Colorado considering new industrial emissions limits. Environmentalists want to scrap them and start over

Hart Van Denburg/CPR News
On a cold fall morning, the sun comes up behind steam rises from the American Gypsum plant in Gypsum, Colorado. Oct. 21, 2022.

A coalition of environmental justice groups released a statement Tuesday calling on state regulators to reject a proposed rule to limit planet-warming pollution from 18 of Colorado’s largest sources of industrial climate pollution. 

Those groups — including Conservation Colorado, GreenLatinos and Cultivando — were integral to lobbying for the 2021 Environmental Justice Act, which directed air quality regulators to come up with the rules in the first place. Gov. Jared Polis signed the legislation after tense negotiations with the environmental community and lawmakers. 

Ahead of the start of hearings Wednesday, the coalition said the final version of the proposed rules is riddled with loopholes that would allow polluters to pay their way into compliance rather than invest in on-site pollution reductions. Environmental groups now want commissioners to delay a final decision and send regulators back to the drawing board. 

“Regulators have consistently failed to live up to the commitments of the EJ Act to rapidly reduce industrial pollution,” the coalition said in a statement. “The state’s proposal perpetuates environmental injustices faced by communities that are overburdened by cumulative impacts from industrial pollution and climate change.”

Colorado air quality commissioners will consider the proposed regulations this week before a potential vote on Friday. 

If passed, the new rules would set the state’s overall strategy to cut carbon pollution from the industrial sector, which accounted for 14 percent of Colorado’s total contribution to climate change in 2015, according to state estimates. A spokesperson for the Colorado Energy Office said the state expects to finalize an updated estimate soon.

The 18 businesses covered by the rule — including the Suncor Energy refinery in Commerce City, the Molson Coors brewery in Golden, the JBS Swift Meatpacking Plant in Greeley and the American Gypsum plant in Gypsum — each emit more than 25,000 metric tons of carbon-dioxide equivalent pollution each year. All but five of them are located in communities that have faced higher levels of air pollution for decades.

A group of progressive state lawmakers echoed concerns about the proposal in a separate letter sent to commissioners last month. A state-appointed environmental justice board has also criticized the latest version of the rules, endorsing an alternative proposal from the Environmental Defense Fund, an environmental group, to require tougher pollution limits. 

Meanwhile, business representatives warn the current proposal is already too onerous. To avoid companies shifting their operations outside Colorado, a coalition led by the Colorado Chamber of Commerce is pushing a plan to allow companies to pay their way to compliance using a state-managed mitigation fund.

At the center of the tug-of-war is Polis. While not a single company or environmental group supports the current version of the plan, Will Toor, the executive director of the Colorado Energy Office and a lead architect behind the governor’s climate policy, said it strikes a balance between reducing pollution and keeping heavy industry within state boundaries. 

“We want to make sure the way were are achieving these emissions is investment in technology, not by forcing facilities to close or cut back production,” Toor said.

A debate over free-market pollution policies

At the core of the debate is a plan to allow companies to trade pollution credits. 

The initial legislation requires the industrial sector to cut emissions 20 percent below 2015 levels by 2030. Under the proposed rules, manufacturers would be required to hit a set of individualized benchmarks based on their emissions levels over the last eight years.

To get there, the first option for the companies is direct on-site upgrades, such as replacing a gas-powered furnace with an efficient electric heat pump. But that comes with a major caveat: the regulations only require “cost-effective” investments, defined as cuts costing $89 per metric ton of carbon dioxide or other greenhouse gases with an equal impact on global warming. 

If the potential investments are too expensive, the proposed rules could allow a company to theoretically purchase pollution credits from another business that’s achieved its emissions reductions ahead of schedule, environmental and business groups said. The system — often referred to as “baseline-and-credit ”— is meant to harness market forces to push companies to achieve broader environmental goals. 

Private industry groups, however, maintain the plan doesn’t give them nearly enough flexibility. In a letter to Polis, the Colorado Chamber of Commerce said there’s no guarantee businesses would generate enough credits to help other companies effectively offset their emissions. 

As a remedy, it recommended the state establish a fund as a “safety valve” to help companies comply. An earlier version of the draft rules included a fund, but it was removed through revisions over the last few months. 

While the Colorado Energy Office isn’t backing the Chamber’s plan, Toor said regulators should develop a fund and present the details to commissioners at a later date to make sure it’s effective. 

“In concept it makes sense. It’s just not quite ready for prime time,” Toor said. 

Democratic State Sen. Faith Winter, a sponsor of the original legislation, is disappointed the governor’s administration is supporting a plan that could allow businesses to “pay to pollute.” 

“It ensures we are allowing corporations to pay to harm communities,” Winter said. “The idea that we would let you buy yourself out of justice is hard for me to accept.” 

Frustration from the environmental community

For Ean Thomas Tafoya, the state director of GreenLatinos, the endorsement of a mitigation fund was confirmation that the governor’s office wasn’t serious about following the spirit of the Environmental Justice Act. 

He said the point of the law was to improve air quality around major industrial sites. Under the proposed pollution trading system, he said companies could follow the rules without actually making any on-site reductions in greenhouse gases or co-pollutants, a term for other toxic gases released alongside carbon. 

“No rule would be better than the rule that’s on the table,” Tafoya said.

Tafoya also didn’t close the door on a potential lawsuit if regulators endorse the proposed regulations. His group has already joined other environmental groups to sue the state over another permitting rule required on the 2021 environmental justice law. 

Meanwhile, the Environmental Defense Fund has argued the current rules would actually allow facilities to increase emissions over the next few years before tougher requirements take effect in 2030. That’s due to the state’s complicated method for calculating each facility’s baseline emissions and interim targets. 

The EDF’s alternate proposal would revamp Colorado’s pollution trading program. Rather than giving companies credits based on reductions, it would issue a set number of pollution permits below the state’s overall emissions cap. 

The nonprofit says the structure has already proven successful in California, but that state’s system has also drawn criticism from environmental justice advocates concerned it encourages some facilities to pollute in heavily impacted neighborhoods.

Collin Tomb, a Boulder County climate strategist representing a coalition of 44 local governments, said her group will nevertheless continue to push for the EDF’s alternative plan because it's the only option that’d effectively force manufacturing sites to cut emissions. 

“The proposed rule doesn’t do that, and it doesn’t guarantee that the air will improve in our communities,” Tomb said.