The punishing costs of Colorado’s pathway to decarbonization Image By Kelly Caufield In the next fifteen years, Coloradans could be facing one of the steepest electricity price hikes in the country as an unintended consequence of well-meaning, but ultimately short-sighted, environmental policy. This is the accumulated costs of the state’s energy mandates and a push for rapid electrification absent due consideration for the costs to producers. Energy-borne fees will be hitting Coloradans at a time when housing costs and regulatory burdens are stinging both business and residents and the state is experiencing an economic and demographic growth slowdown. State leaders in Colorado – a significant energy producer – have implemented some of the nation’s most aggressive greenhouse gas emissions reductions goals. The state’s “Pathways to Decarbonization” report from last year lays out a roadmap for meeting Colorado’s emissions goals. This involves converting a large share of Colorado electric grid generation to wind, solar and battery storage. While this conversion happens, the state also wants to triple the grid’s capacity. This conversion and the capacity growth will impact energy producers, who will not simply eat the cost alone. What consumers can expect Pass-through costs to electricity consumers could drive average household electricity costs up by as much as $504 per year by 2030, according to the Common Sense Institute’s analysis. Over the longer term, Coloradans could pay $6,400 to $9,280 more per household cumulatively by 2040 — just in electricity costs. This is not only a residential concern, but a business concern as well. Commercial businesses will pay up to $66,000 more in total by 2024, and industrial businesses will pay over $1 million more in sum. As much as producers and the state would like to attribute these impacts to the fluctuation in natural gas prices, policy is the culprit. Over time, these costs will add up for the economy. The Common Sense Institute report’s modeling forecasts that by 2030, elevated electricity prices will shave $2.6 billion off Colorado’s GDP and cost the state 25,000 jobs. Disposable income for a family of four will drop by over $1,300. This happens in a moment where Colorado’s housing costs rank virtually the least competitive state in the union, according to CSI’s Free Enterprise Index. Calculating the policy costs These reduction are only the beginning. Colorado is paying the costs for the state’s energy roadmap across all sectors. CSI estimates that, as of 2023, state and local environmental policy has cost Colorado $18.3 billion of GDP, $13.8 billion of personal income, and $32 billion of output over 15 years. In 2023, it cost the state roughly 1% of its GDP and employment—an amount larger than the state’s whole agricultural sector—and $131.7 million in tax revenue from personal income alone. In return, the state is on track to fall just short of its goal to reduce total emissions to a level 26% below what it was in 2005 with even more expensive action on the horizon. This kind of economic math is unsustainable. And regressive. As electricity costs rise, lower- and middle-income Coloradans will feel the pain most. If consumption grows as expected with increased vehicle and building electrification, those bills will climb even faster. To be sure, the amenities that made Colorado competitive in the past are not only its extractable natural resources but its recreational ones: its ski slopes, open prairies, mountain hiking paths, rivers, canyons and open vistas. Centennial State lifestyle revolves around these features, and Colorado’s leaders are right to try to protect them. However, those protections should not have to come at the cost of economic development. Colorado’s population is growing at a slower rate than 10 years ago, aging more quickly, and its retail sales and job growth rates are no longer exemplary. Now is no time to add more hurdles. Policymakers should revisit the scope and pace of current mandates. That includes reevaluating assumptions that natural gas will only run “a few hours a year,” or that massive renewables buildouts can occur without triggering grid reliability issues or bankrupting consumers. Clean energy is a noble goal, but no more noble than prosperity. Balancing both should be the goal for Colorado’s leaders. Kelly Caufield is the executive director of the Common Sense Institute, a non-partisan, public-policy think tank based in Colorado. *The opinions expressed in this column are those of the author and do not necessarily reflect the views of EnergyPlatform.News.