Colorado regulators adopted an ambitious 2035 greenhouse gas emission reduction target for gas utilities, even though the companies are not on track to meet an interim goal.
The Colorado Public Utilities Commission (PUC) on Dec. 1 set a GHG reduction target of 41% from 2015 levels by 2035. The target exceeded the goal recommended by natural gas utilities and state agencies but fell short of the reduction that environmentalists recommended (Proceeding No. 25R-0309G).
The decision is the latest step in implementing Colorado's clean heat standard, which seeks to progressively drive down emissions tied to fuel combustion by gas utility customers. Gas utilities will propose portfolios of decarbonization solutions, known as clean heat plans, to meet a series of targets that tighten every five years.
None of the clean heat plans previously approved or under consideration by the PUC put gas utilities on pace to meet a 2030 emission reduction target of 22% — a point that several stakeholders raised in public comments. The plans are also subject to a cost cap.
Still, the PUC said the 41% reduction target for 2035 reflected GHG emissions from gas utility customers in the residential, commercial and industrial sectors. The target also "allows for better planning as the next decade unfolds despite significant uncertainty at these early stages of the clean heat statutory implementation process," the PUC said.
Differing views on 2035 target
The Colorado Energy Office and the Air Pollution Control Division of the Colorado Department of Public Health and Environment initially proposed a 41% reduction. However, they later recommended a 31% target, saying a 41% reduction was questionable given the uptake rate of clean heat resources.
Those resources include building electrification, energy efficiency, low-carbon fuels and other PUC-approved decarbonization strategies that can displace standard gas.
The Colorado Energy Office and Air Pollution Control Division recommended revisiting the 31% target in 2029 after the PUC assessed the companies' progress. Xcel Energy Inc. subsidiary Public Service Co. of Colorado recommended a similar approach.
The PUC declined the recommendations, saying its goal was "to set a clear target for 2035 to both comply with the requirements of [state law] and to provide necessary guidance for upcoming gas utility clean heat plan filings."
Environmentalists recommended a 55% reduction by 2035, while Atmos Energy Corp. suggested leaving the 22% target in place until companies proved they could meet it.
Decisions on future targets, renewable natural gas
The PUC additionally declined to set targets for 2040, 2045 and 2050. Instead, the commission deferred action until a Dec. 1, 2032, deadline established in the clean heat legislation. That legislation outlined emission reduction targets for 2025 and 2030 but left it to the PUC to determine targets going forward.
The commission agreed with environmentalists that setting targets beyond 2035 would inform forward planning and facilitate wiser infrastructure investment. However, the PUC ultimately concluded that "the record here is insufficient to meaningfully determine those future targets" and that commissioners needed more data and analysis.
Despite that, the commission signaled that it would eventually set a 100% emission reduction target for 2050, in line with the state's overarching climate goal.
Finally, the PUC determined that clean heat plans can continue to include recovered methane strategies, such as procuring renewable natural gas (RNG), a pipeline-quality biogas processed from organic sources of waste methane at farms, landfills and other facilities.
The PUC additionally exercised its option to drop a provision of the enabling legislation, which initially limited the contribution of recovered methane resources to 5% of a clean heat plan's overall emission reduction for the period. However, the commission stressed that it would determine the appropriate levels of recovered methane strategies in companies' future clean heat proceedings.
The PUC's decision closed the proceeding, pending petitions for reconsideration by stakeholders.
