The key to unlocking Colorado’s pioneering climate goals lies firmly within our ability to secure public and private capital. With innovation driving our energy transition, Colorado must create a favorable and competitive economic landscape for the climate-friendly technologies we need. This will require bold public action that is aligned with private-sector needs.
To chart this public-private framework, Signal Tech Coalition convened Colorado’s private sector leaders in finance and tech to collaborate with the state’s public officials on a series of investing, regulatory and policy recommendations aimed at bolstering emerging climate-tech markets. At both the state and federal level, these recommendations are poised to attract billions of dollars of private investment and help meet Colorado’s emissions-reductions targets.
As Colorado weighs its options for how best to allocate historic federal investments, this funding has the ability to catapult our economy forward towards a cleaner, more-equitable future. In addition to much-needed investments in EVs and charging infrastructure, reducing emissions in buildings and workforce development, we recommend sizable investments be made in the specific areas where private-sector investments are currently not being made, either because perceived risk is too high or return horizons are too long. These areas are industrial manufacturing decarbonization, the electrification of heavy-duty fleets, deployment of heat pumps in buildings, the development and deployment of green hydrogen, and carbon capture and sequestration. Public capital could get these markets off the ground so they reach scale within the necessary time frame.
Additionally, state tax credits for commercial building upgrades could set asset owners ahead of incremental regulatory requirements. Tying tax credits to energy use per square foot or emissions per square foot would efficiently make larger scale energy efficiency upgrades possible sooner. Joined with strengthening state and federal energy efficiency mandates, these would significantly support the market for efficiency-oriented technology.
A green investment fund or “green bank” is another strong mechanism for attracting private-sector capital to fund harder-to-reach parts of our energy transition. Federally, the Clean Energy and Sustainability Accelerator is seeking a $100 billion investment that would attract $463 billion in private capital within four years’ time. That alone would hit nearly a quarter of President Biden’s $2 trillion climate-investment target while creating four million good-paying jobs in the U.S. in four years. The Colorado Clean Energy Fund is the state-level affiliate and would receive part of this capital. Whether through direct federal capitalization or state-level allocations, the Colorado Clean Energy Fund would be able to powerfully support disproportionately impacted communities, just transition communities, and use innovative mechanisms to expedite our energy transition.
Another central issue for supporting both climate tech and just transition communities is workforce development. As it is now, most workforce development funding is allocated to a region’s established economic sectors. Yet, there’s untapped potential in workforce-development programming and funding to upskill workers in the fields their economies could transition toward. Particularly in rural areas, programming focused on high-paying, climate-friendly and innovation-forward solutions could help these economies flourish. Combined with $65 billion of federal spending on broadband infrastructure, the communities placed at risk in our energy transition would be given resilient opportunities for vibrancy and monumental growth.
A specific testament to the power of resourcing rural communities comes from the example of flare mitigation. In 2019, 4.72 billion cubic feet of natural gas were flared in Colorado. Yet one recipient of Colorado’s State Job Growth Incentive Tax Credit has created 286 flare-mitigation jobs across the state, with an average annual salary of $122,000. By incentivizing flare mitigation, Colorado would be primed to eliminate methane emissions by up to 98% while creating many more high-paying tech jobs in rural communities currently dependent on the oil and gas sector. Furthermore, adding an extraction tax credit would increase corporate and individual income tax revenue to offset foregone severance tax revenue. This same concept was successfully demonstrated in North Dakota in early 2021.
Finally, a financing structure that has enormous untapped potential for climate-positive investments is the Community Reinvestment Act. Since it was enacted in 1977, the CRA has prompted $6 trillion of private investment in underserved communities. By adjusting the CRA criteria to include environmental components for affordable housing projects, as well as adding a new class of credit to fund climate-positive initiatives, significant private capital would be efficiently mobilized, through an established and trusted financing mechanism.
Colorado is ready to lead in the clean economy of the future. These recommendations would unlock tremendous private, climate-friendly spending and investments. By securing bold climate investments and implementing strategic policies, our markets will be primed to launch us to the forefront of climate tech ingenuity and economic development.
Quinn Antus is executive director of the Signal Tech Coalition. Joseph Antus is communications consultant.