Implement State Climate Goals

Section 1 of the act creates the office of sustainability (office) in the department of personnel (department). The office is required to work with state agencies to implement environmentally sustainable practices.

Section 1 also creates the state agency sustainability revolving fund (revolving fund) and directs the state treasurer to transfer $400,000 from the general fund to the revolving fund each year. The office may use the money in the revolving fund for the purposes of operating the office and replacing the state's gas- and diesel-powered equipment located in ozone nonattainment areas as designated by the U.S. environmental protection agency.

Section 1 also requires the office to review and coordinate state agencies' applications for elective pay funding available under the federal "Inflation Reduction Act of 2022" (IRA). State agencies are required to submit elective pay applications directly to the office of the state controller. The inflation reduction act elective pay cash fund (cash fund) is created, and all money received by the state or state agencies pursuant to the elective pay provisions of the IRA must be deposited into the cash fund to be used for the purposes of the office.

Subject to specified exceptions, section 3 requires, on and after January 1, 2025, recipients of state financial assistance for new building construction projects that include energy-consuming products covered by the Energy Star program (covered energy-consuming products) to use covered energy-consuming products certified by the Energy Star program (requirements). A state agency that provides or administers state financial assistance for a new building construction project (state agency) shall include certain requirements in the state agency's criteria for receiving state financial assistance and request an attestation signed by the recipient of the state financial assistance that declares that the requirements have been or will be followed or that the recipient is requesting a waiver from the requirements. A state agency may issue a waiver from the requirements based on certain evidence and an attestation from a licensed professional engineer or design professional. If the attorney general, by a preponderance of the evidence, believes that a recipient of state financial assistance has violated the requirements, the attorney general may bring a civil action to seek a civil penalty of up to the total amount of state financial assistance received by the violator.

Section 4 amends the state efficiency standard for residential windows, residential doors, and residential skylights sold in Colorado on and after January 1, 2026 (standard). If the executive director of the department of public health and environment determines that the standard cannot reasonably be met by manufacturers, the executive director shall set an alternative standard which may be applied instead of the standard. Such an alternative standard, if set, must be displayed on the public website of the department of public health and environment no later than June 1, 2025.

Section 6 clarifies law relating to the geothermal energy grant program within the CEO (grant program) by specifying that:

• The grant program applies to both heating-only and combined heating and cooling systems;
• At least 25% of the grant money must be awarded to projects in low-income, disproportionately impacted, or just transition communities; and
• The CEO may utilize grant program money to facilitate the growth of the geothermal sector and awareness of relevant state programs in Colorado.

Section 7 allows money in the decarbonization tax credits administration cash fund to be used to repay administrative costs associated with administering the decarbonization tax credits, and specifies that all such administrative costs must be repaid on or before June 29, 2024. The amount of money that must remain in the fund after other unexpended and unencumbered money has been transferred to the general fund on June 30 of each year is increased from $100,000 to $300,000.

Section 8 extends the deadline for the energy code board to develop a model low energy and carbon code from June 1, 2025, to September 1, 2025, and specifies that the model low energy and carbon code can include both appendices and resources to the international energy conservation code.

Section 9 decreases the amount of money in the energy fund that the CEO is authorized to use to issue grants to local governments to support their adoption and enforcement of the 2021 international energy conservation code, an electric ready and solar ready code, and a low energy and carbon code from $2,000,000 to $1,875,000 and increases the amount of money that the treasurer is required to transfer into the energy fund for CEO to use to administer the energy code board from $150,000 to $275,000.

Section 10 authorizes grantees to use money received through the CEO's high-efficiency electric heating and appliances grant program for equipment used to dry clothes and for other purposes as determined by the CEO.

Section 13 requires the CEO, on or before August 1, 2024, to commence a study to explore how to accelerate adoption of heat pump technology in Colorado through a technical standard for applicable air conditioners. The CEO is required to provide to the general assembly a progress report, interim results and legislative recommendations, and, on or before June 1, 2025, a final study and final legislative recommendations.

Section 14 repeals the requirement that a person using any portion of a transfer facility for the provision of retail or commercial goods or services or for the provision of residential uses pay rent at fair market value for such use.

Section 15 clarifies that, for purposes of the industrial clean energy tax credit, an industrial study includes a pre-front-end or front-end engineering design study that meets or exceeds the standards established by the CEO or any other industrial studies as outlined in program standards and an owner includes a project developer. Section 15 also increases the amount of the credit that can be claimed from $5,000,000 to $8,000,000 and specifies that an owner that claims the industrial clean energy tax credit cannot, for the same greenhouse gas emission reduction improvements, claim the enterprise zone investment tax credit or receive grant money under the industrial and manufacturing operations clean air grant program.

Section 16 clarifies several definitions related to the tax credit for expenditures made in connection with a geothermal energy project and adds several definitions. Section 16 also adds tribal governments as eligible taxpayers that may claim the tax credit.

Section 17 adds tribal governments as qualified entities that may claim the geothermal electricity generation production tax credit, and requires the CEO to annually review and evaluate the effectiveness of the tax credit.

Section 18 clarifies and adds several definitions related to the heat pump technology and thermal energy network tax credit, adds new standards for taxpayers to be eligible to claim the credit, and requires the CEO to substantiate that eligible taxpayers are meeting those standards periodically rather than annually.

Section 20 repeals a provision that required the state treasurer to credit an amount of severance taxes to certain cash funds to repay costs associated with administering the decarbonization tax credits.

Section 21 requires the CEO to prioritize high-efficiency homes and buildings when providing loans and grants from the sustainable rebuilding program to homeowners and business owners that are seeking to rebuild. Money from the sustainable rebuilding program may also be used to provide loans and grants through the disaster resilience rebuilding program which is administered by the department of local affairs.

Section 22 extends the date by which the public utilities commission must determine mass-based greenhouse gas emission reduction targets for clean heat plans for 2035 from December 1, 2024, to December 1, 2025.

Section 23 requires investor-owned utilities, on or before August 1, 2027, to submit to the public utilities commission a proposal for a voluntary rate or rates for energy supplied to residential customers who utilize a heat pump as their primary heating source, which, if cost-justified, are designed to lower the energy bills of those customers.

Section 24 specifies that an appropriation made to the department of higher education and related to the biochar in oil and gas well plugging working advisory group for state fiscal year 2023-24 is further appropriated to the department for state fiscal year 2024-25 to the extent that it is not expended prior to July 1, 2024.

To implement the act:

• Section 25 reduces state fiscal year 2024-25 appropriations from various cash funds to the department of revenue by an aggregate amount of $1,770,160 and offsets the decrease by increasing state fiscal year 2024-25 appropriations to the department of revenue from the decarbonization tax credits administration cash fund by $1,770,160; and
• Section 26 appropriates $1,058,596, of which $958,596 is from the decarbonization tax credits administration cash fund and $100,000 is from the general fund, to the office of the governor for use by the CEO.

APPROVED by Governor May 17, 2024

EFFECTIVE May 17, 2024
(Note: This summary applies to this bill as enacted.)