Colorado adopts nation-leading policies to reduce GHG pollution from buildings

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DENVER - Tues., June 8, 2021 - As the Colorado General Assembly wraps up its 2021 session, an ambitious package of newly adopted legislation will ensure Colorado reduces greenhouse gas (GHG) pollution from buildings while also improving indoor air quality, protecting consumers, driving rural economic development and supporting high quality jobs. These nation-leading policies came together through months of work by prime bill sponsors and legislators from both parties, utilities, environmental advocates, environmental justice advocates, labor unions and Governor Polis’ administration including the Colorado Energy Office (CEO). The bills provide a thoughtful, strategic approach to achieving decarbonization of the building sector while protecting consumer interests and allowing plans tailored to the needs of Colorado’s diverse communities.

The state’s Greenhouse Gas Pollution Reduction Roadmap (Roadmap) identified combustion of fossil fuels in buildings as one of the four largest sources of GHG pollution in Colorado. The Roadmap also identified near-term actions Colorado could take to reduce GHG pollution including increasing energy efficiency investments by gas utilities, implementing energy and emissions benchmarking and performance standards for large commercial and public buildings, requiring electric utilities to support customer-focused beneficial electrification and expanding financing for clean energy and energy efficiency programs. The Roadmap called for GHG pollution reduction goals for gas delivered by utilities that would serve as an overarching framework to ensure, collectively, that all of the individual policies would achieve the state’s GHG targets. Each of these near-term actions was approved by the Colorado legislature this session.

As part of this year’s legislative package, Colorado adopted Senate Bill 21-264, which requires gas utilities to implement clean heat plans that reduce emissions 4 percent by 2025 and 22 percent by 2030 from a 2015 baseline. The bill is technology neutral and outcome driven, and it allows utilities to use multiple technologies and count emissions savings from energy efficiency, beneficial electrification, leak reduction, hydrogen and recovered methane. Regulated utilities are required to file clean heat plans with the Colorado Public Utilities Commission (PUC), which is directed to ensure the plans meet cost-effectiveness targets. 

In addition to adopting requirements for clean heat plans, the General Assembly passed legislation to implement many other near-term Roadmap actions that address emissions from buildings comprehensively including enhancing gas demand-side management, ensuring utilities are working with customers to help them switch to high efficiency electric appliances, benchmarking and reducing energy use island emissions in large commercial buildings, and enhancing financing programs for building upgrades. 

“Taken together, this impressive package of bills places Colorado at the forefront of tackling greenhouse gas pollution from the buildings sector,” said Will Toor, Colorado Energy Office Executive Director. “It gives us a pathway to achieve our targets of a greater than 20% reduction by 2030 and 90% by 2050━and does it so in a manner that protects consumers, supports low income and disproportionately impacted communities, drives new economic opportunities and supports development of high quality jobs.”

Following is a summary of some of the newly adopted bills to address GHG pollution in Colorado. During this session, CEO focused on reducing emissions from buildings including: 

  • Senate Bill 21-264 Clean Heat - Adopt Programs Reduce Greenhouse Gas Emissions Utilities creates a requirement for gas utilities to reduce GHG pollution by 4 percent by 2025 and 22 percent by 2030 using a technology-neutral, outcome-based approach. Eligible technologies include energy efficiency, beneficial electrification, green hydrogen and recovered methane. Investor owned utilities must file plans with the PUC, which is directed to ensure the plans are cost-effective.  
  • Senate Bill 21-246 - Electric Utility Promote Beneficial Electrification promotes the use of energy-efficient electric equipment in place of less efficient fossil-fuel-based systems by requiring Xcel Energy and Black Hills Energy to file plans with the PUC that support all cost-effective electrification including the full social cost of carbon and methane emissions in cost-effectiveness evaluations. The bill provides guidance to the PUC on how to implement cost-effective programs that provide incentives to customers.
  • House Bill 21-1238 - Public Utilities Commission Modernize Gas Utility Demand Side Management Standards builds on a decade of success in gas demand-side management programs in Colorado. The bill requires the PUC to set energy reduction targets, updates the way the PUC reviews the cost-effectiveness of utility plans and requires the PUC to use science-based costs for GHG emissions (“the social cost of carbon and of methane”) as part of its cost-effectiveness evaluations. 
  • House Bill 21-1286 - Energy Performance for Buildings requires building owners of commercial, multifamily and public buildings 50,000 sf or more to report the building’s annual energy use starting in 2022. It provides exemptions for certain building types and creates a process for a building owner to seek a waiver. Beginning in October 2021, CEO will convene a diverse task force of building and efficiency experts, industry stakeholders and local government representatives to develop and provide recommendations on building performance standards that achieve a 7 percent reduction in GHG emissions by 2025 and a 20 percent reduction by 2030 from a 2021 baseline. 
  • Senate Bill 21-230 - Transfer To Colorado Energy Office Energy Fund allocates $40 million to CEO to support investing in clean energy and efficiency including $30 million to the Colorado Clean Energy Fund, $3 million to the New Energy Improvement District, $2 million to the Residential Energy Upgrade loan program and $5 million to Charge Ahead Colorado.
  • Senate Bill 21-231 - Energy Office Weatherization Assistance Grants transfers $3 million to CEO to help fund the Weatherization Assistance Program, which serves low income Colorado families by improving the energy efficiency of their homes to help reduce energy burden.
  • House Bill 21-1105 - Low-income Utility Payment Assistance Contributions creates a revenue source to support low income utility bill assistance and expand low income energy efficiency, electrification and renewable energy programs.
  • House Bill 21-1303 - Global Warming Potential For Public Project Materials directs the Office of the State Architect to develop a policy for maximum acceptable GHG emissions from certain building materials by January 2024. The bill also requires the Colorado Department of Transportation, by January 1 2025, to establish a policy to assess and report GHG emissions from certain projects. 

In addition to these building sector bills, the passage of Senate Bill 21-260 addressing transportation and House Bill 21-1266 addressing emissions from electricity generation, industry, and oil and gas extraction ensures action to achieve the state’s science-based GHG targets in the top sectors responsible for emissions.

  • Senate Bill 21-260 - Sustainability Of The Transportation System creates new sources of dedicated funding and new state enterprises to enable the planning, funding, development, construction, maintenance, supervision and regulation of a sustainable transportation system by preserving, improving and expanding existing transportation infrastructure, developing the modern infrastructure needed to support the widespread adoption of electric motor vehicles, and mitigating adverse environmental and health impacts of transportation system use.
  • House Bill 21-1266 - Environmental Justice Disproportionate Impacted Community enhances Colorado’s work on environmental justice by creating the Environmental Justice Action Task Force within the Colorado Department of Public Health and Environment (CDPHE), an ombuds position at CDPHE to serve as an advocate for disproportionately impacted communities, and a Community Impact Cash Fund to provide grants for environmental mitigation projects in impacted communities. The bill also defines disproportionately impacted communities and requires the Air Quality Control Commission (AQCC) to engage with disproportionately impacted communities and propose recommendations to the General Assembly to address environmental justice issues. The bill also obligates utilities that own or operate generation to file clean energy plans and directs the AQCC to develop rules to reduce GHG emissions from oil and gas exploration and the industrial sector.