What's up with Gov. Polis' oil & gas "truce/deal"?

As many of our members have asked about it, here is some info about the oil and gas “truce” orchestrated by Governor Polis. At the end of April, Governor Polis announced a 3-year “truce” between 3 oil & gas corporations and 9 environmental groups. The problem is, this agreement does nothing to curtail the expansion of fracking, and we cannot wait 3 more years to take action on Colorado’s #1 source of climate and air pollution – the oil and industry!

Colorado must begin a phase out of new oil & gas fracking and plan a fast and fair clean energy transition to protect our communities, our land, air and water, our global climate, and our children’s futures!

First, to be clear, 350 Colorado, was NOT consulted with or part of this agreement. Nor was Safe & Healthy Colorado (coalition campaign to phase out fracking) or any of the 49 member groups of CCLC (Colorado Coalition for a Liveable Climate) part of the deal.

The o&g industry had introduced (as usual every 2 years) ballot initiatives this year to continue their record profits. This year they introduced an initiative about “energy freedom” that would basically make it illegal for governments to favor one energy source over the other (which could potentially undermine good policies supporting the transition off fossil fuels). Conservation Colorado and a few other groups also introduced 3 pro-environment ballot initiatives this year. (These initiatives are in addition to the Safe & Healthy CO coalition ballot initiative that 350CO endorsed to phase out new oil and gas permits by 2030. This ballot initiative was not able to move forward yet for the 2024 ballot due to a lack of funding and it was not part of the deal.)

The “agreement” was reached between 3 big o&g companies (Civitas, Chevron, and Occidental) who fund the industry ballot initiatives and 9 environmental groups (Colorado Public Interest Research Group, Colorado Sierra Club, Conservation Colorado, Earthjustice, Earthwork, GreenLatinos, Healthy Air and Water Colorado, Southwest Energy Efficiency Project, Western Resource Advocates) that were leading the 3 environmental ballot initiatives and 3 ozone bills that were moving through the CO State Legislature.

As part of the agreement, all the 3 ozone bills (and a bill to address minimally-producing stripper wells) were dropped and all the ballot initiatives were dropped. Instead, 2 new bills were introduced:
- Senate Bill 24-229 to require the Colorado Department of Public Health and Environment to create rules to reduce nitric oxide emissions from oil and gas production by 50%, compared to 2017 levels, by 2030. It also would expand the fund used to plug orphan wells, as well as other ozone mitigation measures.
- Senate Bill 24-230 creates a fee on oil and gas production that would fluctuate based on market conditions. The fee would start at 5 cents per barrel of oil when prices are at $40 per barrel or less, rising up to 30 cents per barrel when prices reach $60 or more — plus 15 cents for every $10 price interval beyond that. There’s a similar fee structure for natural gas production. The funding would go to transit (80%) and Parks and Wildlife (20%).
  - 350CO and many of our CCLC partners opposed this bill because it ties funding from the oil and gas industry to a public need – public transportation, making society more dependent on the oil and gas industry when we need to become less reliant on fossil fuels. It could result in a perverse incentive to continue the expansion of fossil fuel extraction in CO when scientists have made clear that we need to stop bringing online new fossil fuels in order to keep global heating below 1.5-2C.
  - 350CO’s statement to the Legislative Committee on SB24-230:
    - 350 Colorado was not a party to the negotiations on the administration’s deal that led to this bill, nor are we a party to the deal. Our position is that the administration’s deal stands in the way of fully addressing the threat that the oil and gas industry poses to public health including climate change. For instance, the science shows all new oil and gas development must stop right now everywhere around the world to limit catastrophic impacts of climate change. 350 Colorado cannot in good conscience support this bill.
    - We agree there needs to be more money to be spent on transit. Reducing emissions from transportation is urgent and to do that a strong transit system is essential
    - We agree that oil and gas corporations SHOULD be paying more fees and taxes on their ever growing profits. Colorado has nearly the lowest severance tax rate in the US.
    - But these two things do not belong together in a bill. Colorado should not be increasing its dependence on a finite resource that will be in decline as it is depleted, and as the world stops using fossil fuels for energy, as the world is already doing. Demand for oil and gas will peak globally in the next year or two and we should not be increasing our reliance on oil and gas revenue.
    - Instead, oil and gas fees should be used to pay for the climate disasters Colorado has suffered, over $20 billion so far. It should also be used to fund protections for outdoor workers, and many other needs for mitigation and adaptation that are necessary now in Colorado due to higher temperatures. These needs will continue to increase as temperatures rise. Oil and gas fees should also be used to pay for other externalities of the industry such as human health costs in communities near oil and gas facilities, and in the ozone air pollution non-attainment area.
    - Based on what our legislators said in committee hearings, the proposed fee is based on a 1% fee that would bring in $130 million annually on average. That means oil and gas profit is $13 billion on average. They can surely afford to pay a 10% fee toward climate mitigation and adaptation, and repair of climate caused disasters such as wildfires, floods and mudslides, and Colorado should institute a fee like this.
    - Photographer: Christian O’Rourke
      
      The bottomline: We must not increase Colorado’s dependence on oil and gas.
These 3 o&g industry groups and 9 environmental organizations also agreed not to introduce new legislation or ballot initiatives about “upstream” oil and gas production until 2028. While we hope that the bills will effectively decrease ozone production and better protect disproportionately impacted communities, we are concerned that they will do little to reduce climate pollution and could make it more difficult to pass legislation or an initiative to phase out new fracking.

Additional notes on the “deal/truce/agreement”:

The 2 new bills (SB24-229 and 230) were promoted as “part of a legislative package that will generate new funding for transit and rail, as well as land and wildlife habitat conservation and restoration, from fees placed on oil and gas production in Colorado.” Unfortunately, this gives the industry more power and bragging rights by making society more reliant on fossil fuels when we should be doing the opposite.
Though SB24-230 is not presented by its sponsors in these terms, it really is a ‘pay to pollute’ scheme that allows oil and gas corporations to continue business as usual – exporting the profits and leaving Coloradans with the pollution. Furthermore, what the oil and gas corporations will pay to continue polluting Colorado is only a pittance (cents per barrel) and only beginning to pay Nov 30, 2025.
SB24-230 says it uses oil and gas fees to reduce and mitigate the impact of oil and gas – but it does not use these fees to reduce the emissions from the oil and gas sector in Colorado or to pay for climate damages, but instead uses it to reduce the emissions from the transportation sector by contributing to funding for transit.
The NOx reduction rulemaking laid out in SB24-229 matches up with the Polis executive order from March 2023, except now it does not include a 2025 standard. The orphan well mitigation program will be expanded to include “marginal” wells. Marginal wells are defined as an oil and gas well that is at high risk of becoming orphaned, and this vagueness in definition will present problems in interpretation and enforcement of the new law. It is unclear if there is any additional funding for the program. The slap on the wrist fines for failing to file an Air Pollutant Emission Notice (APEN) will be set with a $1000/day maximum instead of the $500/day maximum in current law.
We hope that the bills yield meaningful, measurable positive impacts, but at present the environmental benefits of these bills appear quite limited, with much of the language simply providing the regulators ‘more authority’ to take action. This deal does not reduce the production of oil and gas (primarily via fracking) in Colorado, and it ignores most of the pollution from burning it here in CO or wherever the oil & gas corporations export it.
This deal and these bills do nothing to align with scientists’ warnings that we cannot continue to bring online new fossil fuels and stay below 1.5-2C. So it’s not a good deal for the climate.
Unfortunately this deal will likely hinder efforts to phase out new fossil fuel production in Colorado despite scientists worldwide warning that we must in order to stay below 1.5-2C global temperature rise. Important allies’ hands will be tied from providing support for legislation or ballot measures.
Meanwhile, the industry, although they contribute a small fraction to the economy and schools, will have more talking points around how we must continue their expansion to fund schools AND now public transit too. (It’s good to remember that Colorado funded schools prior to the fracking free-for-all that started around 2010, and we’ll still have to fund them and transit once fracking dries up too. It would be smart to make ourselves less, not more dependent on a finite industry that is poisoning us and overheating our planet.)
We do not support the way in which this deal was done. Nine environmental groups – a fraction of Colorado’s environmental movement – were included in the agreement coordinated by Polis with the oil and gas industry. These groups do not represent the whole environmental or climate movement in Colorado. They don’t represent or speak for us and the rest of us are not bound by, and should feel no unspoken obligation to abide by the terms of this deal. For example, none of the 49 member groups of the Colorado Coalition for a Livable Climate were consulted with or are part of the deal. Those who are a party to this deal have explicitly stated that no other groups are expected to follow the deal.
Gov. Polis negotiated a deal that will do little to clean up our air and reduce GHG emissions compared to what the 3 proposed ozone bills and SB159 would have done. This is a failure for meaningful climate action.
Future generations and historians will be the judges when looking back at this critical moment in time to address the climate crisis and what was done. Let’s stay on the right side of history and keep calling for a fast and fair fossil fuel phaseout and transition to clean energy.
To reiterate, 350 Colorado is NOT part of the agreement, and we are not held to the agreement in any way. (Also 2 coalitions that we’re part of did not sign onto the deal –> 1) Colorado Coalition for a Livable Climate with 49 member groups, nor 2) the Safe & Healthy Colorado coalition campaign to phase out fracking.) We will continue efforts for a fast and fair transition off fossil fuels, because it is key to achieving our mission to solve the climate crisis and we know that future generations are counting on us to do so.

350CO will continue to support the Safe & Healthy Colorado coalition campaign to phase out fracking in Colorado by 2030. We hope you’ll stay committed to phasing out fracking too!

Photographer: Christian O’Rourke

What can you do now?

Write a letter to the editor of your local newspaper about why our state must continue to work to phase out new fracking and toward a fast and fair clean energy transition in Colorado to protect our communities, our land, air and water, our global climate and our children’s futures! Click here for great info for writing/sending a letter to the editor or longer opinion editorial!
Post a statement of support on social media and urge your friends to share and pledge your support for phasing out fracking at www.safeandhealthyco.org

Thank you!!!

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