Will 2021 be remembered for natural gas the same way as 2004, the year that Colorado began its pivot toward renewables?
Colorado began dialing back methane emissions in 2021, firmly, but with restraint. In the future, I predict it will be seen as the same sort of pivot as occurred in 2003 when Colorado gained its first wind farm near Lamar and in 2004 when state voters approved the first renewable energy mandate.
Legislators passed four bills governing directly or indirectly the natural gas consumed by buildings. The new laws might best be described as nudges, like a passenger in a low-fare airline marking turf.
They require that state regulators use a new tool, the social cost of methane, similar to the social cost of carbon, when evaluating programs. The idea is to take the long view of the cost of methane, a greenhouse gas with 83 to 87 times the global warming potential of carbon dioxide over a 20-year span. The U.S. Interagency Working Group on Social Cost of Greenhouse Gases has set the cost at $1,756 per short ton, compared to $68 for carbon dioxide.
In the concern about the short-term impacts of methane, legislation also revised the financial tools for measuring effectiveness of demand-side management strategies required by HB21-1238. State regulators must take a long view of the payback of these programs. This makes energy efficiency easier to justify.
SB 21-264 requires gas utilities with more than 90,000 customers (there are three) to develop clean-heat plans that result in fewer emissions.
“Reducing gas emissions in the building sector is what I’ve called the hardest nut to crack, because it will take the longest time to convert the building sector to clean-heat technologies, especially retrofitting existing buildings,” said State Rep. Tracey Bernett, a sponsor or co-sponsor of several of the bills, in a June interview. “That’s why we need to start now.”
Unlike California, there were no local mandates, no deep lines in the sand, such as that in Berkeley, which in 2019 said no buildings could be constructed with natural gas hookups.
A Republican representing Colorado’s oil and gas country sponsored a bill that proposed to quash any such bans by local jurisdictions. It never got out of committee in the Democrat-controlled Legislature. After all, what problem was that bill trying to solve?
State agencies were given responsibility for administering some of this tamping down of methane. The Colorado Public Utilities Commission held several informational meetings. The social cost of carbon, in particular makes it harder for Xcel Energy and Tri-State Generation and Transmission, the state’s two largest electrical utilities, to justify natural gas plants for production of electricity. New laws also will cause utilities to push harder on demand-side management programs.
Tri-State, on its own, had concluded that building new natural gas plants might not make sense, given how much change is likely in the energy landscape during the next few years. Xcel wants to retrofit Pawnee to burn gas and also add considerable natural gas combustion inventory.
The Air Quality Control Commission also pushed, at year’s end, adopting regulations to step up inspections of what is called the upstream infrastructure of wells and compressing stations to reduce gas escaping into the atmosphere.
Local governments were having conversations and taking some action. This included both the low ends and high ends of real estate. At Dotsero, at the east end of Glenwood Canyon, aging trailers were converted to technology that required no natural gas by an Eagle County program. In Snowmass Village, two-bedroom condominiums in Electric Pass Lodge were selling for $3.2 million. One of the selling points beyond the location adjacent to ski lifts: all electric, all from renewable energy.
Downvalley in Basalt, the Aspen Skiing Co. completed an employee housing complex that similarly has no natural gas. In Aspen, meanwhile, town officials at year’s end were talking about benchmarking of larger buildings.
Denver has already set out on this path. The city council adopted a law in November that requires buildings larger than 25,000 square feet to get to 30% energy savings by 2030. The law requires a gradual adoption of electric heating and cooling systems to replace gas systems when cost effective.
This matters because commercial and multifamily buildings in Denver account for 49% of the city’s GHG emissions.
This is one of seven big-picture stories from 2021 identified by Big Pivots that involve Colorado.
Colorado Springs, too, is having this conversation about converting gas uses in buildings to electricity. It’s still early, said Aram Benyamin, the chief executive of Colorado Springs Utilities since October 2018.
In late August, as the utility burned its last coal before retiring the Martin Drake plant along Interstate 25, near downtown Colorado Springs, Benyamin sat down with me for an interview. The last generation from coal will be replaced by wind and solar and, for reliability purposes, natural gas turbines that will be in place at the same plant for about a decade.
Like other utility chiefs, Benyamin sees an electrical grid increasingly saturated with renewables, a combination of those from somewhat distant places but also development of local microgrids. He also sees electricity supplanting natural gas in buildings.
Benyamin has been out to speak with builders and other stakeholders. Some rejected the idea of building electrification initially. It will never happen, they said. By the second meeting, though, there were questions about how it can happen. Benjamin says it’s natural to be leery of relying upon only one source of energy. He is confident this shift will happen during the next 5 to 7 years, maybe 10, when all new buildings become all- electric.
A week after that interview, I was in Redstone to hear about the methane emissions continuing to come from coal mines that have been closed since 1992. Pitkin County, the Aspen Skiing Co., and others would like to figure out a way to capture the methane being emitted by Dutch Creek and other mines, which haven’t operated since 1992. The methane emissions in their global warming potential dwarf what is being emitted elsewhere in Colorado—and not just from old coal mines. But it’s a sticky situation fraught with complexities.
Even well-conceived ideas can go off their rails. In metro Denver, Norbert Klebl obtained approvals from the city of Arvada in 2008 for a visionary project that would require no natural gas. The process began with strict attention to siting, using principles easily a thousand years old, married to new technologies, including ample use of PV and energy efficiency.
It took him until 2014 to get financing. Finally, in 2020, after completing 29 units, he was ready to sell the remaining entitlements. He did so, he said, with the understanding that the other units would also be devoid of natural gas.
This was not in writing, though. The buyer has since sold off the remaining project entitlements to builders who want to do what they know how to do. That means housing with natural gas furnaces. Outraged residents of the project, called Geos, got some state attention and a CNN report. Ten years ago, though, CNN would have had no interest.
Looking into 2022
The Public Utilities Commission has begun rule-making regarding the framework in which the natural gas utilities to institute demand-side management and clean-heat plans as specified by two key laws passed in 2021. (This is in case 21R-0449G, if you want to comb the PUC files).
Already there is controversy.
One proposal would have utilities pass the full cost of extension of new natural gas lines on to new customers. Today, and in the past, utilities socialized the cost, meaning that existing customers help pay for the new lines. E-mails in mid-January began pouring into the PUC objecting to this end of socialism from what would seem to me an unlikely source, the Grand Junction area.
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