Colorado Takes a Giant Stride Toward Clean and Healthy Buildings

This blog was coauthored with Sarah Tresedder of the Sierra Club.

Colorado hit it out of the park again in implementing its nation-leading Clean Heat law. In its decision on Xcel Energy’s inaugural Clean Heat Plan yesterday, the state’s Public Utility Commission approved the investment of $440 million dollars, mostly in energy efficiency and electrification to benefit Xcel Energy customers. This commitment has the potential to avoid more than 775,000 tons of climate-busting carbon emissions by 2027 while simultaneously making the places where Coloradans live and work more efficient, affordable, and comfortable. 

Today’s $440 million decision is the latest in a series of landmark moves by the state to eliminate carbon emissions from its building sector. In 2021, environmental champions in Colorado enacted the nation’s first Clean Heat law—a requirement that gas utilities reduce greenhouse gas (GHG) emissions from gas burned inside their customers’ homes and other buildings by 4 percent by 2025 and 22 percent by 2030. In the years since, the Public Utility Commission has shown tremendous leadership by planning for a utility system aligned with Clean Heat goals, reigning in irresponsible gas spending, and directing low-cost efficiency and electrification improvements. This decision is one more giant stride to put Xcel on track to meet its climate obligations. 

What the Commission approved: $440 million and a strong directive to stick to the lowest-cost, highest-value resources 

Operating buildings—heating and otherwise powering our homes and places where we work and gather—results in GHG emissions. Climate and public health advocates agree that energy efficiency and beneficial electrification are the best ways to decarbonize those buildings at the lowest cost. Beneficial electrification involves investing in buildings to make them healthier, safer, and more efficient and replacing home appliances that burn fossil gas with highly efficient, all-electric appliances capable of being powered by 100 percent clean electricity. Studies have found that, if done equitably, electrification could result in over $96 billion in energy savings across the nation. 

In this latest decision, the Commission strongly agreed with the scientific consensus that beneficial electrification and energy efficiency are the most cost-effective resources available and directed Xcel to pursue them aggressively. This ambitious direction includes pursuing the opportunity offered by two-way air conditioner heat pumps. The Commission also agreed with stakeholders that the cost of beneficial electrification will fall as electric appliances become more popular and installers get familiar with the technology and directed Xcel to incorporate these falling costs into future modeling along with the public health benefits of reducing pollution from burning fossil gas in people’s homes. 

Xcel had initially proposed  to use a much higher percentage of its Clean Heat spending on biomethane and other ecologically dubious and largely unproven “alternative fuels” resources. Thanks to public pressure and advocacy, the Commission directed Xcel to severely limit their spending on this type of resources, approving only up to $10 million in spending on biomethane, and only if Xcel can provide additional information that it failed to include in its application. 

Setting an example that the nation is eager to follow 

Colorado was the first state to adopt a decarbonization standard for heating utilities. In the few years since the law was adopted, it’s become clear that the policy offered a compelling solution to climate-minded states across the nation. Vermont followed suit by adopting a Clean Heat law the very next year; Illinois and New Jersey have introduced similar heating decarbonization standards this year; just this month, Maryland’s governor signed an executive order directing state agencies to develop clean heat standards.  

It's clear that policymakers are watching Colorado as a leader in building decarbonization. With this precedent-setting decision, the Commission set a bold direction for decarbonizing the built environment across the country as well as for the remaining Colorado gas utilities.