ICAP is pleased to welcome Colorado as the 9th jurisdiction with ICAP observer status.
Colorado has demonstrated its ambition to implement carbon pricing instruments on its path to carbon neutrality by 2050. In October 2023, the Colorado Air Quality Control Commission (AQCC) adopted regulations establishing an ETS covering large in-state manufacturers. The new system is to be established by 1 December 2024, with the first auction scheduled for 30 June 2025. It is designed to support Colorado in reaching its economy-wide and industry-specific greenhouse gas reduction goals.
Colorado’s ETS features a unique design where regulated entities are divided into two groups. The first group consists of energy-intensive, trade-exposed manufacturing facilities, which have compliance obligations based on their emissions intensity (the quantity of greenhouse gases produced per unit of output). The second group of manufacturing facilities face compliance obligations based on their absolute emissions (the total quantity of greenhouse gases produced). By December 2024, the government will publish guidance to enable trading across the two groups. Looking ahead, Colorado’s Air Pollution Control Division (APCD), responsible for administering the ETS, will further evaluate its ETS and submit a petition to the AQCC by September 2025 if it identifies aspects of the system that need modification.
As an ICAP observer, Colorado will benefit from the experiences of ETS policymakers all over the world, supporting its effort to implement a robust and effective carbon market.
For further information on Colorado’s ETS regulation, please visit the website of the Colorado Department of Public Health and Environment and the ICAP Factsheet.
