Colorado to consider greenhouse gas cap and trade system for manufacturers

Colorado proposes a cap on greenhouse gases and a system of credits for emissions reduction for 18 facilities that are deemed responsible for a large percentage of the planet-warming emission in the state.

The Air Quality Control Commission of the state unanimously decided Wednesday to hold public hearings on September about a proposal for a program that would set limits and mandate reductions at manufacturing sites emitting between 25,000 and 50,000 metric tons of carbon dioxide per year.

The program allows manufacturers to claim credits that can be traded with another manufacturer who is subject to emissions limits.

Megan McCarthy is an air quality planner at the Colorado Department of Public Health and Environment. She said that the proposed reduction credits would expire in five years and create an incentive for businesses to act quickly.

She said that the goal was to reduce pollution in the near term. It's also meant to encourage pollution reductions that are below the limits, and to cut early and deeply.

It is the aim to reduce greenhouse gas emissions by 20% in 2030 compared to what was emitted by the sector in 2015. This reduction is required as part of a 2021 state law.

The company will receive credits for each metric ton that individual facilities reduce beyond their goal. These credits can be exchanged with another manufacturer or saved and used to make future reductions.

Air Pollution Control Division held stakeholder meetings with companies covered by the program for the last year.

The APCD proposes that the greenhouse gas emissions of facilities be reduced by 13% compared with what they emitted last year.

Manufacturers will be required to come up with ways to reduce their emissions collectively and meet the industry goal of 20% by 2030.

According to the pollution division, this fee is still under development.

McCarthy stated that the 18 facilities covered by the cap-and-credit system account for collectively about 25% of emissions in the sector today.

Three of the 18 facilities are located in the Denver metropolitan area. The Molson Coors brewery in Golden, Rocky Mountain Bottle Co. in Wheatridge, and Suncor Energy fuel refining in Commerce City are three of the 18 facilities.

Anheuser Busch Inc. in Fort Collins, Leprino Foods a Denver-based mozzarella maker with an operation near Greeley, JBS Swift Beef Co. in Greeley, and Cargill Meat Solutions, and Western Sugar Cooperative in Fort Morgan are also among the other facilities.

The proposal excludes four larger sources of greenhouse gases pollution -- the EVRAZ Steel Mill and Rio Grande Railroad Site in Pueblo and Holcim and Cemex Cement Plants in Florence and Lyons -- because they had been covered by a previous phase of greenhouse gas emissions exceeding 50,000 metric tonnes annually.

McCarthy stated that these four facilities were responsible for 50 percent of greenhouse gas emissions in the manufacturing sector across the state.

By 2030, the state air quality staff calculated that adopting the proposed rule to reduce greenhouse gas emissions from 18 smaller manufacturers would result in a reduction of about 223,300 tons per year for all of the state's greenhouse gas emitters. The pollution control staff estimated that the avoided social costs would amount to $28 million dollars by 2030, and $329.5 millions in the next 20 years.

Manufacturers that are covered by this program don't have to wait for emissions to be reduced.

Two ethanol refineries, Yuma Ethanol LLC in northeast Colorado and Sterling Ethanol LLC in northwest Colorado, have contracted a carbon capture and storage company based in Arvada to build systems that collect CO2 from fermentation processes, and store these greenhouse gases underground.