Sign In or Create an Account.

By continuing, you agree to the Terms of Service and acknowledge our Privacy Policy

Economy

Colorado Just Uncorked Billions in Free Climate Money

Thanks to a flurry of state legislation, Coloradans now stand to win big from the Inflation Reduction Act. They can even pick up one of the last new Chevy Bolts for $15,000 or less.

The Colorado state flag.
Heatmap Illustration/Getty Images

No one really knows how big the United States’ signature climate legislation could become. The Congressional Budget Office projects the incentives in the Inflation Reduction Act add up to about $369 billion. But many of those incentives are uncapped, meaning the government will keep shelling out tax credits and rebates as long as there’s demand for them. Some outside analysts think the law could ultimately total $800 billion, or even more than $1 trillion.

State policy will be a deciding factor. And Colorado just wrote a playbook for how to bring as much of that money into its economy as possible while steering the IRA’s programs to better fit its own climate agenda. I call it: The Inflation Reduction Act 2.0.

Last week, the state passed a series of bills that replicate much of the federal climate act, including tax credits and rebates that double down on some IRA programs while building on others.

One of the biggest bills expands the state’s incentives for consumers to electrify their heating systems and purchase electric vehicles. Will Toor, the executive director of the Colorado Energy Office, told me the idea was basically for the state to spend money to make money.

“The philosophy was creating state incentives that would encourage businesses and consumers to act in ways that will then draw down federal tax credits and bring more federal funding into the state,” he said.

Heat pump installations can be complicated, and costs can quickly balloon into the tens of thousands of dollars. While the federal incentives in the IRA help, they may not be big enough for many interested customers. Toor said that a state analysis revealed that additional state-level incentives for heat pumps would significantly increase uptake of related federal programs.

The idea behind a $5,000 tax credit for electric vehicles was slightly different. Toor told me that because of the domestic content requirements for the federal tax credits, there won’t be many models that are eligible in the next three to five years. “Given the momentum that we have in growing the EV market share in Colorado, we wanted to make sure that we were able to maintain that during that period,” he said.

Colorado’s EV tax credit also bumps up to $7,500 for vehicles that are under $35,000. As Toor said, not many EV models are eligible for the federal tax credit yet, but the Chevy Bolt, which retails for less than $30,000 is one. That means Coloradans have a limited chance (RIP Chevy Bolt) to pick up the 2023 model for $15,000 or less.

Get the best of Heatmap directly in your inbox:

* indicates required
  • They’ll also have access to the first state-run rebate in the country for e-bikes, which was included in the same bill, and will complement cities like Denver’s plans to expand bike lanes. An e-bike rebate was in an earlier version of the IRA, back when it was called the Build Back Better Act, but it was ultimately cut from the final draft.

    The other big thing Colorado did was set the stage to solve long-term climate challenges by expanding the IRA’s incentives for emerging technologies. It basically made the pot a little sweeter for some climate-solutions companies to set up shop in Colorado. For example, the federal government now offers tax credits for the production of sustainable aviation fuel, a lower-carbon version of jet fuel. Colorado will try and lure that industry with a new tax credit for the construction of the production facilities.

    Similarly, the IRA created a tax credit for clean hydrogen production. But it’s still unclear whether industries that don’t already use hydrogen in their operations will adopt the fuel. Colorado will make it more attractive by offering a new tax credit for the use of the fuel — a first-in-the-nation program. The goal was not only to attract the federal tax credit funding, but also to support Colorado’s application to become one of the Department of Energy’s “hydrogen hubs.”

    Here, lawmakers went a step further, showing how states can really determine how some of these riskier solutions supported by the IRA, like clean hydrogen, take shape in the U.S. Hydrogen is a flexible fuel with many potential applications, but it’s very energy intensive to produce. Many climate advocates recommend using it in limited, hard-to-decarbonize industries, rather than, for example, as a replacement for natural gas in home heating. But thus far, Congress has funded programs that encourage its use in almost every conceivable way. With its new tax credit, Colorado is the first state to prioritize the fuel in a few select industries, like aviation and heavy-duty trucking.

    Notably, lawmakers also took a stand in a contentious debate over how to define clean hydrogen, adopting very strict rules for what will qualify for its tax credit. Climate advocates hope the decision will influence the U.S. Treasury Department’s guidance for the federal tax credit, which has yet to be published.

    “The IRA and the Infrastructure Act create new opportunities,” Toor told me. “So I do think it's very important for states to consider those opportunities and think through how to design state policies that complement the IRA.”

    Yellow

    You’re out of free articles.

    Subscribe today to experience Heatmap’s expert analysis 
of climate change, clean energy, and sustainability.
    To continue reading
    Create a free account or sign in to unlock more free articles.
    or
    Please enter an email address
    By continuing, you agree to the Terms of Service and acknowledge our Privacy Policy
    AM Briefing

    Exxon Counterattacks

    On China’s rare earths, Bill Gates’ nuclear dream, and Texas renewables

    An Exxon sign.
    Heatmap Illustration/Getty Images

    Current conditions: Hurricane Melissa exploded in intensity over the warm Caribbean waters and has now strengthened into a major storm, potentially slamming into Cuba, the Dominican Republic, Haiti, and Jamaica as a Category 5 in the coming days • The Northeast is bracing for a potential nor’easter, which will be followed by a plunge in temperatures of as much as 15 degrees Fahrenheit lower than average • The northern Australian town of Julia Creek saw temperatures soar as high as 106 degrees.

    THE TOP FIVE

    1. Exxon sued California

    Exxon Mobil filed a lawsuit against California late Friday on the grounds that two landmark new climate laws violate the oil giant’s free speech rights, The New York Times reported. The two laws would require thousands of large companies doing business in the state to calculate and report the greenhouse gas pollution created by the use of their products, so-called Scope 3 emissions. “The statutes compel Exxon Mobil to trumpet California’s preferred message even though Exxon Mobil believes the speech is misleading and misguided,” Exxon complained through its lawyers. California Governor Gavin Newsom’s office said the statutes “have already been upheld in court and we continue to have confidence in them.” He condemned the lawsuit, calling it “truly shocking that one of the biggest polluters on the planet would be opposed to transparency.”

    Keep reading...Show less
    Red
    The Aftermath

    How to Live in a Fire-Scarred World

    The question isn’t whether the flames will come — it’s when, and what it will take to recover.

    Wildfire aftermath.
    Heatmap Illustration/Getty Images

    In the two decades following the turn of the millennium, wildfires came within three miles of an estimated 21.8 million Americans’ homes. That number — which has no doubt grown substantially in the five years since — represents about 6% of the nation’s population, including the survivors of some of the deadliest and most destructive fires in the country’s history. But it also includes millions of stories that never made headlines.

    For every Paradise, California, and Lahaina, Hawaii, there were also dozens of uneventful evacuations, in which regular people attempted to navigate the confusing jargon of government notices and warnings. Others lost their homes in fires that were too insignificant to meet the thresholds for federal aid. And there are countless others who have decided, after too many close calls, to move somewhere else.

    By any metric, costly, catastrophic, and increasingly urban wildfires are on the rise. Nearly a third of the U.S. population, however, lives in a county with a high or very high risk of wildfire, including over 60% of the counties in the West. But the shape of the recovery from those disasters in the weeks and months that follow is often that of a maze, featuring heart-rending decisions and forced hands. Understanding wildfire recovery is critical, though, for when the next disaster follows — which is why we’ve set out to explore the topic in depth.

    Keep reading...Show less
    The Aftermath

    The Surprisingly Tricky Problem of Ordering People to Leave

    Wildfire evacuation notices are notoriously confusing, and the stakes are life or death. But how to make them better is far from obvious.

    Wildfire evacuation.
    Heatmap Illustration/Getty Images

    How many different ways are there to say “go”? In the emergency management world, it can seem at times like there are dozens.

    Does a “level 2” alert during a wildfire, for example, mean it’s time to get out? How about a “level II” alert? Most people understand that an “evacuation order” means “you better leave now,” but how is an “evacuation warning” any different? And does a text warning that “these zones should EVACUATE NOW: SIS-5111, SIS-5108, SIS-5117…” even apply to you?

    Keep reading...Show less