Colorado quietly held its first auction of greenhouse-gas credits last month, with five companies spending $68,000 to compensate for missed pollution-reduction goals.
However, details about how many credits those five companies purchased, and by how much they were allowed to offset emissions reductions through those purchases, remain a secret because state regulations prevent disclosure of those details.
The credit-trading program has been heavily criticized by environmentalists as a pay-to-pollute scheme that allows the state’s dirtiest industries to avoid making real changes to their greenhouse-gas emissions, which pollute the air and contribute to climate change.
The five companies that bid on credits were Cemex Construction Materials, a cement plant near Lyons; GCC Rio Grande, Inc., which makes cement in Pueblo and Penrose; Sterling Ethanol, a chemical manufacturer in Sterling; Suncor Energy’s oil refinery in Commerce City; and Yuma Ethanol, a chemical manufacturer in Yuma, according to the Colorado Department of Public Health and Environment’s auction summary. Sterling Ethanol and Yuma Ethanol are owned by Colorado Agri Products.
The sellers were Anheuser Busch’s Fort Collins brewery; Avago Technologies Wireless Manufacturing, which makes semiconductors and other electronic components in Fort Collins; and Western Sugar in Fort Morgan, according to the state’s auction summary.
Credits sold for about $25 each, and one credit equals one ton of carbon dioxide equivalents for one year. So if a company spent $100 at the auction, that company’s required emissions reduction would be four tons lower than what it otherwise would have been required to cut through improved technology or other measures.
In total, 2,760 credits were sold out of almost 210,000 credits offered.
Patrick Cummins, the health department’s director of environmental health and protection, said the state did not have any preconceived expectations going into the auction, but he was not surprised that so few credits were purchased.
“The companies offering and those bidding also didn’t know what to expect,” Cummins said.
Not every company that bid ended up buying credits, he said.
The Denver Post reached out to Suncor and Colorado AgriProducts to ask how the auction worked from their perspective, but representatives did not respond.
The details on which companies bought credits and how much they paid are kept secret to maintain a fair marketplace, Cummins said. If sellers knew how much a company was willing to pay, it could distort the market, he said.
Colorado’s Air Quality Control Commission, which establishes air pollution policies, created the greenhouse-gas credit-trading system while trying to come up with a plan to reduce by 20% the greenhouse-gas emissions from the state’s 18 largest manufacturers.
The plan allows companies that can lower their emissions beyond the mandated benchmark to sell credits to companies that struggle to meet the state’s emissions standards.
State regulators believed that by forcing the 18 largest industrial manufacturers to cut emissions, Colorado would move closer to its goal of eliminating all greenhouse-gas emissions by 2050. Those manufacturers include Suncor, Molson Coors, Western Sugar, Leprino Foods, Microchip Technology, JBS Foods and Cargill Meat Solutions, and they represent about 15% of all climate pollution emitted by industrial and manufacturing facilities in Colorado.
The majority of those 18 companies reduced their emissions below the specified levels they needed to meet in 2024 and did not need to buy credits, Cummins said.
The 18 companies will be evaluated and graded on their emissions reduction on a three-year cycle, and 2024 was the first year in the cycle, he said. There could be a greater demand for credits in the next two years as companies figure out how close they are to meeting the state’s mandated 2030 goal. But it is too early to predict whether some will rely on credits to make the goal, Cummins said.
Eight companies have told the state health department that they would achieve their 2030 reduction goals this year, Cummins said. Of the 18, only three exceeded the 2024 reduction requirements: Suncor, JBS Foods and Sterling Ethanol, according to the state’s greenhouse gas report.
Greenhouse gases include carbon dioxide, methane, nitrous oxide and fluorinated gases that trap heat in the atmosphere. Those gases linger and circle the Earth, causing global warming and climate change that brings on more severe weather such as large forest fires, rainstorms and intense summer heat. They also impact human health, causing respiratory and heart diseases and some cancers.
Colorado is planning to reduce its greenhouse gas emissions by 50% by 2030 and to zero by 2050, and the credit-trading program is just one of multiple programs in place to help the state reach that goal.
Last year, the state approved a credit-trading program for natural-gas operators. Other programs include a push to get more electric vehicles on the road, require state and local governments to use electric lawn equipment, and to shutter the state’s coal-fired power plants by the end of 2030.
When the credit-trading program was approved in 2023, multiple environmental groups said the system would create a loophole that would allow the state’s biggest polluters, such as the Suncor refinery in Commerce City, to buy their way out of making serious greenhouse gas reductions.
But business leaders and the governor’s office wanted the credit-trading system, fearing that burdensome regulation would force some companies to move out of state.
June’s greenhouse-gas credit auction occurred with little fanfare. Multiple environmental groups contacted by The Post did not know it had happened. And that, too, was criticized because state regulators have promised to be transparent with the people who live in neighborhoods closest to those large polluters and who are most impacted by the pollution.
Ean Tafoya, of GreenLatinos, said no one told him that credits had been sold and he did not completely understand what had happened.
“I’m left with more questions than I have answers,” he said. “I’m disappointed there wasn’t more enhanced community engagement on such an important issue.”
Ian Coghill, senior attorney for Earthjustice, said he was surprised by how few credits were sold and how little the credits cost, especially since the state has determined the social cost of greenhouse gas emissions equals about $89 per ton. That essentially puts a price tag on how pollution impacts the environment and human health.
“I assumed the credits would go for much more money,” Coghill said.
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