Colorado’s buildings are a 6 billion square-foot climate change problem

Ask your average eco-conscious Coloradan to imagine a world without fossil fuels and greenhouse gas emissions, and you’ll likely hear a lot about wind farms, solar panels and streets full of electric cars and buses — and not so much about the air circulating through their home, or the water coming out of their faucets.

“In terms of climate change, people tend to think of cars and power plants,” said Mike Henchen, a clean-energy researcher with the Boulder-based Rocky Mountain Institute. “They don’t tend to think of the furnace in their house.” With scientists’ warnings about the need to reduce carbon emissions growing increasingly urgent, experts say that that needs to change, fast.

While transportation and electricity generation remain the largest sources of emissions in Colorado — each sector emits roughly 30 million tons of carbon-dioxide equivalent (CO2e) per year — direct fuel use by residential, commercial and industrial buildings ranks a close third at just under 25 million tons of CO2e annually as of 2020, according to state estimates.

About half of that total comes from the natural gas burned by homes and businesses to power furnaces, water heaters, stoves and other appliances. To achieve net-zero emissions — a target that scientists say must be reached by 2050 — virtually all of these systems will have to be replaced with climate-friendly alternatives.

But even as activists celebrate progress in other sectors, especially electricity generation, reducing direct emissions from buildings has proved far more difficult. Policies aimed at making buildings more energy-efficient have led to modest gains in improving heat retention and reducing waste, but these gains have been offset entirely by the pace of new construction. Every year in Colorado, thousands of new homes and commercial buildings are still being constructed with natural gas as their primary heating source.

“Over the last 50 years, we’ve added a lot more buildings, and they’ve gotten more efficient at the same time, but the net effect is basically that we have the same level of emissions that we’ve always had,” Henchen said. “Now, in a world where we’re talking about dramatic cuts in building emissions, we have to do something dramatically different.”

That means opting for technologies like electrically-powered heat pumps rather than gas-burning furnaces. It means professional and home chefs learning to love cooking with electric or induction appliances.

Most dramatically of all, it means not only building new homes and businesses differently but retrofitting millions of existing buildings, too.

The vast majority of Colorado’s roughly 6 billion square feet of residential and commercial building stock is currently heated by gas-powered systems, according to data from the Energy Information Administration. Eventually, for Colorado to do its part to stop climate change, virtually all of these systems will need to be electrified — an enormous financial and logistical challenge that will be far easier to overcome, experts say, if governments start aggressively moving towards zero-emission buildings now.

“We’re definitely going to need new approaches to do that at scale,” Henchen said. “The pace of change that we’re looking at, getting to 100% by 2050, is going to require retrofitting a lot of existing buildings, and we’ve got to do some early work to spur the market. We need some policies from the state or programs from the utilities to make that happen.”

Going electric

In Denver, home to Colorado’s largest concentration of residences and large commercial buildings, elected officials and city staff are ramping up their efforts to clean up the heating sector — an area of climate policy over which municipal governments, which set building codes, have especially direct control.

In a report released earlier this month, Denver’s Climate Action Task Force — a 26-member panel convened last year by Mayor Michael Hancock in response to activists and City Council members who had pushed for more aggressive action — outlined a long list of policies for the city to pursue. Their recommendations include a requirement for highly efficient, all-electric new homes in the city’s building code by 2024, and the same for commercial buildings by 2027.

The good news, clean-energy advocates say, is that achieving such goals won’t require any major technological breakthroughs in the coming years. While they’re expected to continue gradually improving in terms of cost and performance, electric heating technologies are relatively mature. With a growing number of contractors offering clean-heating options, many homes in Colorado — and even some entire residential developments — have already gone all-electric.

“We know that the technology exists,” said Katrina Managan, buildings team lead for Denver’s Office of Climate Action, Sustainability and Resiliency. “We know that cold-climate heat pumps work really well in Denver’s climate, and the technology has improved significantly in recent years.”

Still, only about 1% of homes in Denver currently use heat pumps, according to a 2018 report from the Southwest Energy Efficiency Project, a Boulder-based nonprofit. The “cold-climate” heat pumps suitable for Colorado weather tend to be more expensive than the models that can be used in more temperate climates.

But heat-pump systems, which provide both heating and cooling, are a significantly more cost-effective option for a typical new home than installing both a furnace and air-conditioning system separately, SWEEP’s report found. And many of the upfront costs associated with clean-heating systems can be chalked up to a lack of awareness among consumers and contractors, rather than any real technological barrier, Henchen said.

“The heating contractors, the suppliers, are not always familiar with the latest technologies, or maybe are just not carrying the right products,” he said. “That does impact the cost — when you go to these contractors today as a customer, and ask for these products, you’ll tend to find some inflated prices. Part of that is that contractors are baking in a bit of a premium for a product that they’re not very familiar with.”

Denver hasn’t adopted any of the task force’s recommendations yet; officially, the city’s target of net-zero new buildings by 2035, set in its 2018 climate action plan, remains in place.

Typically, local governments update building standards in “code cycles” that last about three years, and Denver’s most recent code update will take effect on July 31. Finalized last year, it’s projected to continue the city’s progress in incrementally improving energy efficiency and sustainability — but more dramatic changes will be necessary soon, if city officials hope to meet the task force’s more ambitious goals.

“We’re going to really evaluate that task-force recommendation, and see — can we get there by 2030?” Managan said. “What would that look like, over the four code cycles that we have between now and 2030? Or do we need the fifth one?”

Denver’s new building code also includes the city’s first-ever Green Code, an optional pilot program designed to help inspectors and developers “preview” stricter clean-energy standards that could become universal requirements in future code cycles. Officials hope to incentivize five commercial buildings and five affordable-housing projects to adopt the voluntary standards ahead of the next code cycle.

Natural gas fight simmers

Around the country, however, a growing number of local governments are ditching gradual code updates in favor of bold, headline-grabbing new building regulations. Since the beginning of 2019, at least a dozen U.S. cities — from San Jose, California, to Brookline, Massachusetts — have passed ordinances banning or severely restricting natural gas systems in newly constructed homes, while many others are updating their codes to strongly incentivize all-electric buildings.

But as climate activists, developers and city officials begin to wonder if and when the Mile High City might pass natural-gas restrictions of its own, advocates of building electrification are also fending off attempts by the oil and gas industry to block local governments from imposing such limits altogether.

In response to a wave of municipal natural-gas restrictions, legislators in at least five Republican-controlled states, including Arizona and Oklahoma, have passed laws prohibiting such measures in the last year.

Initiative 284, a ballot measure launched earlier this year by fossil-fuel industry group Protect Colorado, similarly sought to bar state and local governments from passing any law or regulation that would “inhibit consumer choice through restrictions on the installation of natural gas” in homes and businesses.

The measure had alarmed clean-energy advocates, who feared that even relatively minor restrictions, or government incentives aimed at boosting electric heating options, would run afoul of the initiative’s proposed statute.

But Gov. Jared Polis announced on July 24 that Protect Colorado had agreed to withdraw Initiative 284, along with a separate measure that sought to require “fiscal impact statements” in the ballot language for all future initiatives. Earlier this year, activist group Colorado Rising said that it had dropped a petitioning effort for several possible anti-fracking ballot measures, and a breakaway group that had initially sought to continue the campaign also abandoned those plans due to the coronavirus pandemic, after a Colorado Supreme Court ruling that prohibited remote signature-gathering.

“These groups have committed to withdraw current ballot measures filed for 2020 and have expressed a willingness to work together to prevent future ballot measures through 2022,” Polis wrote in a Colorado Politics op-ed.

Protect Colorado — which was last active during the 2018 election cycle, when it served as the industry’s primary campaign vehicle for opposing Colorado Rising’s Proposition 112 — received more than $4 million in contributions exclusively from oil and gas companies ahead of its push for Initiative 284. Nearly all of that total came from Occidental Petroleum, Noble Energy and PDC Energy, which are three of the state’s largest natural-gas producers and contributed identical sums of $1,219,050 each.

The industry’s opposition to limits on gas-powered heating and cooking in homes and businesses — which emit roughly 12 million tons of CO2e annually, or about 10% of Colorado’s total emissions — is inconsistent with the scientific consensus that emissions must fall to zero within the next several decades. Without such reductions, scientists with the U.N.’s Intergovernmental Panel on Climate Change warned in a 2018 report, global temperatures will rise more than 1.5 degrees Celsius above pre-industrial levels, a critical threshold beyond which climate impacts like heat waves, desertification and increased natural disasters will become catastrophic.

But while natural gas has driven emissions reductions in the electricity sector by replacing coal-fired power plants, its use as the dominant source of heating and cooking fuel does not represent a cleaner alternative to an older, higher-emitting technology. The combustion of natural gas in homes and businesses results in the emission of significant amounts of carbon dioxide, methane and other greenhouse gases; electric heating and cooking systems, if powered by renewable energy sources like wind and solar, are zero-emission technologies.

As long as homes and businesses continue to burn natural gas for fuel, the climate benefits of more efficient, better-insulated buildings can only go so far. Experts say that the sooner Colorado constructs its last new building with a natural gas connection, the better.

“If in 2024, we’re still building a new house and running a gas line to it, that’s just one more project we’re going to have to come back and retrofit anyway,” said Henchen. “It’s so much more affordable to do it right from the start, to stop digging ourselves into a deeper hole — especially here in Colorado, because it’s a relatively fast-growing state. There’s so much new construction, it really matters here quite a lot.”

‘Deep decarbonization’

Ultimately, however, the fight over new construction is only the tip of the iceberg. The vast majority of the buildings that will exist in Colorado in 2050 — when climate scientists say we must reach net-zero carbon emissions — have already been built, and most of them are burning natural gas.

Changing that is unlikely to be cheap. SWEEP’s 2018 report on heat pumps concluded that in a retrofit scenario for a typical home in Denver, it would require an outside grant or government incentive of about $4,700 to make a heat-pump system be cost-effective — and only when a furnace or air-conditioning system is due to be replaced.

Because of such costs, and the scale on which retrofitting will be necessary, eliminating emissions from existing buildings falls into a realm of climate policy that some researchers call “deep decarbonization” — the most daunting problems policymakers face in their efforts to achieve net-zero emissions, and likely some of the last to be fully solved. 

House Bill 19-1261, the climate legislation enacted by Colorado Democrats in 2019, directed regulators to achieve a 50% statewide emissions cut by 2030, among other goals. But progress in the buildings sector is likely to lag far behind this overall target, with gains in electricity generation and other industries making up the difference. In one scenario presented to Colorado’s Air Quality Control Commission in June, state climate officials proposed meeting HB-1261’s goals with a mere 13% reduction in building emissions — by far the least progress in any sector.

Officials at the Colorado Energy Office are finalizing a report that will propose more detailed policies that would allow the state to meet its new targets, along with a separate plan that will outline a path towards the “strategic electrification” of existing buildings. The AQCC tentatively plans to draft and enact regulations on building emissions in late 2021, and the Colorado General Assembly is also widely expected to tackle the issue in next year’s legislative session.

But nearly two years after Colorado Democrats took full control of state government in a sweeping 2018 electoral victory, many clean-energy advocates remain frustrated by the pace at which lawmakers and regulators are developing state climate policy. The scale of the challenge ahead makes it especially important for policymakers to take early, aggressive action to jumpstart the market for clean-heating alternatives, Henchen said.

“It’s clear that the state of Colorado needs a coordinated effort to build up the market for the new technologies that are going to provide clean alternatives to gas,” he said. “That includes incentives to get these products deployed more, but it also includes training for the workers who install them, and education for business owners who need to understand how to sell them and how to take advantage of incentives, and why they’re important.”

While the costs of building retrofits are significant, advocates stress that the benefits of all-electric heating and cooking go beyond their long-term impact on the climate. Sources of local air pollution, like nitrogen oxides and carbon monoxide, are often co-emitted as a result of natural gas combustion, and a growing body of scientific research indicates that indoor air pollution from gas-powered cooking appliances can pose health risks, too.

In Denver, meanwhile, roughly half of all homes lack air conditioning, even as temperatures along the Front Range continue to rise due to climate change. As heat pumps replace gas furnaces, more residents will be able not just to heat their homes, but cool them as well — including those who have long suffered the most from excessive heat.

“Especially people of color, under-resourced communities — they really bear the greatest burden of the lack of air conditioning, urban heat island effects, the negative health impacts of excessive heat,” said Managan. “That’s some of what we’re trying to plan for in our implementation plan — who really needs that cooling first, in addition to how to transition the heating.”

Experts compare the current market for clean heating to the state of the electricity sector a decade or two ago, with consumers and suppliers familiarizing themselves with new, sometimes costlier technologies that require a measure of government support. With some early help in the form of tax incentives and mandates like Colorado’s Renewable Energy Standard, wind and solar power steadily grew cheaper and more efficient, and many utilities are now voluntarily setting targets that once would have been considered unthinkable, like Xcel Energy’s pledge to cut carbon emissions from electricity 80% by 2030.

The same could soon be true of heat pumps and induction cooktops, advocates say — but only if state and local governments are willing to make it happen.

“We need to get over that initial hump with policy, with incentives that help people get there, with workforce training,” Managan said. “There’s a lot where we need to get over that first cost hurdle. And first we’ll try to get the easiest building types over that hump, and then we’ll start to work on how you get the harder ones over that hump. But we’ve got to start somewhere.”