Executive Order Would Drive Climate Progress in Colorado

Colorado is fifth in the country in wind industry employment, with over 6,000 workers.
Credit: National Renewable Energy Laboratory

As the impacts of climate change intensify in Colorado – leading to diminishing snowpack, more severe droughts, and larger wildfires – the urgency of reducing carbon pollution grows clearer. The good news is that there also has never been a better time for Colorado to transition to a clean energy future and achieve significant emissions reductions, and this week, it appears that Governor Hickenlooper is prepared to begin that process.


A draft Executive Order, made public by Politico, would require Colorado’s power sector to achieve carbon pollution reductions of 25% below 2012 levels in 2025, strengthening to 35% cuts in 2030. These are readily achievable targets. California’s legislature just extended its economy-wide cap on carbon – requiring 40% cuts below 1990 levels by 2030. The Executive Order, if finalized, would represent a huge step forward and would strengthen Colorado’s leadership in the growing clean energy economy. Colorado’s power companies are well-positioned to meet and exceed the targets in the draft order through smart investments in clean energy like wind, solar, and energy efficiency.


In December 2015, Congress passed a multi-year extension of the tax credits for wind and solar, providing important near-term certainty for the renewable energy industry, and making it an ideal time for Colorado to double down on its clean energy policies and investments. The state could also achieve significant emissions reductions by extending and broadening its utility energy efficiency savings standards to 2% savings per year, with the added benefit of increased bill savings for customers.


Renewables Are Cheaper Than Ever


Colorado has abundant wind and solar resources, and Xcel Energy, Black Hills Energy, and other electricity providers can purchase zero-carbon, renewable energy at a lower cost than ever before. The cost of building a new wind farm is falling as the technology improves, allowing developers to take advantage of higher-speed, less variable wind at higher turbine heights. The costs of solar technologies have also declined quickly over the past several years. According to investment firm Lazard, the cost of generating electricity from solar has decreased 78% since 2009, and many analysts believe costs will their rapid decline over the next several years.

Utilities purchased wind power at an average price of $20 per MWh in 2015, the lowest ever. With prices this low, wind power is the cheapest source of new electricity generation and can save money for customers, even when compared to buying electricity from existing, fossil-fuel fired power plants. Colorado’s existing wind fleet has already saved customers more than $20 million in fuel costs, and Xcel estimated that its proposed 600 MW wind project would save its electricity customers more than $400 million over the 25-year life of the project.


Recent analysis from Climate Policy Initiative has found that there’s room to build on that progress: Xcel may be able to replace roughly a quarter of its coal generation (6,000 GWh) with new wind projects, all while saving money for its customers. The analysis also indicates that the utility could do so while maintaining reliability and benefitting its own bottom line.


Energy Efficiency Remains the Lowest Cost Resource, and Colorado Can Do More


Colorado also has significant untapped energy efficiency potential. Although Colorado’s utilities expanded their energy savings and energy efficiency program spending between 2009 and 2012, overall savings have been about the same since 2012. Colorado lags regional leaders like Arizona and Utah in energy efficiency policies and programs. Though Colorado has a good policy framework, the ambitions of its policies could be higher. For example, the energy efficiency portfolio standard, when fully implemented in 2018, will require utilities like Xcel Energy and Black Hills to save 1.68 percent of load each year, well below the savings levels of 2.5% and more that other states are demonstrating is achievable. Additionally, Colorado’s co-ops and municipal utilities are not held to an energy efficiency standard, limiting savings for many customers throughout the state.


Colorado Should Accelerate the Growth of its Low Carbon Economy


By committing to achieve significant carbon reductions from the power sector, Governor Hickenlooper would be sending a strong and clear market signal, encouraging Colorado to strengthen its leadership position in the low carbon economy. Colorado is already feeling the benefits of its thriving clean energy industry. In 2015, Colorado’s wind and solar industries supported between 11,000 and 12,000 jobs. As of 2014, the wind industry had injected more than $4.8 billion in the Colorado economy, and generates an estimated $7.8 million in annual lease payments to ranchers, farmers, and other landowners.


According to the state’s most recent carbon pollution inventory (which tracked 2010 emissions), less than a third (30%) of the state’s emissions are from the power sector, and recent investments have likely cut that proportion. Another 23% come from transportation, 21% from residential, commercial and industrial fuel use, and 8% from oil and gas activity. Coal mining, agriculture and waste management also contribute to the state’s carbon emissions. The state can cut emissions from all of these sources – and do so while boosting the state’s economy and saving customers money.  This executive order should start the state’s work in addressing carbon pollution across the board.


Governor Hickenlooper’s draft Executive Order, if finalized, represents a hugely important step forward and will cement Colorado’s climate leadership and its position in the burgeoning clean energy economy. With the impacts of climate change already being felt across the state, Colorado can’t afford to wait. 

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