Colorado regulators this week will consider some of the first climate rules in the country specifically targeting the hard-to-decarbonize manufacturing sector.
The new regulations would apply to Colorado’s 18 largest manufacturers, including Suncor Energy Inc., Front Range Energy and Yuma Ethanol LLC, as well as brewing giant Molson Coors and Leprino Foods Co., the world’s largest manufacturer of mozzarella cheese.
The Colorado Air Quality Control Commission will vote on the regulations during a multiday hearing that starts Wednesday afternoon.
But the long-awaited proposal — an emissions trading system to cut climate pollution 20 percent from a 2015 baseline by 2030 — has won few supporters, with groups on all sides of the issue digging in for a fight to define the cutting edge of climate regulations.
“It is worse than doing nothing,” Katie Schneer, a senior policy analyst with the Environmental Defense Fund, said of Colorado’s proposal.
Environmentalists argue the proposal’s emissions cap is too high and contains too many loopholes. The state’s high cap on emissions, they say, would enable manufacturers to actually increase their pollution for years before eventually cutting back to the legal limit set for calendar year 2030 — opening the possibility, they argue, that the state’s plan would lead to more cumulative emissions than business as usual.
“It just isn’t going to have any meaningful impact to adopt the state’s proposal now, and allow for these substantial increases in emissions over the next several years,” Schneer said.
Along with environmentalists, strong opposition has emerged from Democratic lawmakers — most notably from those who authored the 2021 law mandating these regulations. State Sen. Faith Winter (D), the law’s sponsor, and 16 other lawmakers filed comments last month outlining their “serious apprehension” at how regulators are moving to implement their legislation.
Environmental justice has emerged as a flashpoint, with lawmakers warning that the state is proposing too many ways to offset emissions instead of cutting them.
Advocates also have criticized the regulation’s cost-benefit analysis for assuming a social cost of carbon at $89 a ton — more than the current federal estimate of $51, but less than the $190 now under consideration by EPA.
Business groups argue the regulations would make Colorado uncompetitive for attracting manufacturers — especially the semiconductor companies that state and federal policymakers are seeking to entice back onshore with billions of dollars in subsidies. The Colorado Chamber of Commerce has lobbied Gov. Jared Polis (D) to back more relaxed rules.
Along with longer compliance timelines, industry wants the state to offer more options for offsetting emissions, such as paying into a state mitigation fund. Business groups have focused more on shaping the regulation than outright fighting it.
“We are confident that we can achieve emissions reduction goals given a reasonable timeline and predictable rulemaking process,” David Dazlich, vice president of government affairs for the Colorado Springs Chamber and Economic Development Corp., wrote in a regulatory filing. “Unfortunately as proposed, the current proposed rule is arbitrary and inflexible.”
The arguments extend beyond this specific policy. As one of the first climate regulations for manufacturing, this rule promises to set a precedent for how Colorado regulates the rest of the sector — and how other states approach the issue.
Colorado law calls for the state to reach net-zero emissions by 2050. Environmentalists are warning that if the state pulls back from aggressive regulation now — for instance, by allowing polluters to offset emissions rather than reduce them — it could have a domino effect of making future climate action harder.
“If the Commission does not require [industrial] emissions reductions onsite now, these operators will be set up to fail to achieve the even greater reductions needed in the longer term,” Heidi Leathwood, a climate policy analyst with 350 Colorado, wrote to regulators.
State regulators say they’re balancing legal requirements and environmental protection against the “technical- and cost-related realities” that make it difficult to decarbonize the manufacturing sector.
“The Division is grappling with the reality that the industrial sector is difficult to decarbonize,” the air pollution control division of the Colorado Department of Public Health and Environment wrote in a regulatory filing.
The 18 facilities that would be covered by this regulation account for about 15 percent of Colorado’s manufacturing emissions.
The state already has imposed a different set of regulations on four cement and steel plants. As “energy intensive and trade exposed” industries, they’re required to cut their emissions 5 percent every five years.
The Polis administration argues that those regulations, combined with electricity and oil sector rules, have put Colorado on a path to meet its climate targets.
But climate modeling shows the Centennial State remains off track of its climate goals by a serious margin, according to a report this year by EDF. Colorado aims to emit 59 million metric tons of greenhouse gases in 2030, but it’s on track to exceed that amount by 24 to 45 MMT.
“Especially at a time when we remain off track, state regulators can’t afford to delay on cutting emissions,” Schneer said. “Particularly when they have this opportunity on the table to make meaningful emissions cuts from industrial facilities.”