The term New Energy Economy refers to the transition of a state’s energy economy from one based purely on fossil fuels to one that includes a higher percentage of renewable energy sources. State-level energy policies have been the primary force moving the United States toward a greener economy, and Governor Bill Ritter Jr. led this effort in Colorado between 2007 and 2011.
The transition involved dozens of pieces of legislation, organizational and administrative changes, and various voluntary initiatives developed and funded by the state. By the end of 2014, Colorado’s electricity generation from renewables had increased to 18 percent (from virtually nothing), and the state is on track to meet its own Renewable Energy Standard (RES) goal of 30 percent by 2020. The adoption of a 30 percent RES is often held up as one of the crowning achievements of the New Energy Economy, and the process by which it was implemented in Colorado provides a window into its political dynamics.
Colorado’s New Energy Economy began taking shape before Ritter took office. After three failed legislative attempts to adopt an RES in the early 2000s, the passage of Amendment 37 in 2004 established a 10 percent RES and was the country’s first voter-approved RES. Amendment 37 required Xcel Energy and other investor-owned utilities, as well as rural electric associations (REAs) and municipal utilities with 40,000 or more customers (such as those in Fort Collins and Colorado Springs) to produce 10 percent of their electricity from renewable sources by 2015 without raising rates by more than 2 percent. The amendment also included a solar “carve out,” which required utilities to meet a portion of the 10 percent mandate with solar sources. While the RES was open to a variety of renewables, it was evident that wind was likely to be dominant and solar would play an important role.
The Amendment 37 campaign faced opposition from the state’s electricity providers. Xcel Energy spent at least $1 million in its effort to defeat the initiative. Municipal utilities desired local control and choice of energy use, while REAs argued that the amendment would disadvantage smaller utilities. Other opponents included the coal industry—through the Colorado Mining Association—the Colorado Association of Commerce & Industry, and the steel industry.
Proponents crafted a powerful bipartisan coalition by framing Amendment 37 in terms of environmental protection, rural economic development, and job creation. While Democrats highlighted the environmental benefits of the RES, key Republican allies emphasized the economic benefits of wind projects through rents paid to landowners and tax benefits for agricultural communities in depressed areas in eastern Colorado. The pro-amendment alliance also included the renewables industry and voters in the six Front Range counties most likely to benefit from new jobs and innovation initiatives in renewables. By linking clean energy to rural development, the measure secured enough support to pass with a 53.6 percent majority.
New Energy Economy
Shortly after the passage of Amendment 37, Ritter articulated his vision for the New Energy Economy through his campaign for governor. His campaign team used the term to make clear that the goal was not simply to promote the use of clean energy but to build a new economy based on it. By continuing to highlight the links between clean energy, job creation, and environmental concerns, Ritter sought to maintain and expand the bipartisan alliance instrumental in passing Amendment 37.
One of Ritter’s first legislative proposals after taking office in January 2007 was to raise the RES to 20 percent by 2020. The initiative passed with surprisingly little opposition, largely because Xcel had realized that it would meet the 10 percent RES eight years early and had reportedly begun to view renewable energy generation as a way to hedge against price fluctuations for coal and natural gas. The opt-out provision for small municipal utilities remained, but REAs were now required to meet a 10 percent standard.
The Ritter administration’s effort to reorganize the Colorado Oil and Gas Conservation Commission (COGCC), the state agency that oversees oil and gas development, was much more contentious. Historically, the majority of the COGCC’s seven members represented the oil and gas industry, which was consistent with the agency’s mission to promote the development of the state’s natural resources to generate revenue. In 2007 the legislature added two additional members and stipulated that wildlife, public health, and environmental interests must also be represented. These changes allowed the Ritter administration to write new rules in 2008 to address drilling-related environmental and wildlife concerns. Afraid that the new regulations would kill jobs, the oil and gas industry launched a determined campaign that succeeded in weakening some of the proposed rules.
Natural Gas Ascendant
While the 2008 rulemaking process resulted in friction between the Ritter administration and the oil and gas sector, their relationship shifted considerably in 2009, taking many environmentalists and renewable energy advocates by surprise and altering the trajectory of the New Energy Economy. In a July 2009 speech to the Colorado Oil & Gas Association (the industry’s trade group), Ritter declared that natural gas was “mission critical” to the New Energy Economy. Representatives of the oil and gas industry saw this shift as reflective of Ritter’s awareness of the industry’s central role in the state’s economy in the wake of the global financial crisis. Members of the Ritter administration, however, suggested this was a tactical move linked to its long-term goal of reducing dependence on coal as the state’s major electricity source; the administration argued it was never strategically opposed to natural gas.
This new partnership between the Ritter administration and the oil and gas industry was key to the administration’s success in raising the RES to 30 percent in 2010, a process that was nonetheless much more confrontational and required even more careful coalition building. The 30 percent RES was part of a broader compromise linked to the Colorado Clean Air, Clean Jobs Act (CACJ), which was passed that same year and required major utilities to replace, retrofit, or retire 900 megawatts of coal-fired power generation with natural gas or lower or non-emitting fuel by 2018.
Negotiations for the 30 percent RES and the CACJ took place quickly and out of the public eye, keeping many potential opponents, such as the coal industry and REAs, in the dark. The oil and gas industry focused its resources on gaining support for the CACJ, which they saw as a way to establish new markets for natural gas at a time when prices were very low, and largely stayed silent on the RES increase. Meanwhile, Xcel supported the increase to insulate itself from nonrenewable price fluctuations and because it could shift some of its electricity generation from coal to natural gas. The renewables industry was concerned about the move to gas in the CACJ but was brought along as a result of the 30 percent RES and a host of other provisions that were particularly beneficial to the wind industry. In order to satisfy small renewables producers, the new RES requires Xcel to get 3 percent of its energy supply from distributed generation, including rooftop solar, small hydro, and wind. Environmentalists were eager to increase the RES both because of its long-term commitment to renewables and concerns about the shifting relations between the Ritter administration and natural gas producers.
Despite the increasing prominence of natural gas, Colorado’s 30 percent RES is among the highest in the country. It is important to note, however, that RESs only cover electricity and are more often than not accompanied by binding emission standards.
After Ritter’s term ended, the conflict over the New Energy Economy continued with a 2015 federal appellate court decision upholding the constitutionality of the RES. Despite continued opposition, the RES is not likely to be repealed—all the more so since renewable energy is coupled with a broader move toward green manufacturing and technology in the state.
As of June 2016, there does not seem to be a strong political alliance that would increase the RES. While Governor John Hickenlooper is supportive of the federal Clean Power Plan, that plan is more likely to promote the use of natural gas rather than increase the RES, at least during the current governor’s term.