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Capitalizing on Colorado’s Homegrown Energy

In a global economy where products are not only delivered the next day, but sometimes the next hour, it can be easy to lose track of where things come from. A former industry trade executive used to quip, “Kids today think milk comes from the grocery story, gasoline from the Conoco station, and 2x4s from Home Depot.”

He may not have been far off in our modern-day comprehension of where things come from. Indeed, one consequence of America’s economic success these past hundred years may be our loss of a direct connection to the land and basic understanding of our natural resources.

Or has it?

There’s something deep within the power behind the Colorado brand. Countless companies have found a way to subtly profit from Colorado’s homegrown reputation.

For more than a century, Golden-based Coors has pedaled beer made from the pristine waters of the Rocky Mountains; Pueblo is burning up the market with their chilies; Olathe sweet corn rivals that from Iowa; Rocky Mountain Chocolate Factory has built a global dynasty; Palisade peaches and melons from Rocky Ford are unmatched; and of course, Colorado’s brand of cannabis-derived products, including edibles and hemp-made products, are known from coast to coast.

Perhaps the same could be true for Colorado’s homegrown energy.

READ: Who Will Lead Colorado’s Energy Future?

According to the U.S. Energy Information Administration, last year, the Centennial State’s fertile energy ground made it the fifth-largest crude oil-producing state, with 82% of production coming from Weld County. Colorado was also the eighth-largest natural gas-producing state in 2022 and has the eighth-largest natural gas reserves.

Some have criticized oil and natural gas as the primary contributor to a climate change, claiming the elimination of fossil fuels is paramount to protecting the environment and saving Mother Earth. Timing is running out, they say. The end of the world is near. However, rarely do they offer realistic, practical energy alternatives that will keep us comfortable at home and work and at a price we can afford without completely upending our economy and forcing us to relocate back to caves.

Others argue the opposite — oil and natural gas is the solution, not the culprit.

READ: Biden is Right About One Thing — Oil and Natural Gas Aren’t Going Anywhere

They point to the fact that energy poverty and a lack of access to affordable energy is literally leaving billions freezing in the dark. These third-world countries and emerging nations are only looking to replicate America’s success: an economic engine built entirely on the foundation of cheap, abundant, reliable fossil fuels. Still, there’s no doubt the talking points that extreme environmental groups — as unrealistic as they are — have made an impact.

What began as a campaign to end “dirty coal” has pivoted to a ban on oil and natural gas and fossil fuels altogether. Perhaps public opinion polling showed them that eliminating fossil fuels was impossible, maybe even ill-advised, and their slogan of “keep it in the ground” seems to have morphed into “keep it from moving around.” In other words, they have conceded that it’s OK to produce hydrocarbons, but you can’t transport or sell them, which of course is just a more clever, de facto ban.

This year, the Institute for Energy Research released its inaugural Environmental Quality Index comparing the environmental quality of all major oil-producing countries. The results were overwhelming if not shocking. The United States, the world’s largest producer of both oil and natural gas, is only outranked on environmental quality by three of the top 20 global oil producers and three of the top natural gas producers, but none of those countries produce even one quarter of the volumes of oil or natural gas that the U.S. does. That means the U.S. produces the cleanest energy in the world at the highest volume bar none.

Energy must be produced somewhere. Our modern way of life is irrevocably I dependent upon abundant, affordable, reliable energy. America, and Colorado specifically, has some of the toughest environmental rules and oil and natural gas regulations in the world. We’ve seen what happens when we outsource manufacturing to other countries. Our principles around child labor protections are violated, the environment is outright ignored if not abused, and jobs traditionally performed here seem to never return.

READ: Andy Filson and the Future of Manufacturing in Colorado (Q&A)

A case could even be made that it’s now more important than ever to ensure the United States is able to meet the energy needs of its citizens while limiting its reliance on foreign entities. According to a report from the World Bank, the recent war between Israel and Hamas may cause oil prices to balloon by 35%. Couple that with increased tensions with Russia given their ongoing invasion of Ukraine, recent geopolitical conflicts expose the incredible gaps in depending on oil and gas imports for our energy needs. As uncertainty arises at the international level, it’s all the more important for the United States to be self-sufficient, and Colorado can play a huge role in achieving energy independence for the nation.

Perhaps it’s time to rally around these facts and the opportunities to capitalize on Colorado’s brand when it comes to our homegrown energy.

 

Jon Haubert Hb Legacy Media Co 2Jon Haubert is the publisher of ColoradoBiz magazine. Email him at [email protected].

Keeping up With a Dizzying Array of Regulatory Air Changes

Colorado’s oil and gas industry has spent years — and millions of dollars — staying in compliance with an ever-changing regulatory landscape where the goalposts are constantly moving. However, continuous rulemakings and changes in state oil and gas regulations make it increasingly difficult for companies to keep up.

READ: 2024 — The Next battle in Colorado’s Never-Ending Fracking Wars

Going back more than a decade, Colorado elected officials and industry alike have hailed the state as being home to the nation’s toughest environmental rules and the strictest oil and gas regulations in the country. Despite overwhelming support, that appears not good enough for some.

Lately, a significant regulatory moving target has been air quality. While a complex topic, it has been the easiest regulatory lever for opponents of the oil and gas industry to pull, largely because several factors — including geography and population growth — have historically contributed to less-than-ideal air quality on Colorado’s front range.

Going back to the 1970s, the region dominated by the Denver metro area has struggled to comply with the Environmental Protection Agency’s (EPA) National Ambient Air Quality Standards for ozone. In 1979, the standard was set at 120 parts per billion of ozone in ambient air, based on a one-hour averaging time for the measurement. In 1997, that standard was lowered to 80 ppb over an eight-hour timeframe. In 2008, it was again lowered to 75 ppb. Most recently in 2015, it was lowered once again to 70 ppb. The Denver metro area and Northern Front Range region have been out of compliance with the standards since 2008, despite aggressive plans to reduce ozone emissions.

Still, in 2019, Gov. Jared Polis decided against applying to the EPA for a waiver that credits Colorado against ozone coming in from out of state — from pollution being blown in from California and overseas, for instance, and from wildfires on the West Coast. This triggered a determination of “severe non-compliance,” even though there was little the state could do to lower its own emissions — and nothing at all that it could do to stem the considerable amount of ozone pollution being imported from the west. The practical impact of failing to apply for an EPA waiver for out-of-state pollution will likely be higher gasoline prices and fewer jobs.

It’s a debacle many thought to be solved. Since the state was out of compliance with the federal standards, it was required under the federal Clean Air Act to come up with a State Implementation Plan (SIP) for reducing ozone emissions, which needed to be approved by the EPA. Colorado’s Air Quality Control Commission (AQCC) did just that last year, including stricter permitting requirements for oil and gas production. However, the agency decided that temporary emissions, such as those generated during hydraulic fracturing of a well, which typically only takes place for a period of a few days or weeks, did not require special air quality permits. The AQCC approved the plan in December 2022, as did the EPA the following spring.

READ: Biden is Right About One Thing — Oil and Natural Gas Aren’t Going Anywhere

It would seem the problem was finally solved. However, that’s precisely when environmental groups pulled the litigation lever again, filing a lawsuit in the 10th Circuit Court of Appeals. Last month, the court found for the plaintiffs, saying that the state needed to account for emissions from “fracking,” which is the layman’s term for hydraulic fracturing. This means it’s back to the drawing board for the state, which will undoubtedly impose a whole new set of rules and permitting requirements for every stage of oil and gas production.

Fortunately, or unfortunately, Colorado’s oil and gas industry is accustomed to this sort of thing. Back in 2019, the state legislature passed into law SB-181, a sweeping new regulatory framework for the industry that completely overhauled the rules for Colorado oil and gas development. Among many other things, SB-181 notably changed the mandate of the state regulatory agency—formerly known as the Colorado Oil and Gas Conservation Commission and now referred to as the Colorado Energy and Carbon Management Commission (ECMC) — from one of fostering and managing oil and gas production in the state, to one of essentially “protecting” the state from its production.

Those new rules had hardly been finished when the General Assembly passed HB-1294 “Pollution Protection Measures” during this past 2023 legislative session. The new legislation increased penalties, lowered the threshold for making complaints to the ECMC, and required yet another round of rulemaking – this time directing the ECMC to “promulgate rules that evaluate and address the cumulative impacts of oil and gas operations.” This piece of legislation came about as a result of some lawmakers and environmental groups feeling as though the cumulative impact of rules resulting from SB-181 were not enough.

And that’s on top of the state now having to redo its SIP.

Feeling a little dizzy? You’re not alone. It has been difficult for professionals who monitor oil and gas regulatory changes in the state to keep track of it all. All of this, incidentally, came after more than 19 rulemakings that the industry was subject to between 2007 and 2017, which had earned the state the title of “strictest oil and gas regulations in the country.”

The oil and gas industry are not the only sector to be subjected to reflexive, ongoing legislation and rulemakings in the state. For instance, Colorado’s building industry has been subject to the same dizzying influx of regulation, as new laws are passed every year to require rulemakings before the rulemakings required by previous years’ bills have even been finalized.

Energy and construction are merely two examples. The list goes on. And let’s not forget, Colorado is in constant competition with nearby states like Utah, Arizona, and yes, even Texas.

The bottom line to all of this is not so much the regulations that are being passed — everyone, after all, desires clean air — but the revolving-door style of introducing them.

Business requires, more than anything, stability, certainty and predictability. It may be fair to say that most sectors of the economy can handle a certain level of regulation so long as the regulatory environment is stable year to year. If a business knows the landscape in which it is operating, good business owners can adjust and operate accordingly. But when the goalposts are constantly moved — when laws and agency rules are coming at industry faster than they can be absorbed — the result is an operational environment that is no longer stable, certain, predictable or competitive; and therefore, very often untenable.

In addition, some experts worry that all of this cumulative regulatory confusion will have unintended consequences. “The fact is that, now and well into the future, oil and gas is going to be an important part of Colorado’s energy mix,” said Doug Benevento a former state and federal environmental regulator. “That oil and gas is going to come from somewhere and shutting down Colorado’s industry, which extracts energy in an environmentally sound manner so that we can import it from somewhere else with less stringent safeguards, actually hurts the environment and working Coloradans.”

Colorado’s air quality saga continues, with no indications of abatement in the near future, and with the oil and gas industry – which is responsible for perhaps 3-7 percent of the ozone in the non-attainment area – remains in the crosshairs. Other industries clearly aren’t far behind.

Balancing Net Zero and Keeping the Heat On

Access to affordable energy is a prerequisite for economic security, physical health and social wellbeing. Energy poverty occurs when a household is unable to access essential energy services and products.

Coloradans are fortunate to live in a state where energy is reliably available, and instances of brownouts and blackouts are rare and promptly remedied. In the developed world, energy poverty is preceded by financial insecurity, rather than insufficient supply and delivery.

READ: Who Will Lead Colorado’s Energy Future?

Unfortunately, there has been an uptick of environmental activism in the Centennial State, the effects of which contribute to a diminished energy supply, increased costs and more instances of energy poverty.

Regulatory policies and their sponsors may be well-intended, but they are demonstrably harming those who can least afford it.

When he ran for governor, Jared Polis campaigned on a platform calling for the state to be exclusively reliant on renewable energy by 2040. Along with democrat legislators and regulators, Gov. Polis is pursuing that lofty goal through a series of new laws and regulatory requirements that directly impact fuel supplies and prices.

House Bill 1261 is a climate-action plan empowering regulators to pursue Polis’ aggressive renewable goals. According to a report released by the Common Sense Institute (CSI), the new regulations will not dent national, let alone global, greenhouse gases in the atmosphere, but the renewable mandates are costly and will unnecessarily impact all energy consumers.

Those in the lower socio-economic strata spend a significantly larger percentage of their incomes on energy and will feel the brunt of higher costs much more than their affluent neighbors. CSI’s report recommends a net-zero energy strategy, rather than a 100 percent renewable strategy. They argue that this compromise will allow energy to remain affordable and reliable by allowing for the “continued use of fossil fuels with appropriate offsets and/or capture of greenhouse gases.”

READ: Understanding ESG & Colorado’s Energy Transformation

Colorado’s environmentalists are unlikely to consider such a compromise. Instead, they persistently bring forth a never-ending tab of new proposals effectuating the deconstruction of the oil and gas industry upon which we rely to heat our homes and drive our cars.

Energy assistance programs in the state are receiving record-breaking numbers of calls. Energy Outreach Colorado has received 335,555 calls so far in 2023, a 20 percent increase from last year. “Last year, natural gas prices were absolutely unprecedented,” says Ms. Denise Stepto, chief communications officer at Energy Outreach Colorado. “This year already, people are calling our office and saying, ‘I’m scared I can’t afford to heat my home this winter.’” Stepto said she’s worried about people having to choose between heat and food or medicine, or having to bundle their children in winter coats at bedtime.

Rising natural gas prices and increasing utility rates are financially clobbering Coloradans, and policymakers are insufficiently moved to consider a course correction. Instead, it’s full speed ahead on climate action, and banning the natural gas that could rescue the people who are struggling the most.

2024: The Next Battle in Colorado’s Never-Ending Fracking Wars

For decades, Colorado’s oil and gas industry has been subject to a constant barrage of threats coming from a variety of angles, including regulation, legislation and litigation. During the last four of five election cycles, you can add ballot initiatives to that list.

For years, environmental groups and ad-hoc coalitions have turned their attention particularly to ballot initiatives with the aim of severely restricting — or in some cases outright banning — oil and gas production in the state.

READ: Biden is Right About One Thing — Oil and Natural Gas Aren’t Going Anywhere

The latest ballot measure attack has been submitted to the state for inclusion on the 2024 ballot, which would again seek to ban oil and gas development in Colorado. The measure, submitted by a new umbrella organization of environmentalist groups called “Safe & Healthy Colorado,” would phase out the issuance of oil and gas “fracking” permits until finally eliminating them altogether in 2030. Never mind you, there is no such thing as a fracking permit. Make no mistake, the aim of this latest in a series of ballot initiative attacks is to ban Colorado oil and gas production. Two nearly identical versions of the measure have been submitted.

The backers of the renewed initiative are a coalition of environmentalist and progressive organizations, ranging from the more established environmental lobby groups such as 350 Colorado, WildEarth Guardians, Earthworks, and the Center for Biological Diversity, to a variety of relatively new and obscure local community associations, to more radical international movements such as Extinction Rebellion, the UK-based group that advocates civil disobedience in support of climate-related political goals. Even to your average voter, it is starting to look like an all-star cast of extremists.

Spokespeople for the coalition have said that their motivation behind advancing these measures is not only to stop the development of oil and gas in Colorado, but to protest what they perceive as insufficient commitments to the cause by Colorado’s elected officials. According to various news articles, the backers see the measure as a referendum not only on the energy industry, but on Gov. Polis and his regulatory approach to oil and gas, which they believe has fallen short of their goal to eliminate fossil fuel production completely.

Others, however, see this as simply the next step in a long-term “death by a thousand cuts” strategy to dismantle Colorado’s oil and gas industry, which has included an onslaught of new legislation, ongoing and overlapping regulatory changes, and periodic litigation to tighten new rules even further.

READ: Clearing the Air on Colorado’s Emissions

While the legislative, regulatory and legal processes are all meant by design to include an element of more stringent review and sober analysis, the more democratic process of the ballot initiative does not often lend itself to comprehensive examination of complex and detailed issues, relying more on emotional appeals and soundbite analyses to sway the Colorado electorate. That has some questioning whether the ballot box is the appropriate place to make such major and complex public policy decisions.

As an exercise in direct democracy, proponents of the ballot initiative process point to its ability to include a greater number of citizens directly in the law-making process, arguing that this grants a greater degree of popular consent. Critics of the process, however, argue that legislating via the ballot undermines the deliberative nature of the legislative process, reduces complicated issues down to campaign soundbites, and opens the door for out-of-state interest groups to use the state as a laboratory for policy ideas that have failed to gain legislative approval.

And indeed, Colorado has received something of a reputation for becoming a policy “petri dish.” For instance, Colorado became the first state in the country to legalize marijuana via amendment 64, a 2012 ballot measure. Since then, ballot measures have been used to pass increases the minimum wage, legalize assisted suicide, decriminalize “magic” mushrooms, allow sports betting, establish paid family leave and reintroduce gray wolves to the state. Other initiatives have been attempted, including to establish a single-payer health care system, and to grant legal protections to a fetus, which ultimately failed, but keep coming back at regular intervals.

And these groups and ad-hoc coalitions aren’t limited to Colorado. Of the handful of states that permit citizen-led ballot initiatives, Colorado has one of the lowest barriers to entry when it comes to qualifying an initiative for the statewide ballot. As such, out-of-state interests have targeted the Colorado ballot in the hopes of getting an anti-oil and gas initiative passed here to use as a foothold to inform federal policy.

National and Colorado groups opposed to fossil fuels have regularly used this process — or have threatened to use this process — in an attempt to further restrict oil and gas production in our state. The last major effort was in 2018, with Proposition 112, a ballot proposal that would have mandated a 2,500-foot setback between oil and gas facilities and houses, schools and other structures. Another ill-disguised attempt to ban industry, Proposition 112 and its proposed setback increase would have eliminated virtually all land in the state from being eligible for oil and gas production.

Colorado voters delivered a resounding no to Proposition 112, which was handily defeated in a blue wave election year that saw progressive victories across the board. Fast forward to 2020, the same groups sought to put another iteration of their setback increase initiative on the Colorado ballot. Gov. Polis helped broker an arrangement by which both industry and environmental groups would pull opposing ballot measures in order to allow rulemaking under the just-passed Senate Bill 181 to take shape. At the time, Gov. Polis declared that the “oil and gas wars in Colorado are over.”

But the recently submitted ballot measures by Safe & Healthy Colorado suggest otherwise. The war for them is far from over.

Who Will Lead Colorado’s Energy Future?

As ColoradoBiz prepared its fifth Energy Report, we identified more than 100 story ideas for consideration. From renewables to hydrogen to the electric grid to battery storage and critical minerals, we were again reminded that we’ll never run out of business stories to tell.

And while this report may merely scratch the surface when it comes to protecting our environment and wildlife, the state’s role within America’s energy security plan, the face of energy poverty, legal, regulatory and political challenges facing our state, and its competitiveness compared to other states, we felt the following articles set the scene for energy today and key topics that will matter most in the next decade.

READ: Understanding ESG & Colorado’s Energy Transformation

The world energy market is complex, to put it plainly. Many don’t know that the robust history of oil in Colorado began in Boulder in 1901. Yes, Boulder, the most progressive and environmentally conscious city and county in the state, initiated our dependence on fossil fuels. Yet, a look at modern-day Boulder proves without a doubt that hydrocarbons like oil and gas can be extracted and the land safely returned to its pristine state, sometimes even better than it was before.

So, who are Colorado’s energy leaders who have found a way to protect the environment we love while producing the energy we need?

The people behind it may be just as complex as the market itself. In short, there are two classifications of oil and gas producers: independents, who usually operate only in the U.S. or a single state like Colorado; and major oil companies, typically with hundreds of thousands of employees and operations across the world. Examples of major U.S. oil companies are Chevron and ExxonMobil.

READ: Biden is Right About One Thing — Oil and Natural Gas Aren’t Going Anywhere

Both independents and majors are positively shaping our energy future. Major oil companies have earned their right to the pick of the litter not just across the U.S., but across the globe, and their investments go well beyond just oil and gas. Think of them as the Apple or Google of energy.

In recent years there has been a slew of multi-billion-dollar acquisitions and consolidations within the oil industry. In 2019, Occidental Petroleum Corp. acquired Anadarko Petroleum Corp. and its Colorado assets for $57 billion. The following year, Chevron announced it was acquiring Denver-based Noble Energy for $5 billion. In May of this year, Chevron also acquired Denver-based PDC Energy for $7.6 Billion. Last month, ExxonMobil announced it was acquiring Pioneer Natural Resources for $59.5 billion. Two weeks later, Chevron announced it is acquiring Hess Corp. for $53 billion. Some of these deals mark three of the five largest oil and gas acquisitions in history.

Companies like Chevron and ExxonMobil, or Apple or Google for that matter, don’t make multi-billion-dollar investments without a firm grasp of the future.

Clearly, oil and gas will continue to fortify, if not lead, our energy mix for several decades to come. But make no mistake about it, there is an energy transition underfoot – literally. Oil and gas are unlikely to be the predominant energy sources beyond 2050 like they are today. However, leaders in this industry, and companies like Occidental and Chevron, are infinitely better positioned to solve problems associated with climate change. After all, who’s more likely to cure cancer, a scientist in the laboratory testing real-life samples, or a professor waxing philosophical in the classroom? My money’s on the oil engineers. No one knows carbon like they do.

 

Jon Haubert Hb Legacy Media Co 2Jon Haubert is the publisher of ColoradoBiz magazine. Email him at [email protected].

Understanding ESG & Colorado’s Energy Transformation

The energy produced right here in Colorado, by our home-grown oil and natural gas industry, is the foundation of everything in our state, America, the world and beyond. Every business, transportation system, school, home, news organization, or social media app, would not exist without energy.

Over the last several decades, investors have intentionally shifted their money toward businesses whose operations are aimed at fighting climate change. Like the rest of us, they work for a paycheck, but they don’t see capitalism and environmental stewardship as mutually exclusive. Instead, they say the two must co-exist if we want to come close to meeting government climate goals.

READ — Exploring Colorado’s Energy Transformation: 2022 Energy Report

ESG Guidelines Rule Colorado Oil and Gas Companies

That’s brought attention to ESG, which stands for Environmental Social Governance. For those vested, it is a critical part of a company’s culture if it wants to efficiently produce energy while respecting and protecting our environment. It will provide all of us with the cleanest oil and natural gas that keeps our homes, businesses and lives running smoothly at affordable prices.

Operational Efficiencies, Innovation Improve our Environment and Economy

From the (E)nvironmental perspective, operators must show continued improvement in efforts to protect our environment. They must dramatically reduce greenhouse gas emissions with a focus on methane, conserving or recycling water and applying new technologies to make operations cleaner, safer and more efficient.

Methane Intensity in the DJ Basin

Methane Intensity
The above graph represents methane emission intensity expressed as Kg CH4/boe from oil and gas as reported to the EPA.

 

On the (S)ocial side, the priority must be on keeping field staff, employees and communities safe.

Companies should also build relationships with the communities they operate in, often referred to as a social license to operate.

“All components of ESG are important factors when evaluating venture investment decisions. As it relates the the ‘E’, the most immediate, effective, direct-to-the-bottom-line, capital efficient way of achieving ‘pick your climate-related goal’ is through investments that make the existing industrial sector more efficient (i.e., less energy intensive, reduce mineral use and waste, increase yields, etc.). Relatively low-cost technology and software are available to make this happen now.”

-JP Bauman, Principal, Altira Group

As for (G)overnance, it’s about aligning strategies and corporate values. A board composed of diverse members with diverse backgrounds is focused on, and supports, ESG.

The expectations inherent in new energy policies have accelerated the focus on environmental responsibility and broader ESG measures in oil and natural gas.

READ — Becoming a Zero-Emissions State: How Alternative Fuels Are Transforming Transportation in Colorado

Investor and Stakeholder Pressure

The energy industry is also experiencing pressure from investors tasked to allocate capital exclusively to companies that prioritize ESG initiatives — and they’re demanding insight into more than just financials. The emphasis on sound, consistent and comparable data for the investor community has rarely been stronger. Investors are betting that sustainable business practices are a prerequisite as we transition to cleaner energy sources, and shareholders are starting to demand practices supporting environmental stewardship. In some cases, ESG proponents argue that operational efficiencies can make the air cleaner and simultaneously improve a company’s bottom line. After all, the investment community wouldn’t push so hard if it meant their investments were to be less profitable.

ESG scores comprise metrics and set voluntary standards for a company’s operations, which socially conscious investors use to screen potential investments. In addition, energy industry analysts expect government regulations around greenhouse gas (GHG) emissions and other pollutants to only become more rigid over time. For some oil and natural gas companies, routinely mislabeled as anti-environment, this is an opportunity to accurately tell their story. Their environmental efforts and goals to decrease the carbon intensity of their operations is gaining positive attention, especially in their sustainability reports.

For example, Oxy, which acquired Anadarko Petroleum Corp. in 2019, has published a Pathway to Net Zero Strategy that underscores its commitment, demonstrated by efforts to develop and deploy revolutionary technologies to help society reach net zero while meeting urgent needs for energy and essential products. In a recent sustainability and ESG report, PDC Energy wrote in a letter to stakeholders stating, “Our operational expertise and financial fortitude allow us to set aggressive sustainability goals, and by innovating and appropriately investing we can achieve the results required in today’s dynamic energy environment. Our mission to be a cleaner, safer and socially responsible company begins in the board room and resonates through every level of PDC.”

“ESG has become a term that gets tossed around by every investor. Unfortunately, too many investors are glossing over this as a check box leading to “green washing” of this important distinction. As a true ESG investor, we believe that each investment must have real and measurable positive impacts such as carbon or waste reduction and improving diversity & equity.”

-Trent Yang, President, Galway Sustainable Capital

Others in Colorado’s oil and gas industry have joined, too. The Colorado Oil & Gas Conservation Commission noted in a report that 13 of the state’s 15 largest oil and natural gas producers have set climate and/or sustainability goals.

That’s not to say the topic isn’t being met with opposition. Some, inside and outside the oil and natural gas industry, are questioning whether the energy transformation is being unnecessarily forced with underlying political motivations. Others note the unnecessary increased energy costs the changes could reveal. In October, 19 Republican-led states coalesced to investigate six major U.S. banks and their involvement in the United Nations’ Net-Zero Banking Alliance, which they claim is hurting American companies. Hearings and legislation are expected as soon as next year.

ESG factors are, essentially, measures that address how a company protects the planet, how the company engages with its communities and the diversity of its governing board and workforce. This transparency and accountability mark a shift in mentality for many industries, including operators in oil and natural gas.

“ESG should define good operating practices, from financial stewardship to environmental stewardship, to managing people well. In my mind, it all boils down to different dimensions of governance, particularly how well a company understands, measures, and mitigates risk. Transparent, accurate, comparable data are key to differentiating the quality of a company’s operations.”

-Kelly Bennet, CEO, B3 Insight

None of this means fossil fuels are going away. Energy experts, even those who agree on the need to reduce carbon and methane emissions from the industry to combat climate change, recognize fossil fuels will continue to be important. Renewable energy sources are virtually impossible without a back-up fuel such as natural gas. The transition to cleaner energy perhaps should more rightly be called an energy transformation, with changes to how energy is produced and delivered, and recognizing that all resources — fossil fuels and renewables — are needed to meet the ever-increasing demand for energy.

How each energy source — traditional or renewable — alongside billions in investments play out during the energy transformation will be the start of a new chapter in America’s energy story. And it’s clear Colorado will be front and center.

 

Jon Haubert Hb Legacy Media CoJon Haubert is the publisher of ColoradoBiz magazine. Email him at [email protected].

Tapping the Brakes on the Californication of Colorado transportation

Almost a decade ago, David Lewis wrote for Colorado-Biz that Colorado was “a natural-gas leader,” while European-based energy organizations crowed about the “Golden Age of Gas.” Natural gas-powered vehicles were the green-fad de jour in 2013. Many then, and to some extent now, can recall city buses and fleet vehicles with painted exultations of “this vehicle is powered by natural gas.” The reasons natural gas vehicles fell out of favor are enigmatic. Some speculate the fallout was attributable to the election of candidates with a worldview wholly opposed to hydraulic fracturing, also known as fracking.

READ — Clearing the Air on Colorado’s Emissions

Perhaps the reason is as simple as the emergence of a more viable alternative. Nearly 10 years after the natural gas vehicle heyday, the new darling in the transportation sector’s role in redressing greenhouse gas (GHG) emissions is the electric vehicle (EV). It didn’t hurt that the falcon wing doors on Tesla’s SUV reminded us of the De-Lorean in “Back to the Future,” minus the ability to time travel.

The clarion call to reduce GHG emissions is supported by research indicating an urgency to act, according to the Colorado Department of Public Health and Environment (CDPHE), which says Colorado’s transportation sector emits more GHGs than any other sector.

Will EVs endure as the preferred panacea for the GHG in Colorado’s atmosphere, or will this remedy go the way of natural gas-powered vehicles? Signs point to the former being the most-probable scenario.

Gov. Jared Polis signed in 2019 an executive order creating a slew of EV-related directives:

  • Creation of an interdepartmental transportation electrification workgroup to develop, coordinate and implement state programs and strategies supporting widespread transportation electrification.
  • Creation of a Zero Emission Vehicle program by CDPHE’s Air Quality Control Commission.
  • Revision of the state’s Beneficiary Mitigation Plan, allocating the remaining $70 million of funds from the federal Volkswagen-emission case to support electrification of transportation.

In 2019, responding to the executive order, CDPHE’s Air Quality Control Commission adopted a Zero Emission Vehicle standard. The Colorado Energy Office then released in 2021 the Pollution Reduction Roadmap, which outlined strategies for transitioning Colorado’s transportation system to achieve 100% electric cars on the road, and a 100% market share for zero-emissions trucks among new sales by 2050. (Colorado already has a stated goal of 940,000 EVs statewide by 2030.)

Lofty goals necessitate aggressive strategies, which is why Polis adopted California’s vehicle standards under Section 177 of the Federal Clean Air Act, mandating zero-emissions vehicles statewide.

READ — Do Hispanics Bear the Brunt of the Energy Crisis?

However, the governor stopped short of an outright ban on the sale of new gas-powered cars, as California regulators have done, leaving many to question how committed he is to the cause. Whether the governor tapped the brakes on the Californication of Colorado because of election-year considerations is fair speculation.

Still, the greatest roadblock to achieving EV goals is the charging infrastructure. ColoradoBiz in 2019 reported on the dismal status of EV-charging infrastructure, and progress since then has failed to put a dent in the need. As of 2020, there were 2,000 public chargers. Studies suggest 24,000 will be required to accommodate the 2030 goals: an unfathomable 30% annual growth rate.

In the end, political realities will continue to rule when it comes to environment and transportation policies.