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Analysis: Scissor analogy explains the great oil, gas divide in Colorado’s heated climate debate

March 13, 2024, 10:16 am
Fort Collins oil rig
An oil rig in a Fort Collins neighborhood (David O. Williams photo).

This week, for the first time ever, Colorado lawmakers will formally consider a policy that seems to many environmental activists like one of the most direct and obvious ways to fight the climate crisis.

Senate Bill 24-159 would phase out new oil and gas drilling in Colorado by Jan. 1, 2030, aiming to limit the supply of the fossil fuels that, together with coal, account for the vast majority of the greenhouse gas emissions that cause global warming. The bill is set to be heard by the Senate Agriculture and Natural Resources Committee on Thursday.

The legislation’s proposed drilling phaseout, however, appears dead on arrival. Gov. Jared Polis has made his opposition clear, and even before it gets to his desk, the bill likely faces an uphill battle in the state Senate, where influential moderates hold sway.

To many Coloradans who are concerned about climate change, this doesn’t add up. No one can dispute that fossil fuels are the primary cause of global warming. Why would a state government that says it’s committed to cutting emissions be opposed to limiting the source of most of those emissions?

The answer has to do with the deepest divide in Colorado climate policy — not counting, of course, the divide between the reality-based community and those who continue to deny the overwhelming scientific consensus on human-caused climate change. In short, the debate over SB-159 is a matter of supply and demand.

The Polis administration, together with moderate environmental groups and most other top Democrats nationally, overwhelmingly favors climate policies that aim to restrict demand for fossil fuels. Their first preference is simply to make cleaner alternatives — wind and solar generation, electric cars, electric appliances and heat pumps — cheaper and more available, and count on consumers to do the rest. In some cases, they support government intervention, like mandates on electric utilities or car manufacturers, to add some regulatory heft to market-driven transitions.

What Colorado Democrats mostly haven’t supported, though, are policies that aim to fight climate change by restricting the supply of fossil fuels. As a result, Colorado’s oil and gas industry has continued its post-2010 boom. Even as the state tries to put fewer gas-guzzling cars on Colorado’s roads, and fewer gas-fired furnaces in Colorado’s homes, it expects production to continue to increase through at least 2030, with more and more of what’s produced put to other uses or shipped out of state to be combusted elsewhere.

A handful of progressive environmental groups have argued for years that this needs to change. In addition to demand-side policies that push clean-energy adoption to 100%, they want supply-side policies that reduce fossil fuel production to zero. And for the first time, some Democratic lawmakers are joining them. In the words of state Sen. Sonya Jaquez Lewis, one of SB-159’s sponsors: “We know we can’t keep drilling forever.”

‘Both arms of the scissors’

The science is clear that, at a global level, Jaquez Lewis is right. Relatively simple math concerning the Earth’s “carbon budget” shows that in order to limit warming to below catastrophic levels, humanity must leave the vast majority of known fossil-fuel reserves in the ground. The increasingly urgent question for Colorado and other governments around the world is whether — and how fast — that can be achieved through demand-side policies alone.

The Polis administration’s approach to the energy transition is simple: “Fundamentally, our strategy to reduce greenhouse gas emissions is to make clean energy cheap, rather than making fossil fuels expensive,” state climate officials wrote last month in their latest “roadmap” for climate action.

In an influential 2018 paper making the case for supply-side policies, however, economists Fergus Green and Richard Denniss critiqued this approach with an evocative metaphor. Policymakers focused only on demand-side policies, they wrote, are only cutting with one half of a pair of scissors: “Supply-side policies should be in the toolkit, ready to be wielded when circumstances favor,” Green and Denniss concluded. “Better, we think, to cut with both arms of the scissors.”

It’s certainly possible to cut things with a single scissor blade — if the blade is sharp enough, or if enough force is put behind it, or if the material being cut through simply isn’t very tough. In recent years, Colorado and other states have had the most success cutting emissions in the electricity sector, where wind and solar generation are already cost-competitive with fossil fuels and utilities like Xcel Energy have needed relatively little prodding to follow through on ambitious decarbonization goals.

When it comes to knottier problems, though, demand-side policies alone haven’t been enough to keep Colorado on track to meet its greenhouse gas targets. The state is set to fall short of its first-ever statutory emissions goal in 2025, in large part because of its failure to reduce emissions from the transportation sector, for example.

Proponents of supply-side climate policy want to apply pressure with the other half of the scissors — even if it means, as it surely will, increasing the price of fossil fuels. Coloradans will buy well over 150,000 brand-new gas-powered cars and trucks this year alone. How many would opt for an EV, an e-bike or a transit pass instead, if the cost of driving were much higher?

Like many other Democrats, Polis and his top climate officials are adamant that going down that road would be a critical error for the climate movement.

“If it were implemented at a large enough scale to have a meaningful impact it would drive up the cost of living for the many Coloradans who can’t yet afford to make the switch to cleaner alternatives,” they wrote last month. “A strategy of limiting the supply of fossil fuels will harm lower-income residents and cause significant public concern.”

When it comes to SB-159, it seems like that that viewpoint will carry the day, whether in Thursday’s committee hearing or with the stroke of Polis’ veto pen. But with the impacts of the climate crisis accelerating and the governor term-limited in 2026, it’s unlikely that the bill’s defeat will settle the argument for good. A growing number of governments around the world, including California and Denmark, are moving to enact supply-side policies.

While few would dispute that the energy transition shouldn’t overburden people with lower incomes, it’s also true that many of the state’s existing climate programs show that carefully designed and sufficiently ambitious fiscal policy can mitigate the costs associated with market restrictions. Colorado has paired its restrictive California-style EV mandate, for example, with generous incentives that help low- and middle-income drivers afford EV models whose upfront costs would otherwise be prohibitive.

And finally, as is the case with any other ambitious climate policy, supporters of supply-side intervention argue — and climate science generally bears out — that the choice isn’t between higher or lower costs now, but between the costs of a rapid clean-energy transition or the costs of a dangerously hot planet in the years to come.

“We have other states that are looking at this path. We have the rest of the world saying we need to phase down our use of fossil fuels,” Jaquez Lewis said in an interview. “We’re just trying to say that Colorado shouldn’t think that we exist on our own.”

Editor’s note: This analysis first appeared on Colorado Newsline, which is part of States Newsroom, a nonprofit news network supported by grants and a coalition of donors as a 501c(3) public charity. Colorado Newsline maintains editorial independence. Contact Editor Quentin Young for questions: info@coloradonewsline.com. Follow Colorado Newsline on Facebook and Twitter.

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