations sectors to meet their 2030 greenhouse gas reduction goals. At the same time, policymakers and regulators in these States are delaying the implementation of these programs in the face of high electricity and fuel costs after a cold Winter last year, and concerns that these programs could be politically unpalatable.

This push and pull has allowed everyone to choose which narrative they like best and make decisions accordingly. If you want to see a Clean Heat Standard (CHS) in place in your State, you’re betting that there will be one sooner than later. If you hope these programs just go away, you’re viewing the delays as the first step in the eventual elimination of these programs.

I am here to tell you one thing: Our industry will have to do business with Clean Heat Standards, Cap & Invest Programs and other market decarbonization programs. This is not an “if” issue—it’s a “when” issue.

Whether you’re a fuel company in Massachusetts waiting for the CHS draft regulation, a dealer in Pennsylvania just learning of the pending Clean Fuels Standard legislation or a business in Vermont waiting on the next iteration of its decarbonization programs, the time to prepare for what comes—whenever it comes—is now. Here’s what you should be thinking about.

1. Secure your biodiesel supply. Ensure you have reliable access to qualified biodiesel sources. Biodiesel will be the key to staying ahead of these programs. Blending biodiesel with heating oil will reduce the cost of compliance and potentially even create profits within these programs. Establishing relationships with biodiesel suppliers in the area is a great first step when preparing for these programs.

2. Strengthen your cash flow. Build financial flexibility to navigate credit costs, training timelines and compliance shifts. These programs will increase the capital needs of all businesses. Whether that is purchasing allowances in a Cap & Invest program before even selling a gallon of fuel or the increase cost of biodiesel in a CHS, heating fuel retailers will need to have access to additional capital in order to continue running their business.

3. Train your team. Educate drivers, technicians, customer service representatives and managers about biofuels and regulations. Making sure your entire staff is on board with your transition to low-carbon liquid fuels is extremely important. They will be in customers’ homes and speaking with customers about the change in fuel that is being delivered.

4. Educate your customers. Proactively communicate the benefits and reasons behind fuel changes. Marketing emails, seasonal fliers and other marketing materials will be important to get ahead of the changes the State has imposed. The State will be marketing heat pumps while increasing the price of fuels, so getting ahead of their marketing and speaking to your customers will be important for customer retention.

5. Start decarbonization planning. Integrate pricing credits and the cost of compliance into fuel strategy. Explore forward credit trading in the markets. Opportunities to increase margins and profits within the programs will exist for those who plan ahead. Decarbonization planning will become as important as tax planning for each business within these programs.

These programs will be highly profitable for the companies that are prepared. At the same time, they can be devastating to businesses that aren’t ready to operate effectively within the new business environments that will be created. Whenever these programs finally launch, I hope that you will be on the winning side of the ledger.

Hear what our clients have to say about us

“Working with Joe at Diversified Energy Specialists has been nothing short of a blessing. Reporting figures to the Massachusetts APS program can often be a daunting task, but Joe makes the process painless. He consistently delivers strong return on our credits and as an added bonus, he’s a super nice guy!”

— Christopher Chase, President, PayLessforOil.com

Author: Joe Uglietto

Most of our industry colleagues haven’t paid close attention over the years to the important developments in State and Federal policies and regulations regarding decarbonization. It’s understandable that those of you who have done your best to keep up with your State association updates and who read my columns have been left feeling even more confused of late. I’ve said it before and it bears repeating: The only certainty these days is uncertainty.

Here’s a recap of where we stand with 2026 just a few months away.

Unlike the electricity sector, which has been regulated for years through various programs such as the Regional Greehouse Gas Initiative (RGGI), Renewable Energy Portfolio Standards and Alternative Energy Portfolio Standards, the transportation and thermal sectors had gone unregulated in regards to decarbonization. However, that began to change in a big way just 18 months ago, as many Northeast and Mid-Atlantic States were in the process of developing their own market-based decarbonization programs for the thermal and transportation sectors.

Each State had an obligation—some legislatively mandated and others as an aspirational goal—to meet 2030 and 2050 greenhouse gas reduction goals. States began to release their plans to achieve their 2030 targets and many included market-based decarbonization programs for the thermal and transportation sectors. Low-carbon Fuel Standards, Clean Heat Standards (CHS) and Cap-and-Invest programs were the three most discussed programs. Rulemaking began for CHS in Vermont and Massachusetts, while rulemaking began in New York for an economy-wide Cap-and-Invest program. It seemed like the decarbonization train was racing downhill with nothing to stop it from running over everything in its path. Then came the one-two punch that turned everything upside down.

The Left Jab
The 2024 election was a significant wake-up call for legislators and regulators in many parts of the country. In some cases, incumbents lost their seats to pro-business candidates. In others, where incumbents who favored decarbonization came out on top, they quite literally felt the heat. It became clear that the electorate, even in many parts of the Northeast, would not be supportive of California-style regulations and would vote against those policies when given the chance.

The Right Hook
What immediately followed the election results was an actually cold Winter. This created significant consumer pushback as customers felt the squeeze from higher consumption and higher energy prices, especially as electric rates climbed. State legislators and State agencies felt the squeeze from their constituents. Since virtually all of the market-based decarbonization programs are built in such a way that add costs onto traditional residential energy sources to incentivize renewable technologies, State political and regulatory leaders suddenly had programs they could no longer sell to the public.

Additionally, pushback against wholesale electrification began in Massachusetts after homeowners who used air-source heat pumps felt their heating costs were too high. The high cost of heating during the winter of 2024–2025 and the added publicity that came along with it, slowed the development of CHS, Cap-and-Invest programs and Low-carbon Fuel Standards across the Northeast and Mid-Atlantic.

What Now?
While many of these programs have been delayed, they will not be going away. To continue with our boxing metaphors, the fighter is a little wobbly, but he is definitely not down for the count. Massachusetts still plans to implement a CHS, although it may likely be delayed until 2027 or 2028. New York is still developing its Cap-and-Invest program. Vermont has currently abandoned its CHS, but is exploring other programs such as Cap-and-Invest.

The recent delays are welcome. A pause in these programs gives you more time to prepare and it gives Industry leaders additional opportunities to shape the final details of each program. Still, we must remain clear-eyed. These programs will inevitably be implemented and the fuel companies that are prepared for them will be the ones that succeed for decades into the future.

Hear what our clients have to say about us

“I can’t say enough good things about Joe Uglietto and the work that Diversified Energy Specialists has done for us. Joe took care of everything for us at the outset of the APS program. He got us registered, he did the paperwork. He made the process seamless. Best part is, his strategy delivered higher value for my energy credits than I expected, and the returns have been strong each and every year. There’s no one better to help you get the most out of energy credit programs like the APS.”

— Mike Lamparelli, Owner, Frank Lamparelli

Author: Joe Uglietto

We’re a few months removed from last year’s cold Winter and just a few months away from what we all hope will be another one. The mixed economic outlook combined with increased energy usage this past Winter has put serious pressure on policy makers to avoid legislation or regulations that increase the cost of energy for their constituents. As a result, States are scrambling to find ways to provide relief, and the introduction of programs that would increase costs have become political hot potatoes. We shouldn’t expect this dynamic to last forever, but it has altered the landscape. Here’s where State renewable energy programs stand around New England and the Northeast.

Update on Reporting Regulations
Vermont
30 V.S.A. §8124(b)(1) requires that each entity selling fuel into or in Vermont register annually with the Commission. The deadline to register was in early 2024. All entities that sell heating fuel in or into Vermont must register annually with the Commission and report their total fuel sales of heating oil, biodiesel, propane, kerosene and natural gas.

In a controversial move, the Vermont Public Utility Commission (PUC) issued a ruling in late May 2025 that stated, “The Commission cannot take further action on the Clean Heat Standard.” In regards to the Fuel Dealer Registry, the commission stated that existing law (30 V.S.A. § 8124(b)(1) requires dealers to file and for the PUC to collect information on June 30 every year. However, there are no plans to do so and no effort to enforce compliance. According to the ruling: “Absent a legislatively approved Clean Heat Standard, the Commission will not process fuel dealer registrations, update its website of fuel dealer registrants, or enforce against non-registration.”

Massachusetts
310 CMR 7.71 requires companies selling and distributing heating fuels to homes and businesses in Massachusetts, including suppliers of natural gas, fuel oil and propane, to register with the State and report their fuel sales quarterly. It also implements a reporting requirement for all fuel storage facilities in Massachusetts. The registration deadline for all companies and storage facilities was Jan. 31, 2025. All companies were required to report their Q1 2025 fuel sales by June 2, 2025. This reporting requirement will continue each quarter and will ensure that the Massachusetts Dept. of Environmental Protection (MA DEP) has all the data it requires to implement a Clean Heat Standard in the future.

New York
New York Codes, Rules & Regulations (NYCRR) introduced Part 253, Mandatory Greenhouse Gas (GHG) Reporting Program. Similar to MA and VT, this reporting regulation will require all fuel dealers in New York to report the gallons sold to the State. This program will require reporting annually, rather than quarterly as in MA and VT, but will also require third-party verification of gallons by a New York Dept. of Environmental Conservation (DEC) accredited auditor. The first reporting deadline is at least two years away.

Update on Market-Based Decarbonization Programs
Massachusetts
The MA DEP has yet to release the draft regulation of its Clean Heat Standard (CHS). The Draft Framework was published in April 2024, and the MA DEP indicated that the draft regulation would be published by the end of this past Winter. While the release of the draft regulation has been delayed, there has not been a formal announcement that the program would be delayed past its indicated implementation date of Jan. 1, 2026. It seems likely that the MA CHS will be delayed, but that is not a certainty, and we will await further information from the MA DEP. Additionally, Massachusetts is considering a Low Carbon Fuel Standard for transportation fuels.

Vermont
The Vermont Climate Council has been preparing draft recommendations for reducing GHG emissions within the State. These recommendations, which are scheduled to be drafted this Summer, will include a recommendation that Vermont join a regional Cap & Invest program, which doesn’t currently exist. The Council has also indicated that a CHS is not off the table. While the Council has previously recommended that a CHS not be adopted, they include in their recommendations that a modified CHS could be an option. It is anticipated that the revised Vermont Climate Action Plan will be released by the time this article is published.

New York
The New York Cap & Invest program (NYCI) is in development. This economy-wide cap on emissions will impact all fuel dealers. Cost concerns and significant consumer pushback has delayed its development, but it appears that the State will move forward with the program despite the opposition. Additionally, New York is considering a Clean Fuel Standard for transportation fuels. A Clean Fuel Standard, which would mirror the California Low Carbon Fuel Standard, could run in conjunction with a Cap & Invest program. A Clean Heat Standard could also run in conjunction with a Cap & Invest program and this scenario is entirely plausible given New York’s current political landscape.

Rhode Island
Rhode Island introduced legislation for a CHS for the second year in a row in 2025. While this legislation will likely not be passed this year, there is a potential that a CHS could come to Rhode Island and other States in the near future if it is implemented in Massachusetts.

There are rumblings in other States as well; Maryland, New Jersey and even Pennsylvania may consider modified versions of the CHS we’re likely to see in New England; time will tell.

Right now, some of the wind has been taken out of the sails of the States trying to adopt wide-ranging decarbonization programs. However, the goal of decarbonization still remains front and center for these States. Just as it has become politically treacherous for policy makers to plow ahead with no consideration for the impact on energy costs, so is it politically untenable for these same policy makers to give up on decarbonization altogether.

I expect that the next few months will give us substantial insight into where we’re headed for 2026 and beyond. Stay tuned.

Hear what our clients have to say about us

“Working with Joe at Diversified Energy Specialists has been nothing short of a blessing. Reporting figures to the Massachusetts APS program can often be a daunting task, but Joe makes the process painless. He consistently delivers strong return on our credits and as an added bonus, he’s a super nice guy!”

— Christopher Chase, President, PayLessforOil.com

Author: Joe Uglietto

Is it a Mountain or a Molehill on the Path to Northeast Decarbonization?

The first 100 days of the second Trump Administration have been nothing if not eventful. The administration has been incredibly active in attempting to put its stamp on all aspects of both Government and the economy. We won’t know how voters will respond to this and unified Republican control of Congress for another 18 months, but there will be plenty to support or oppose depending on one’s political view.

While the administration’s energy policies have not quite received the attention that other aspects of its agenda have, the White House has been active on this issue. On April 8, President Trump issued an Executive Order titled “Protecting American Energy from State Overreach.”

The E.O. states that, “American energy dominance is threatened when State and local Governments seek to regulate energy beyond their constitutional or statutory authorities … Many States have enacted, or are in the process of enacting, burdensome and ideologically motivated ‘climate change’ or energy policies that threaten American energy dominance and our economic and natural security.”

The E.O. goes on to reference Vermont, New York and California policies that are in place or being developed to tax or trade carbon: “These State laws and policies weaken our national security and devastate Americans by driving up energy costs for families coast-to-coast, despite some of these families not living or voting in States with these crippling policies. This E.O. directs the Attorney General to take action to stop the enforcement of State laws that drive up energy costs for Americans.”

Taken at face value, this E.O. would drastically change the landscape for decarbonization programs—such as Low Carbon Fuel Standard (LCFS) programs, Cap-and-Invest and Clean Heat Standards—around the country. Programs in development could be scrapped while programs in existence could be drastically changed or eliminated. For our industry, Bioheat® fuel and other renewable liquid heating fuels would no longer be critical for compliance as decarbonization would essentially be taken off the table. To better understand the prospect of this outcome, it’s important to have a full picture of what is likely to happen.

Less than a day after the E.O. was signed, the U.S. Climate Alliance—a bipartisan coalition of 24 Governors representing 55% of the U.S. population and 60% of the U.S. economy—issued a formal response.

“The Federal government cannot unilaterally strip States’ independent constitutional authority. We are a nation of States—and laws—and we will not be deterred. We will keep advancing solutions to the climate crisis that safeguard Americans’ fundamental right to clean air and water, create good-paying jobs, grow the clean energy economy and make our future healthier and safer.”

One of the two co-chairs of the U.S. Climate Alliance is Governor Hochul of New York, a State that is Ground Zero for aggressive decarbonization policy in the Northeast. It’s safe to say that New York—and likely other States—will not accept the E.O. without a fight, and a potentially long legal challenge. Additionally, given the Federal government’s attempt to direct State policy, we can assume that any legal challenges would be focused on the appropriate jurisdiction of the Federal government over State policy.

There are a few additional considerations when trying to determine whether the recent E.O. will likely become the new standard, or if it will be remembered as a “nice try.” For starters, executive orders do not carry the full weight and force of legislation that is passed by Congress and signed into law; these orders can be undone by the stroke of the pen of the next president. Secondly, executive orders can be halted by the courts if they are deemed to be unconstitutional. Given that most of the Northeast States have decarbonization programs already in place or in process, we can expect legal challenges to ensue.

There is another potential outcome. States are becoming increasingly aware of the rising energy prices that have squeezed their constituents. As well, politicians are beginning to recognize the perils of being associated with programs that are perceived as a burdensome tax on middle-income and lower-income residents. These constituent pressures, combined with pressure from actions like this E.O., could result in a softening of the obligations connected with the programs that are currently in development. We’ve already seen this in real time, as the obligations included in last year’s draft of the Massachusetts Clean Heat Standard were significantly softened.

If you’re wondering what this will mean for you and your business, you’re not alone. In this case, I believe that the vast majority of the Northeast State programs to reduce greenhouse gas emissions—especially future programs for the thermal sector—will still be enacted. I think there is a reasonable chance that the obligation levels and costs of these programs will be reduced and we will most likely see some additional delays in program implementation.

Hear what our clients have to say about us

“We’ve worked with Diversified Energy Specialists since the inception of the Massachusetts APS program and we couldn’t be happier with our decision. Joe’s excellent understanding of the program and superb administrative support makes the process very easy for us. He has consistently secured strong returns on our energy credits, and he’s a heck of a good guy on top of it all.”

— Jim Townsend, President & CEO, Townsend Energy

Author: Joe Uglietto

How the Expiration of the BTC and the Introduction of Section 45 are Impacting our Industry

If there’s one thing markets like, it’s low prices. Another is certainty. Right now, the renewable fuels market—and by extension the heating oil market—has neither certainty nor competitive pricing thanks to the fact that critical tax credits are in flux.

The Blenders Tax Credit (BTC) has supported the renewable fuels industry in the U.S. for more than two decades. This credit provided a $1 per gallon subsidy to the blender of record, creating a significant revenue stream within the renewable fuels supply chain. The BTC played a crucial role in promoting the use of renewable liquid heating fuels, offering a cost-effective and immediate path to carbon reduction that our industry has been leveraging with increasing success to maintain market share and position itself as one of the most effective solutions for reducing carbon emissions. Unfortunately, the BTC expired on Dec. 31, 2024, creating immediate market uncertainty and complicating future pricing and planning for producers, retailers and consumers. Most of the margin was pulled out of the renewable fuels market in one fell swoop. Why produce, blend or sell a product that is uncompetitive? What’s made matters worse is the absence of a clear replacement measure to signal long-term stability.

Complicating matters further has been the introduction of Section 45Z, also known as the Clean Fuel Production Credit. Introduced as part of the Biden Administration’s Inflation Reduction Act, Section 45Z took effect on Jan. 1, even though the final guidance has yet to be published. This credit aims to incentivize domestic production of clean transportation fuels, including ethnol, biodiesel and sustainable aviation fuels. Unlike the more straightforward BTC, Section 45Z credit opportunities vary based on the carbon intensity of the fuel and adherence to specific labor requirements. This added complexity has posed challenges for producers, leading to delays in investment and production.

Another important distinction is that, while the BTC was awarded to the blender of record, Section 45Z will be provided to the producer of the renewable fuel, with the credit amount dependent on the feedstock’s carbon intensity. The carbon intensity will be measured using the 45ZCF-GREET model, which was released recently by the U.S. Dept. of the Treasury and Internal Revenue Service (IRS). Section 45Z will provide a tax rebate against taxes owed and will not extend rebates to imported renewable fuels, whereas the BTC offered a liquid credit. Specifically, for on- and off-road diesel used for heating and transportation, Section 45Z will exclude used cooking oil and other imports from receiving a tax rebate. This will further complicate matters for the industry.

The wheels of regulation move slowly and even though Section 45Z is already in effect, the rulemaking process is ongoing, with details not yet finalized. What does this mean for the renewable fuel markets? We should know more soon.

For the time being, renewable fuel producers lack a clear long-term outlook. Even though 45Z went into effect on Jan. 1, and guidance was issued on Jan. 10 under the Biden Administration, there is a question about whether the Trump Administration will finalize, modify or eliminate 45Z entirely. The timing of the finalized rule remains uncertain, even though the Treasury has requested public comments by April 10, 2025.

Where does the industry go from here? That is the question of the hour. The BTC had a powerful impact on the renewable fuels market. It was instrumental in supporting the transition to renewable liquid heating fuels, reducing building emissions and fostering growth of the biofuels industry. Its expiration combined with the introduction of 45Z has been no less profound, slowing production and investment and impacting jobs and revenue in the sector. It’s absolutely true that Section 45Z aims to promote renewable fuels, but it has faced criticism for its complexity and lack of clarity. Additionally, the fact that it doesn’t offer the same level of incentive as the BTC cannot be overlooked. Should 45Z remain in effect in its current offer, it will most likely prove ineffective at supporting the renewable fuels market.

The only certainty these days is uncertainty, so the industry should be prepared for continued instability over the next couple of months. There is confidence however, that we will gain clarity at some point in the not-too-distant future. Until then, biodiesel prices will remain high. We will be keeping a close eye on how policymakers address these issues and the impacts they’ll have on both the renewable fuels market and the heating oil industry.

Hear what our clients have to say about us

“Diversified Energy Specialists has made participation in the APS program a home run for our company. They seamlessly handle the process from applications through selling our AECs. Any APS dealer would benefit from DES’s expertise!”

— Ed Scott, General Manager, Scott Energy

Author: Joe Uglietto

The Most Important “Boring” Article You’ll Read All Day

Just like that, it’s 2025. I hope you all enjoyed a very Happy New Year and have hit the ground running towards another successful season in our challenging—but never boring—industry.

I’m tackling a topic that is absolutely boring, yet also absolutely critical for you to understand. If you operate your business in Vermont or Massachusetts, plan to take notes, make copies or do whatever you need to in order to become familiar with what I’m about to share. If you operate in any other State, pay close attention, because you may be reading about rules that will find their way to your home State.

As part of their aggressive emissions reduction programs, Vermont and Massachusetts have moved forward with the implementation of significant emission reporting requirements. According to these requirements, all heating oil, propane, natural gas and diesel companies will have to register with the State and report their sales in the form of carbon dioxide emissions.

While both States have indicated that the list of registered companies will be made public, they have also indicated that the type of fuel sold and the total gallons sold will be kept confidential. The only data that will be made public is a list of company names.

For the time being, we’ll have to take the Vermont and Massachusetts at their word when it comes to confidentiality, but this will be important to monitor in the coming years.
Here is what the reporting structures look like in each State.

Vermont
30 V.S.A. §8124(b)(1) requires that every entity selling fuel in Vermont or selling fuel into Vermont register annually with the Vermont Public Utility Commission (PUC). The deadline to register was in early 2024. This will be an annual registration and reporting requirement, as all entities that sell heating fuel in or into Vermont will have to report their total fuel sales of heating oil, biodiesel, propane, kerosene and natural gas.

The registration requires companies to list their legal name, address, types of heating fuel sold and the exact amount of each type of heating fuels sold in or into the state for final sale. This regulation will allow the PUC to have a list of all potential obligated parties in a Clean Heat Standard (CHS) and know the exact number of gallons each company sells, ultimately resulting in their obligation under a CHS.

This reporting requirement will also provide the State with the data needed to update the Vermont Greenhouse Gas Emissions Inventory & Forecast reports. With this data, the State will be better able to project its GHG emissions and whether it has met its legislatively-mandated GHG reduction targets.

Even if the CHS is not implemented in Vermont—and based on recent events, it may be replaced with an alternative that is potentially more damaging to our industry—the fuel dealer registry and emissions reporting will remain.

Massachusetts
310 CMR 7.71 requires companies selling and distributing heating fuels to homes and businesses in Massachusetts (including suppliers of natural gas, fuel oil and propane) to register with the State and report their fuel sales quarterly. It also implements a reporting requirement for all fuel storage facilities in Massachusetts. The registration deadline for all companies and storage facilities is Jan. 31, 2025. Any company that isn’t registered by this deadline will face fines from the State.

Registration requires the legal name of the supplier, Federal Employer Identification Number, primary business address and contact information for the designated representative. Once the company or storage facility is registered, there will be a quarterly reporting requirement. The Massachusetts Dept. of Environmental Protection (MA DEP) has indicated that it will provide further guidance prior to the first quarter reporting deadline on April 30, 2025. Companies will likely be required to report all fuel sales in Massachusetts, whether that is heating oil, propane, natural gas, kerosene or biodiesel. The quarterly reports will allow Massachusetts to measure the gallon sales and total emissions from all heating fuels within the State.

The MA DEP has also indicated that sellers of the transportation fuel known as “clear diesel” will also have to register under 310 CMR 7.71 and report on a quarterly basis. Despite clear diesel not being a heating fuel, the MA DEP has included it within the reporting regulation.

This reporting regulation and registry will allow the MA DEP to measure all fuel sales and fuel companies within the State, providing it with a comprehensive list of all potential obligated parties within a CHS. This reporting requirement is a vital first step in the implementation of a CHS in Massachusetts, with the current expectation that the CHS will go into effect in 2026 after a full year of reporting data from 310 CMR 7.71.

If you operate in Massachusetts or Vermont and you haven’t already done so, I would strongly recommend that every company designate someone within their organization to be the point person for these programs. Details can quickly get complicated and the penalty for missing out on a step in the process could be severe. You’ll be well-served to have a homegrown expert who is responsible for tracking developments and executing on the new requirements.

Hear what our clients have to say about us

“Diversified Energy Specialists has made participation in the APS program a home run for our company. They seamlessly handle the process from applications through selling our AECs. Any APS dealer would benefit from DES’s expertise!”

— Ed Scott, General Manager, Scott Energy

Author: Joe Uglietto

There is big news out of Vermont, with the Vermont Public Utilities Commission recommending that its Clean Heat Standard – one of two CHS’s scheduled to go into effect within the next 12-18 months – be abandoned. This after nearly a year and a half of development and work completed by two separate technical committees. The legislature will still have the final vote in January, but the PUC took a strong stance and the smart money is that the Vermont’s CHS will be no more. In favor of what, you might ask? That is the million-dollar question.

Before I answer that question, it’s important to take stock of what this decision will mean. At first blush, you might think this is an exciting development that will allow fuel dealers in Vermont to get back to focusing on taking care of their customers and delivering fuel during the heating season instead of worrying about onerous regulations and policies that would increase costs for dealers and their customers. Unfortunately, that’s not a very likely outcome.

Vermont – like other Northeast states – is focused on developing policies to meet their 2030 and 2050 greenhouse gas reduction goals for the building sector. Unlike some of those states, Vermont has been at the vanguard, with the CHS originally scheduled to go into effect in 2025. More importantly, Vermont is legally required to meet its carbon reduction obligations or it will open itself up to legal action. This is true in Massachusetts as well. In these states, the question is not “Should there be a carbon-reduction program established in the state?”, but rather “What carbon reduction program should be introduced?” And as one of the first states to implement a carbon-reduction regulation or policy, Vermont will establish precedent. What that precedent is will have ramifications well beyond the Green Mountain State’s borders.

Why Embracing a Clean Heat Standard Makes Sense

As the various regulations – Clean Heat Standards, Cap and Invest programs, etc. – have been developed in the states, one of the industry’s primary concerns has been the cost of these programs, both to the retailers themselves and to customers. But the ability for fuel companies to remain competitive is of far greater concern. Dealers can handle cost increases that are measured in cents per gallon. They cannot survive cost increases that are measured in dollars.

There is no question that a CHS formed in even the most market-friendly way will add costs to a gallon of propane or heating oil. But conceived correctly, there would be large financial opportunities for heating oil retailers that blend biodiesel or renewable – and perhaps for propane retailers down the road who offer renewable propane – through the generation of tradable energy credits. These credits would offset the cost increases and potentially generate additional profits.

Given that states like Vermont and Massachusetts are legislatively mandated to achieve their 2030 and 2050 carbon reduction goals, it is not reasonable for us to hope that the Northeast will eventually move away from these goals or pass legislation to override them. And the alternatives to a Clean Heat Standard are far more problematic to the interests of our industry.

If Not a Clean Heat Standard, then What?

The Vermont PUC offered an alternative to the CHS in their report, an increase to the “thermal energy benefit charge” already in existence. This “charge” is essentially a tax on heating oil, propane and kerosene and is currently set at a modest $0.02 per gallon. Proceeds are used for low-income efficiency and weatherization programs. While the PUC didn’t elaborate on the details of this increased fee as an alternative to a CHS, it can be inferred that this $0.02 per gallon fee would have to be increased substantially to reduce emissions from the building sector by 40% by 2030. The revenue from the fee would then be spent directly on weatherization initiatives as well as the electrification of the building sector.

Simply put, revenues from the “thermal energy benefit charge” would be used against the companies paying it, with the express intention of putting them out of business.

And there is no guarantee that decarbonization solutions that our industry can deliver would be given special consideration. The PUC will have to decide whether to exempt renewable fuels from having to pay the per gallon fee or not. But the devil we know – the Clean Heat Standard – gave us a pathway forward. This or other possible alternatives may not.

The next few months will be instructive as to where Vermont goes with its plans and what that will mean for other states. Up next is likely to be Massachusetts and its release of its draft regulation on its CHS. The industry needs to be ready for whatever comes next and continue to fight hard for commonsense regulations that give us a seat at the table. Fossil fuel taxes are poison to our interests. A well-formed Clean Heat Standard is not. Stay tuned.

Renewable Energy Insights is a regular column by Joe Uglietto, president of Diversified Energy Specialists, a leader in the renewable energy markets and consultant to the industry with a focus around emissions reductions and renewable energy innovation.

Hear what our clients have to say about us

“Our experience working with Diversified Energy Specialists has been extremely positive. Joe’s approach makes the process simple for us and his trading strategy delivers strong value each and every time our energy credits are minted. Any time that my team has a question or needs advice, Joe is up to the task immediately. I would recommend Diversified Energy Specialists to any company that is struggling to make the APS Program work for them.”

— Ted Noonan, President, Noonan Energy

Author: Joe Uglietto

The march towards full electrification in the Northeast has been swift and steady over the past 5-10 years. States have leapfrogged one another in an attempt to adopt the most aggressive plans to become the “California of the East Coast.” But the all-out push to “electrify everything” has begun to run up against real-world concerns that are leading to interesting outcomes and possible course corrections in even the most ambitious states.

Northeast and Mid-Atlantic states have been tasked with meeting their 2030 and 2050 greenhouse gas reduction goals and they have been grappling with the question of how to best achieve these targets in the building sector. The answer in New York, Vermont, and Massachusetts – with other states planning to follow their lead – has been to develop market-based regulatory programs that will bring about a transition for the heating fuels industry and require low-carbon fuels or the electrification of the building sector.

But cracks are showing, and the economic realities of such a vast overhaul of the state energy infrastructures are coming to light. As the rulemaking process has progressed in the Massachusetts Clean Heat Standard, Vermont Clean Heat Standard, and the New York Cap-and-Invest program, a number of issues have begun to crop up. Cost concerns, feasibility issues, grid pressure and other issues are making legislators and regulators – and even governors – nervous about the impact of these programs on consumers. Here’s what we’ve begun to see in the process:

New York
New York’s Cap-and-Invest Program (NYCI) is an economy-wide program that caps the amount of greenhouse gas emissions allowed in the state. The original plan was for the NYCI to be implemented in 2025, but the state is behind in the regulatory process and the chances of delayed implementation become greater each day.

Additionally, cost concerns have fueled significant pushback from business associations and other opponents of the NYCI program. Those concerns have reached the Governor Hochul’s office, and she has recently shared those concerns. In a recent TV interview, Governor Hochul said “The costs have gone up so much I now have to say, ‘What is the cost on the typical New York Family?’ The goals are still worthy. But we have to think about the collateral damage of these decisions. Either mitigate them or rethink them.” Later she was quoted saying “I can’t do things without knowing the cost on consumers in either educating them that they believe this is the way to go because it’s good for the future … or making it go just a little but slower.”

Cost concerns have been compounded by several reports that have questioned New York’s ability to meet its 2030 carbon reduction goals. The New York Public Service Commission released a Draft Report in July 2024 that stated the 70% renewables target in 2030 would not be met before 2033. A few weeks later, the New York State Comptroller Thomas DiNapoli released an audit stating that outdated data was used in the CLCPA projections and that the Public Service Commission had failed to estimate the costs of the transition to renewables and those costs would be placed on ratepayers. Following that report, the New York Independent System Operator (NYISO) warned that there were risks of blackouts in the next ten years unless substantial new generation comes online.

It’s against this backdrop that Governor Hochul announced the Future Energy Economic Summit in Syracuse in September. This conference will explore how “the state can accelerate the deployment of dispatchable emissions-free resources that will be needed to bolster its notable and ongoing efforts to scale renewable energy” and will be important in determining the future of the NYCI program.

Massachusetts
In Massachusetts, we’ve already seen modifications to the draft Clean Heat Standard and the targets that will dictate the compliance obligation for energy companies in the state. Initially, the MA Department of Environmental Protection (DEP) stated that the compliance obligation on fossil fuel retailers would be a 29% emissions reduction from 1990 levels in 2026 and a 49% emissions reduction from 1990 levels in 2030, aligning with the state goals. Due to public comments and concerns about the cost impact on consumers, the MA DEP rolled back the compliance obligation in their Draft Framework.

Currently, the MA CHS has a compliance obligation of 4% emissions reduction from 1990 levels in 2026 and a 16% emissions reduction in 2030. And while the MA DEP has created a separate standard call the “Full-Electrification Standard”, which places an additional compliance obligation on energy companies to convert homes to heat pumps or purchase credits from those who do, the overall outcome of the modifications is a reduction in potential costs, both to energy companies and to consumers.

Vermont
The Vermont Clean Heat Standard (CHS) is in the rulemaking process and is scheduled to be implemented in 2026, although it is certainly possible that this program could be pushed back. The VT CHS may have the same name as the MA CHS, but the design of the program is much different. As of now, the VT CHS has a compliance obligation of 40% below 1990 levels by 2030. And while Massachusetts has rolled back the compliance obligation in their CHS, Vermont has not done so.

When the CHS bill was being debated by legislators, the VT Agency of Natural Resources Commissioner Jule Moore estimated the cost of the program would be $2 billion between 2026 and 2030. At the beginning of August, the hired consultant, NV5, released their preliminary findings and estimated the cost of the VT CHS to be $7 billion between 2026 and 2030 and $17 billion between 2026 and 2050.

These cost estimates by NV5 have put pressure on the state and the people who are currently developing the CHS. Even though Vermont has adopted some of the most aggressive positions to attain full electrification, it would not be a shock if the inconvenient realities of the outcomes of these programs – increased costs, undue burdens on business, etc. – will result in modifications or delays to the program.

Should Dealers Sit Tight? Or Should They Be Preparing for What Comes Next?

While the modifications to these programs are welcome news, it is a virtual certainty that emissions-reducing programs will be put in place in some form in the coming months and years. There are plenty of ways for states to reduce the cost of these programs to consumers while still implementing programs that will change how companies in our industry are required to operate. Preparation is necessary, even if the ultimate program details are a moving target. Here is what every company should be doing, especially those in states where a Clean Heat Standard or similar program is imminent:

1. Increase cash flow and access to capital to account for the inevitable cost increases to your product and increased AR as a result.
2. Establish relationships NOW with biodiesel and renewable diesel producers to ensure you have access to a supply of renewable fuels. These fuels could provide an incentive in some markets and an exemption from tax in other markets.
3. Develop the ability to store and blend renewable fuels. Installing storage or heated storage for biodiesel will be an asset for companies that are able to do so.
4. Get involved in your state associations. Attend public hearings on the development of these programs. Contribute financially to the efforts that are underway to create positive outcomes for your customers and your businesses.

We are seeing signs that the wave of electrification policy may be cresting. We can’t expect programs to go away, but we can continue to advocate for reasonable programs that allow our companies to be competitive and to deliver low-carbon renewable fuels in order to meet compliance. If our industry plays its cards right, we just might end up in a winning position. Stay tuned.

Renewable Energy Insights is a regular column by Joe Uglietto, president of Diversified Energy Specialists, a leader in the renewable energy markets and consultant to the industry with a focus around emissions reductions and renewable energy innovation.

Hear what our clients have to say about us

“We’ve worked with Diversified Energy Specialists since the inception of the Massachusetts APS program and we couldn’t be happier with our decision. Joe’s excellent understanding of the program and superb administrative support makes the process very easy for us. He has consistently secured strong returns on our energy credits, and he’s a heck of a good guy on top of it all.”

— Jim Townsend, President & CEO, Townsend Energy

Author: Joe Uglietto

Fuel companies that are “plugged in” have been hearing about market-based decarbonization programs for a while. Industry leadership has featured these issues at conventions and conferences. State association executives are sharing details with their members as they become available. And you’ve certainly heard from me about these programs if we’ve spoken or if you’ve read my previous ICM columns.

Here’s where we stand at this point in the Summer of 2024. Nearly every Northeast and Mid-Atlantic State is considering or is in the process of developing a market-based decarbonization program for the thermal sector. These programs will significantly impact the way heating oil and propane retailers run their businesses. How should heating fuel retailers in each state be preparing for these programs? Let’s take a state-by-state look starting with the programs that are set to go live first, and what retailers in each state should be preparing to do.

2025

New York’s “Cap-and-Invest” is scheduled to be implemented on January 1, 2025. Even though the program launch is just a few months away, NYSERDA has not released the price ceiling for allowances in their planned quarterly auction. This makes it difficult for heating fuel retailers to understand and plan for the cost impact of this program. NYSERDA has also not indicated if renewable fuels will be exempt from the obligation or if the carbon intensity of renewable fuels will be scored. Despite the many uncertainties of New York’s Cap-and-Invest program, retailers should be preparing with speed. Firstly, I would encourage every New York fuel company to read the Cap-and-Invest regulations in order to understand the details of the program. For those heating fuel retailers who offer cap and fixed-price plans, it is critical that you factor in the reality that if implemented on schedule, Cap-and-Invest will add to the cost of your fuel and overall operations. To avoid the worst possible scenarios, it will be important that you include language in your cap and fixed-price contracts that clearly explains that fuel prices may increase on January 1, 2025 and that pricing may need to be adjusted as a result. There are right ways and wrong ways to message about this. And this is one of those situations where you can’t afford to get it wrong.

There are other critical steps that New York retailers should be taking this year, I’ll be covering those in future articles and in my e-newsletter (reach out to me at joe@diversifiedenergyspecialists.com if you’d like to receive that).

2026

The Massachusetts and Vermont Clean Heat Standards are scheduled to be implemented on January 1, 2026. There are many uncertainties still surrounding these programs as well, but we know enough for dealers to be getting ready. In Vermont, heating oil retailers that have blended biodiesel or renewable diesel into their heating oil will be able to generate Clean Heat Standard credits retroactive to January 1, 2023. My advice to every Vermont heating oil retailer; blend biodiesel and/or renewable diesel now and keep records of all purchases and sales of blended fuels. This will allow you to take advantage of this unique opportunity to lower your compliance obligation when the program begins.

Massachusetts retailers don’t have a retroactive blending opportunity built into their Clean Heat Standard at this point in time, but it is just as important for them to begin blending and to establish strong relationships with renewable fuels suppliers in anticipation of the 2026 program launch. The compliance obligation that heating oil and propane retailers will need to meet in Massachusetts will be on a trailing basis. This means that heating oil and propane retailers will have to demonstrate that they’ve generated or acquired the obligated number of credits on a date that trails the compliance year. For example, the date to demonstrate compliance for the 2026 trading year would be June 15th, 2027. As a result, heating fuel retailers will need to price the cost of the program into the fuel they sell, so that they’ve covered their obligations when payments come down in the following year.

2027 and Beyond

New Jersey, Maryland and Rhode Island are the next states up. Maryland’s governor just recently signed an Executive Order that includes a Clean Heat Standard. The good news for retailers in these states is that their programs will trail those around the rest of the region, and the expectation – we’ll see how it actually turns out – is that program developers can learn from what works and what doesn’t. Retailers in these states should get familiar with the Executive Orders and proposed bills that have been introduced regarding decarbonization programs. And it will absolutely be a benefit for retailers to begin establishing relationships now with renewable fuel suppliers and where possible, to begin blending renewable fuels into their supply.

While these programs are often challenging to comprehend, each one provides a significant opportunity for heating fuel retailers to capitalize on a changing market. Diversified Energy Specialists will continue to keep retailers, wholesalers, and industry stakeholders abreast of the various regulatory programs and their rule-making processes in the weeks and months ahead. If you’d like to join our email list to receive our updates, email me at joe@diversifiedenergyspecialists.com.

Renewable Energy Insights is a regular column by Joe Uglietto, president of Diversified Energy Specialists, a leader in the renewable energy markets and consultant to the industry with a focus around emissions reductions and renewable energy innovation.

Hear what our clients have to say about us

“I can’t say enough good things about Joe Uglietto and the work that Diversified Energy Specialists has done for us. Joe took care of everything for us at the outset of the APS program. He got us registered, he did the paperwork. He made the process seamless. Best part is, his strategy delivered higher value for my energy credits than I expected, and the returns have been strong each and every year. There’s no one better to help you get the most out of energy credit programs like the APS.”

— Mike Lamparelli, Owner, Frank Lamparelli

Author: Joe Uglietto

Flowers aren’t the only thing in bloom this season. New York plans to implement an economy-wide Cap-and-Invest program in 2025. Massachusetts and Vermont plan to implement Clean Heat Standards in 2026. New Jersey and Rhode Island have introduced legislation for Clean Heat Standards. Other states won’t be far behind. What began as a trickle of “clean energy” legislation is predictably turning into a flood for the entire region. What will this mean for heating oil retailers and wholesalers? What can they expect and how can they start to prepare now?

If you’re a heating fuel retailer in New York, you’ll face several challenges when the state’s Cap-and-Invest program is implemented next year. While several important questions remain unanswered, the current version of the program will require all retailers that sell more than 100,000 gallons annually to purchase allowances for the fuel that they sell. These allowances will be purchased at a quarterly auction, before the retailer sells any of its fuel. The cash flow impact on your business is obvious. You’ll need access to additional capital upfront in order to purchase these allowances. Inevitably, the cost of these allowances will be priced into retail cost of fuel, increasing costs to New York consumers. We can also access higher AR balances as customers struggle to keep up with their bills, increasing the need for dealers to access capital regularly. If there’s a silver lining to be found in New York’s Cap-and-Invest program, it’s that dealers will know exactly how much the cost of these allowances will be, so they’ll be able to accurately price it into their fuel.

In contrast, Clean Heat Standards do not require additional capital for heating fuel retailers prior to selling the fuel. Clean Heat Standards require heating fuel retailers to purchase credits on the open market or pay the alternative compliance payment price at the end of each compliance period. For example, for all heating fuel sold in 2026, a retailer would need to purchase and retire credits to meet compliance by June 2027. One of the challenges retailers will face in a Clean Heat Standard is knowing where to price their fuel to account for the credits they will have to purchase later. In the Massachusetts Clean Heat Standard, there will be two separate markets, with different compliance obligations and different alternative compliance payment price levels. The cost of compliance in each program will have to be considered by retailers when pricing their fuel.

One thing is certain. Regardless of the program, the price of fuel will increase for consumers. In order for retailers to effectively prepare, it will be important to increase their access to capital prior to the program’s implementation. In both the Vermont and Massachusetts Clean Heat Standards, renewable fuels are incentivized. In preparation for the beginning of these programs, retailers should be establishing relationships with biodiesel and renewable diesel suppliers, and should be blending biodiesel and renewable diesel into their fuel. NYSERDA has not yet determined how it will treat renewable fuels in New York’s Cap-and-Invest program, but there is a possibility that blending biodiesel or renewable diesel will lower the number of allowances required to meet compliance.

Retailers in other states need to remain vigilant. New York, Massachusetts and Vermont will give you insight into what may be coming down the pike for you.

We can expect 2024 to be an extremely active year. New legislation in some states, new rules in others, and the imminent go-live of the New York, Vermont and Massachusetts programs will keep our company – and probably a fair number of industry stakeholders – up at night. You can rest assured, knowing that Diversified Energy Specialists will be with the industry every step of the way, keeping retailers, wholesalers, and industry stakeholders abreast of the various regulatory programs and their rule-making processes. If you’d like to join our email list to receive our updates, email me at joe@diversifiedenergyspecialists.com.

Renewable Energy Insights is a regular column by Joe Uglietto, president of Diversified Energy Specialists, a leader in the renewable energy markets and consultant to the industry with a focus around emissions reductions and renewable energy innovation.

Hear what our clients have to say about us

“Our experience working with Diversified Energy Specialists has been extremely positive. Joe’s approach makes the process simple for us and his trading strategy delivers strong value each and every time our energy credits are minted. Any time that my team has a question or needs advice, Joe is up to the task immediately. I would recommend Diversified Energy Specialists to any company that is struggling to make the APS Program work for them.”

— Ted Noonan, President, Noonan Energy