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By Jonathan Talamani
Visiting Fellow

This blog post summarizes a longer Working Paper available on the Center’s website.

Colorado’s Clean Air-Clean Jobs Act (CACJA) requires utilities to create plans that reduce NOx emissions by 70% at a specified portion of their coal-fired electricity generation facilities by the end of 2017. It allows utilities to make use of many different methods to achieve those reductions, but encourages and incentivizes the replacement of coal-based generation with natural gas. Utilities must seek approval for their plans from state agencies, and must work closely with those agencies in designing such plans.

The primary entity impacted by the act will be the Public Service Company of Colorado (PSCo), the monopoly utility in the state. PSCo’s current revised plan, pending (as of October 16, 2010) before the Colorado Public Utilities Commission (PUC), calls for installing emissions reduction equipment, retiring a number of coal facilities, increasing utilization of natural gas facilities, and constructing new natural gas plants. It is projected to reduce NOx emissions at the covered facilities by 77% by the end of 2017 and to reduce CO2 emissions at the covered facilities by over 20% by 2016.

It is not clear whether the approach that succeeded in CACJA is politically feasible in other states, since Colorado is uniquely amenable to this approach in a few ways. First, natural gas is a major industry in Colorado. Second, Colorado has relatively low energy costs and relatively high median family income as compared with other states. Third, Colorado is currently non-compliant with the National Ambient Air Quality Standard (NAAQS) for Ozone and was motivated, in part, to preempt federal regulation by passing a state law to reduce air pollution.

CACJA has a few advantages. Most importantly, it includes a concrete emissions reduction requirement. It also allows real flexibility to the utility and requires the utility to work closely with, and earn approval from, government agencies. Finally, CACJA was able to garner political support from diverse interest groups.

CACJA also has some clear disadvantages. Most obviously, it requires reductions in NOx, rather than CO2 or greenhouse gases in general. Equally important, it only requires reductions at a portion of the utility’s coal-fired plants and allows utilities to open brand new coal facilities that are not regulated under the act. Furthermore, the bill may be excessively accommodating toward the public utilities and does not create enforcement authority.

While it remains to be seen whether CACJA will serve as a model for other states seeking to incentivize coal plant decommissioning, for the time being the bill stands as an important example of the kinds of state-level action being taken in the absence of comprehensive federal standards on climate and energy.

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