This bill integrates embodied carbon considerations into property-assessed clean energy (PACE) financing and the industrial clean energy tax credit, encouraging low-carbon construction and retrofitting in Colorado.
Key Provisions
1. Expanding PACE Financing for Embodied Carbon Improvements
Current Law:
The Colorado New Energy Improvement District administers property-assessed clean energy (PACE) financing, which provides low-cost, long-term financing for energy efficiency and renewable energy projects.
Bill’s Change:
Adds "embodied carbon improvements" to the list of eligible projects.
Property owners can now finance low-carbon construction materials and retrofits through PACE loans, repaid via property tax assessments.
2. Modifying the Industrial Clean Energy Tax Credit
Current Law:
The tax credit incentivizes projects that reduce greenhouse gas emissions from industrial facilities.
Bill’s Change:
Defines embodied carbon improvements as greenhouse gas emissions reduction improvements eligible for tax credits.
Expands financial incentives for businesses using low-carbon materials and processes.
Legal & Practical ImplicationsA. Economic & Industry Impact
Encourages Green Construction:
Makes low-carbon materials (e.g., low-carbon concrete, recycled steel, sustainable timber) more financially viable.
Could reduce upfront costs for developers who prioritize sustainable construction.
Incentivizes Industrial Innovation:
Tax credits may drive investment in cleaner manufacturing technologies for cement, steel, and other high-emission materials.
Potential Market Disruptions:
Companies using traditional high-carbon materials could face a competitive disadvantage if the shift toward low-carbon options accelerates.
B. Legal Considerations & Compliance Challenges
Defining "Embodied Carbon Improvement":
Regulations must clearly define eligibility criteria for financing and tax incentives.
Requires standardized life-cycle assessments (LCAs) to measure embodied carbon reduction.
Implementation & Oversight:
Colorado's energy agencies will need to develop guidelines for approving financing applications.
Verification mechanisms must ensure claimed carbon reductions are real and prevent greenwashing.
C. Potential Challenges & Opposition
Cost & Accessibility Issues:
Small property owners may struggle to afford low-carbon materials, even with financing options.
Industrial firms might push back against new compliance requirements.
Political Resistance:
Some policymakers may oppose expanding state-backed financing and tax incentives, arguing that it distorts the market.
Final Thoughts
The bill makes embodied carbon a key factor in clean energy financing and tax incentives, accelerating Colorado’s push for low-carbon infrastructure.
Expect increased investment in green building materials, but challenges in defining and verifying compliance may arise.
Would you like a deeper dive into how similar policies have worked in other states or internationally?
Summary
Embodied carbon is the carbon associated with greenhouse gas
emissions arising from the production, construction, use, and end-of-life of products or systems used in the construction of buildings, roads, and other infrastructure. An embodied carbon improvement is a real property installation or modification that is completed in a manner that generates relatively less embodied carbon. Section 1 of the bill adds embodied carbon improvements to the
list of new energy improvements that are eligible for property-assessed clean energy financing provided by the Colorado new energy improvement district. Section 2 modifies the industrial clean energy tax credit so that
embodied carbon improvements are greenhouse gas emissions reduction improvements.
