Brandon Leuallen, The Business Times

Colorado is moving toward one of its most sweeping energy transitions as the Public Utilities Commission finalizes new greenhouse gas mandates that would significantly reduce natural gas use in homes and businesses. The mandates set the state on a path toward eventual elimination of natural gas usage.

About 70 percent of Colorado households currently rely on natural gas as the primary heating source, which means the transition will affect the majority of residents.

The PUC adopted a requirement that by 2035 gas utilities must cut emissions for home heating by 41 percent compared to 2015 levels, building on the state’s 2021 Clean Heat Law that mandated a 22 percent reduction by 2030.

Although the commission did not set a formal 2050 target, its decision states Colorado’s broader climate law implies a 100 percent greenhouse-gas-reduction goal for gas utilities to heat homes by mid-century. It signals a long-term phaseout of natural gas heating and movement toward full electrification.

As the plan moves forward, concerns about climate, cost impacts and grid reliability during Colorado’s harsh winters continue to shape the debate.

Environmental groups praise decision

In its article “Colorado regulators set new greenhouse gas reduction targets for utilities,” The Colorado Sun reported Sierra Club organizer Sarah Tresseder said, “We are excited to see Colorado continue committing to some of the strongest gas utility decarbonization goals in the nation.”

The same Colorado Sun article quoted Sierra Club attorney Jim Dennison, who described the ruling as “a significant step forward in decarbonizing Colorado’s gas utilities,” even though the organization had supported deeper cuts.

In a separate interview with Denver7 for the story “Colorado PUC sets new interim goals for greenhouse gas emissions from utilities,” Tresseder added, “We pushed them on this, and we are really happy with the 41 percent, because it keeps us moving.”

Electrification at center of policy

Utilities will now file updated Clean Heat Plans that sow how they will cut emissions using approved strategies to incrementally make the change. 

In its article “Xcel’s 440 million dollar plan to cut greenhouse gas emissions gets Colorado’s OK, but it could boost utility bills again,” The Colorado Sun reported that one example of how utilities could reduce emissions under the Clean Heat framework is to electrify buildings instead of replacing aging natural gas lines.

Concerns about grid reliability, costs

Xcel’s 2024 Clean Heat Plan included more than $440 million in planned investments and estimated that meeting the 2030 target would raise natural gas bills by about 7 percent and electricity bills by roughly 1.1 percent between 2024 and 2028 (source: Colorado Sun, June 12, 2024). 

The Independence Institute warned the PUC in its comments about the goals and said the commission should reject or revise the proposal, adding, “Independent-modeling projects indicate that Governor Jared Polis’s plan for full residential heat electrification and a 100 percent renewable grid would cost up to $620.7 billion by 2050, require 12 times today’s capacity, and still result in winter blackouts.”

The comment concluded, “Colorado’s clean energy transition must be built on policies that are lawful, durable and financially sustainable, not aspirational mandates divorced from economic realities and operational constraints.”

Debate Over the Target

The 41 percent emissions target was not universally supported.

In its coverage of the decision, The Colorado Sun reported the Colorado Energy Office and the Air Pollution Control Division recommended a 30 percent reduction because of feasibility and cost concerns.

Environmental organizations, including the Sierra Club, by contrast urged the commission to adopt deeper cuts of up to 55 percent. The commission ultimately selected a figure between the two positions.