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Colorado’s compromise climate bill demands emissions cuts for electricity, industry and oil and gas

Buildings and vehicles won’t have strict emissions caps, but separate bills will help target those key sectors.

Jeff St. John
Jeff St. John
6 min read
Colorado’s compromise climate  bill demands emissions cuts for electricity, industry and oil and gas

Colorado has ended its 2021 legislative session with a compromise on climate change legislation being struck between House and Senate Democrats and Governor Jared Polis (D). The legislation will set enforceable greenhouse gas emissions reduction rules for the state's electricity, industry and oil and gas sectors, along with adopting a stronger environmental justice framework aimed at helping communities hardest hit by pollution.

And while House Bill 1266 didn’t include enforceable mandates for the transportation and buildings sectors — the price of overcoming Polis’ veto threat — other bills passed in the session’s final days will take significant actions to help reduce emissions from vehicles and buildings as well.

“We were definitely able to accomplish some good forward momentum this year,” said Jessica Gelay, Colorado government affairs manager for Western Resource Advocates. At the same time, she acknowledged, “there’s still a lot to be done."

WRA was among a host of environmental groups supporting Democratic lawmakers’ push this year to add regulatory teeth to the state's 2019 Climate Action Plan. That plan sets targets to reduce carbon pollution by 26 percent by 2025, 50 percent by 2030 and 90 percent by 2050 (all compared to 2005 levels).

Senate Bill 200 would have given the Colorado Air Quality Control Commission power to set and enforce emissions caps across economic sectors. SB 200 backers said this was needed to ensure Colorado doesn’t fall behind on its targets, as multiple studies indicate it is set to do without stronger regulations.

But Polis threatened to veto the bill, saying it could give the commission “near-dictatorial control of our entire economy” with a “top-down approach” to reducing emissions in sectors better suited to more market-based approaches. The Polis administration has favored using incentives and voluntary measures to meet the 2019 targets. A policy roadmap from the Colorado Energy Office was released in January to lay out the administration's proposals for how to close the gap.

Last week’s compromise dropped SB 200 and its emissions mandates for transport and buildings but retained them for the electricity, industrial and oil and gas sectors. Those were added as amendments to HB 1266, an environmental justice bill that also saw significant enforcement mechanisms added in the final days of the legislative session.

With Polis expected to sign the bill into law in the next 30 days, “we are going to be working to ensure that specific enforceable regulations are established in the timeframe required,” by the end of 2022, Gelay said.

New emissions rules for electricity, industry and oil and gas

Colorado's breakdown of emissions by sector depends on how they're calculated. A May report from RMI and Energy Innovation calculates that Colorado’s industrial sector is responsible for 31 percent of the state’s greenhouse gas emissions, largely due to the report's inclusion of oil and gas industry emissions in that calculation.

Transportation and electricity generation are the second- and third-largest emitters at 24 and 23 percent, respectively, while buildings account for 9 percent, and the remainder comes from agriculture and waste and wastewater management. (RMI is a financial backer of Canary Media.)

Image credit: RMI and Energy Innovation

Colorado’s electricity sector has been the most aggressive with carbon-reduction goals. The state’s biggest investor-owned utility, Xcel Energy, has already pledged to cut emissions by 85 percent from 2005 levels by 2030.

“The bill doesn’t push them further, but it codifies what they’ve announced they’re going to do,” Gelay said.

Colorado’s oil and gas sector will also face mandates on emissions of carbon as well as methane, the primary ingredient of natural gas and a powerful global warming gas. The bill will require reductions of 36 percent by 2025 and 60 percent by 2030 for that sector.

It will also increase focus on strategies to reduce pollution in communities facing the worst impacts from the industry, such as those surrounding the Suncor oil refinery in Commerce City, a suburb of Denver. The facility has faced fines and calls for increased investment and monitoring after a series of incidents spewed ash across nearby neighborhoods and led to shelter-in-place orders for local schools.

Large industrial emitters will also face mandated emissions reductions, along with fines for excess greenhouse gas emissions that will match fines already in place for other toxic chemical releases, Gelay said. That will provide funds for the Air Quality Control Commission to implement the emissions monitoring and enforcement called for in the law.

In a statement last week, Kelly Nordini, executive director of Conservation Colorado, praised the bill’s inclusion of emissions reductions from “some of the state’s largest pollution sources,” as well as its “strong environmental justice provisions.”

Those include mandates to create more avenues for communities to bring complaints and seek regulatory changes for polluting facilities. A new environmental justice ombudsperson role at the state’s Department of Public Health and the Environment will be created to represent communities, and a task force will draw up a statewide environmental justice plan by November 2022.

Transportation and buildings sectors

Polis opposed mandates on transportation and building emissions on the grounds that they would be much more difficult to enforce and could require an emissions cap-and-trade program, which the governor opposes. But separate bills passed this session will take some important steps toward incentivizing decarbonization in those two sectors, Gelay said.

The first is Senate Bill 260, a more than $5 billion transportation bill that, along with billions of dollars for highway repair and expansion, also includes significant funding for electric vehicles and public transit.

SB 260’s $733 million EV section includes $310 million for a “community access enterprise” to support EV charging build-out, as well as incentives for low-income customers to replace older vehicles with new EVs. Another $289 million will go to a “clean fleet enterprise” that will support replacing delivery trucks, school buses, and vehicles used by drivers for ride-hailing companies like Uber and Lyft with electric models, while $134 million will be used to pay for the electrification of public transit.

“I wouldn’t say it put us all the way on track,” Gelay said of SB 260. The climate roadmap from Polis’ administration calls for reaching 1 million EVs on the state’s roads by 2030. That's a big leap from current numbers of only about 7,500 EVs sold last year, 15,000 if plug-in hybrids are included.

“But we were excited to see the amount of funding going toward those types of measures, as well as multimodal funding,” she said. Those multimodal options could include planning for more bicycling and walking, ride-sharing or public transit ranging from local commuting to building a train system to connect the Front Range urban corridor cities of Fort Collins, Denver and Colorado Springs along the eastern slopes of the Rocky Mountains.

As for buildings, four bills passed in the final days of Colorado’s legislative session are aimed at reducing greenhouse gas emissions from natural-gas-fueled heating and appliances:

•  House Bill 1286 requires large commercial buildings to track and report energy use and meet performance standards to improve energy efficiency and pollution.

•  Senate Bill 246 directs investor-owned electricity utilities such as Xcel to create incentives for homes and businesses to upgrade to electric appliances and heat-pump-based space and water heaters.

•  House Bill 1238 calls for the Colorado Public Utilities Commission to set energy-saving targets for natural-gas utilities, including Xcel, and to create demand-side management programs to reduce energy waste.

•  Senate Bill 264 will direct gas utilities to create “clean heat plans” to cut the greenhouse gas emissions related to supplying fuel to homes and businesses — a first step in creating emissions reduction targets for the natural gas utility sector, Gelay said.

The Natural Resources Defense Council highlighted the combined emissions reduction potential of these four bills, which collectively “give homeowners and businesses alike a chance to take stock of their energy use, take advantage of incentives to upgrade to modern appliances, and trust that utilities are delivering ever-cleaner power,” Alejandra Mejia Cunningham, Natural Resources Defense Council building decarbonization advocate, said in a statement.

Just how effective these newly created transportation and building programs will be in achieving their emissions reduction goals will depend on “the details in rules that are not yet written,” Gelay said.

(Article image courtesy of Mike Scheid)

greenhouse gas emissionscarbon emissionsColoradoclean transportationoil and gasrenewable energy

Jeff St. John

Jeff St. John covers technology, economic and regulatory issues influencing the global transition to low-carbon energy. He is former managing editor and senior grid edge editor of Greentech Media.