RI S2654

Establishes a tradeable clean heat credit system where obligated parties (natural gas utilities and heating fuel sellers) must retire credits annually to meet greenhouse gas emission reduction targets for the thermal sector aligned with Rhode Island's Act on Climate goals for 2030, 2040, and 2050.

Eligible clean heat measures include weatherization, air-source heat pumps, ground-source heat pumps, heat pump water heaters, electric stoves, and electric dryers; explicitly excludes switching between fossil fuels or using renewable natural gas or hydrogen.

Requires at least 20% of each obligated party's clean heat credits come from low-income customers and 20% from moderate-income customers to ensure equitable distribution of program benefits.

Department of Environmental Management must begin promulgating rules by July 1, 2027, with obligated party compliance beginning July 1, 2028; noncompliance penalties are set at three times the standard per-credit cost.

Creates a default delivery agent selected through competitive procurement to provide clean heat measures statewide, with all noncompliance payment funds directed to serve low-income customers.