Editor’s note: This column is part of a pro-con exploring the new rules approved by the Air Quality Control Commission last Friday. You can read the opposing view here.
Colorado recently took another strong step to reduce emissions and protect our environment. After more than a year and a half of hearing from experts and stakeholders of all backgrounds, the Air Quality Control Commission adopted a first-in-the-nation rule that will lead to 18 of the state’s highest-emitting manufacturing facilities collectively cutting GHG pollution 20% below 2015 levels by 2030.
The Greenhouse Gas Emissions and Energy Management for Manufacturing Phase 2 rule, or GEMM 2, was born out of Colorado’s Greenhouse Gas Pollution Reduction Roadmap. The roadmap lays out a strategic plan to cut the state’s pollution in half by 2030, focusing on the five largest GHG emission sources: cars and trucks, electricity generation, oil and gas, buildings, and manufacturing and industry.
This rulemaking and related tax credits and incentives strike a careful balance to both strengthen Colorado’s competitiveness and ambitiously go after manufacturing emissions.
The facilities covered by this rule employ thousands of Coloradans, provide an important tax base for their communities, and produce products we all use, ranging from mozzarella cheese to baking soda. Many of their customers are increasingly looking at carbon-reductions in their supply chain, and we expect these new rules will help Colorado companies distinguish themselves, lead the way, and expand markets for made-in-Colorado products.
To save these businesses money and help reduce emissions, the state has created numerous funding opportunities. These include new tax credits to help industrial and manufacturing facilities cut GHG emissions, as well as the Clean Air Program grants, which reduce industrial sector emissions. These incentives, along with numerous federal opportunities, will enable and reward investments necessary to satisfy and even exceed GEMM 2’s GHG reduction target.
Beyond that, the rule allows companies to trade “GHG credits” with other facilities covered by the rule that are able to reduce their pollution in any year, beyond their 2030 reduction requirement. This credit trading system achieves the same level of total pollution reduction from the 18 facilities as a whole while ensuring harder-to-decarbonize facilities can comply with the rule and incentivizing easier-to-decarbonize facilities to pursue even greater emissions reductions over a shorter period of time. The state may further consider requiring that facilities located in disproportionately impacted communities can only purchase credits from other facilities in similar communities, to ensure that the benefits of local pollution reductions happen in the areas that need them most.
While some have expressed concern about this credit system, it’s important to emphasize that a company may only use GHG credits to meet its emissions reduction requirements after all other economically reasonable on-site emissions reduction opportunities are exhausted.
In addition, the rule ensures that disproportionately impacted communities benefit from onsite reductions by setting the cost threshold at 50% higher for facilities located in or near these communities. In total, the health benefits of cutting these air pollutants will be worth more than an estimated $170 million by 2050 (along with $950 million in avoided climate change costs during the same time frame), according to an analysis by Colorado’s Air Pollution Control Division. These improvements are in addition to the benefits from other air regulations and requirements that will reduce air pollution from these facilities over time.
In recent years, Colorado has made huge headway in reaching its climate goals. The state’s electric utilities have locked in more than 80% renewable energy and nearly 85% GHG emission reductions by 2030 compared to a 2005 baseline. Colorado also now has the strongest methane regulations for the oil and gas sector in the country, with a goal to reduce methane pollution by at least 60% by the end of the decade. Colorado has risen to one of the top six states in the nation for electric vehicle market share and is increasing building energy efficiency and reducing reliance on natural gas for heating.
No rulemaking is easy, but this one will help us avoid the worst impacts of climate change, strengthen our economy, and expand markets for made-in-Colorado products, while prioritizing the health and well-being of every Coloradan. GEMM 2 will help continue Colorado’s leadership in climate policy, competitiveness, and environmental justice.
Will Toor is the executive director of the Colorado Energy Office
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