The Legislative Case for Incentivizing Propane in Clean Heat Policies

The Massachusetts Clean Heat Standard (CHS), created by the Massachusetts Department of Environmental Protection (MassDEP), aims to reduce greenhouse gas (GHG) emissions from residential, commercial, and industrial heating. This policy will directly impact every homeowner in the Commonwealth and many other unintended groups, including agriculture, fuel assistance, transportation, and commercial and industrial propane users.

While the aim of the CHS to reduce emissions is desirable for all, the policy intends to do so through costly and inefficient massive, forced electrification and fails to consider propane as a sustainable energy solution that’s already here, clean, safe, and low carbon. It further seeks to impose substantial penalties on clean fuel-energy like propane.

Propane is a sustainable energy solution that’s already here. Propane is clean, safe, and low carbon. It even enhances U.S. energy independence. Offering reliable, accessible, and affordable energy, propane supports our transition to a net-zero future.

The Clean Heat Standard should incentivize propane as a vital alternative heating source to work alongside other renewable energy options. Propane is ecologically responsible and has numerous benefits, including as critical backup and generator resource power:

When we consider the carbon intensity for individual energy sources, we can better make sense of which sources are most feasible for us to forge a realistic path toward a low-carbon or net-zero future. When an energy source has a lower carbon intensity, it is better for us to utilize it for the sake of the environment. Until the electric grid produces a lower carbon intensity than propane, propane should be exempted from penalties and should be incentivized as a clean energy fuel in the CHS.

• Propane carbon intensity: 77 g/MJ
• Electric grid carbon intensity: 100 g/MJ
• Electric grid carbon intensity during peak demand: 120-140 g/MJ

As it stands now, any conversion from propane to electrification will result in increased greenhouse gas emissions due to the current state of the electric grid.

While the mission of the CHS is to reduce emissions, the implementation of the current policy’s framework will have many unintended financial consequences for homeowners, farmers, and businesses alike, especially those that rely on propane.

Used mostly in rural areas that cannot be served by natural gas or by electric power, propane is delivered to individual customers as needed and does not rely on public utility pipelines or infrastructure. Natural gas systems can typically be converted to propane use with minimal cost.

According to the EIA MA State Profile, propane represents just 4.7% of the household heating energy mix in the state and has a minimal impact on overall greenhouse gas emissions.¹ Industry surveys from 2021 and 2022 show that propane is more commonly used for home heating in Western Massachusetts:

• Hampshire County: 10% of homes (5,988 households)
• Berkshire County: 9% of homes (5,262 households)
• Franklin County: 10% of homes (3,177 households)
• Hampden County: 4% of homes (6,431 households)
• Worcester County: 5% of homes (15,061 households)

The high cost of electrification will fall on customers. MassDEP will require fuel suppliers to acquire “credits” by converting homes from fossil energy to full electrification. Companies can acquire credits in three ways:

• Perform installations themselves
• Buy credits from other companies or credit aggregators
• Pay an alternative compliance charge for not obtaining full electrification credits

Credits cannot be obtained for efficiency upgrades like insulation or window improvements—only full electrification counts toward crediting. The cost for this is expected to be $6,000 per home in 2026, increasing $1,000 each year thereafter (i.e., $7,000 in 2027). 25% of the electrification credits must be for verified low-income applications. If a company fails to obtain these low-income credits, they will face a compliance charge of double the normal rate per household (i.e., $12,000 in 2026). These changes will inevitably lead to higher costs for consumers.

The proposed framework of the CHS includes some “equity” measures to help homeowners switch to electric heat pumps, but it does not offer any exemptions for customers like mobile home residents, farms, LIHEAP recipients, and rural homeowners who may find it difficult to convert to electric and would see a significant rise in their energy costs.

MassDEP will require obligated fuel suppliers to reduce their emissions by a percentage threshold each year. If a company fails to comply with reducing emissions, it will face a financial penalty, and the current suggestion for this penalty is $190 per metric ton.

It’s estimated that the propane industry would pay over $68 million in compliance charges in 2030. The projected costs for compliance average $0.70-$1.00 per gallon.

Propane is a clean and vital energy resource that should be used to forge a pathway to meet our net zero goals. Propane is cleaner than the electric grid, and the fuel is becoming even cleaner with the implementation of renewable propane. Propane is safe, non-toxic to humans or the environment, versatile, equitable, resilient, and here to reduce GHG emissions immediately.