SB 25-182
Fiscal Note
Legislative Council Staff
Nonpartisan Services for Colorado’s Legislature
SB 25-182: EMBODIED CARBON REDUCTION
Prime Sponsors:
Sen. Ball
Rep. Brown
Published for: Senate Transportation & Energy
Drafting number: LLS 25-0872
Fiscal Analyst:
Amanda Liddle, 303-866-5834
amanda.liddle@coleg.gov
Version: Initial Fiscal Note
Date: March 4, 2025
Fiscal note status: This fiscal note reflects the introduced bill.
Summary Information
Overview. The bill adds embodied carbon improvements to the Industrial Clean Energy Tax Credit and
the list of energy improvements eligible for funding by the Colorado New Energy Improvement District.
Types of impacts. The bill is projected to affect the following areas on a continuous basis:
State Expenditures Local Government
Appropriations. For FY 2025-26, the bill requires an appropriation of $20,246 to the Colorado Energy
Office.
Table 1
State Fiscal Impacts
Type of Impact
1
Budget Year
FY 2025-26
Out Year
FY 2026-27
State Revenue $0 $0
State Expenditures $24,617 $12,307
Transferred Funds $0 $0
Change in TABOR Refunds $0 $0
Change in State FTE 0.2 FTE 0.1 FTE
1
Fund sources for these impacts are shown in the table below. Page 2
March 4, 2025 SB 25-182
Table 1A
State Expenditures
Fund Source
Budget Year
FY 2025-26
Out Year
FY 2026-27
General Fund $0 $0
Cash Funds $20,246 $10,123
Federal Funds $0 $0
Centrally Appropriated $4,368 $2,184
Total Expenditures $24,614 $12,307
Total FTE 0.2 FTE 0.1 FTE
Summary of Legislation
The bill defines an “embodied carbon improvement” as an installation or modification to real
property that results in the reduction of global warming potential as established by Colorado
Energy Office (CEO) policies.
the bill adds embodied carbon improvements to the list of new energy improvements for which
the Colorado New Energy Improvement District may provide financing.
Beginning in the 2025 tax year, the bill adds embodied carbon improvements to the list of
greenhouse gas reduction improvements that may qualify for the Industrial Clean Energy Tax
Credit. To qualify, an improvement must have a global warming potential at least 15 percent less
than if the same improvement were constructed according to a baseline established by the CEO.
Background
Colorado New Energy Improvement District
The Colorado New Energy Improvement District is a special district that was established in the
New Energy Jobs Creation Act of 2010 (House Bill 10-1328). The district administers the
Colorado Commercial Property Assessed Clean Energy (C-PACE) Program, which provides
financing for new energy improvements to eligible commercial and industrial buildings.
Financing provided by the C-PACE program is repaid through the county property tax
assessment process. A voluntary assessment is placed on the building owner’s property tax bill
to repay the provided funds over a payment period of up to 25 years. New energy
improvements include installations or modifications that reduce the energy consumption of the
property or add energy produced from renewable energy sources. Page 3
March 4, 2025 SB 25-182
Industrial Clean Energy Tax Credit
The Industrial Clean Energy Tax Credit—also referred to as the Colorado Industrial Tax Credit
Offering (CITCO)—is a refundable state income tax credit created by House Bill 23-1272. The tax
credit is administered by the CEO and may be claimed for tax years 2024 through 2032. The
credit is equal to 30 percent of qualifying expenditures by an owner of an industrial facility to
undertake an industrial emissions study or between 30 percent and 50 percent of qualifying
expenditures to implement greenhouse gas emissions reduction improvements. The aggregate
amount of the credit is limited to $16 million for tax years 2024 through 2028 and to $24 million
for tax years 2029 through 2032. Individual tax credit reservations for industrial emissions
studies must not exceed $1 million; individual credits for greenhouse gas emissions reduction
improvements must range between $75,000 and $8 million.
Organizations that receive an Enterprise Zone Tax Credit or a Clean Air Program grant may not
receive a CITCO Tax Credit.
For FY 2024-25, costs to administer the tax credit are paid by the continuously appropriated
Industrial Manufacturing Operations Clean Air Grant Program Cash Fund. For FY 2025-26
through FY 2033-34, funds for administrative costs will be annually appropriated from the
Decarbonization Tax Credit Administration Cash Fund, which receives severance tax revenue
generated from temporary cuts to the severance tax ad valorem tax credit enacted in
HB 23-1272.
State Revenue
The bill is not expected to impact state revenue. The expansion of the CITCO may result in more
applications for the tax credit, making reservations for the tax credit more competitive. However,
the aggregate maximum credit amount is already expected to be reached each year under
current law; therefore, the expansion of the CITCO to include embodied carbon improvements
will not cause further reductions to state revenue than have already been estimated and
accounted for through the fiscal note for HB 23-1272.
State Expenditures
The bill increases state expenditures in the Colorado Energy Office by $24,316 and 0.2 FTE in
FY 2025-26 and $12,307 and 0.1 FTE in FY 2026-27 and ongoing through FY 2033-34. These
costs, paid from the Decarbonization Tax Credit Administration Cash Fund, are summarized in
Table 2 and discussed below. The bill also minimally affects workload in the Department of
Revenue.
Page 4
March 4, 2025 SB 25-182
Colorado Energy Office
The office will have staff costs for program management beginning in FY 2025-26 to implement
the bill. Staff will be responsible for overseeing the development and implementation of
embodied carbon reduction considerations, including coordination with the CITCO contractor to
develop embodied carbon reduction-related calculation methodologies to ensure a minimum
15 percent embodied carbon reduction is occurring when compared to usual material
manufacturing, resulting in increased workload amounting to 0.2 FTE in FY 2025-26 only. In
addition, the incorporation of embodied carbon reduction into eligible project types will likely
result in an increase in tax credit applications, which will require workload amounting to 0.1 FTE
in FY 2026-27 through FY 2033-34 for additional application reviews and awards.
Table 2
State Expenditures
Colorado Energy Office
Cost Component
Budget Year
FY 2025-26
Out Year
FY 2026-27
Personal Services $20,246 $10,123
Centrally Appropriated Costs $4,368 $2,184
Total Costs $24,614 $12,307
Total FTE 0.2 FTE 0.1 FTE
Department of Revenue
The bill may increase workload within the Department of Revenue to the extent that the
expansion of the CITCO tax credit creates more reservations of the credit. Because additional
reservations are expected to be minimal, any additional work is correspondingly expected to be
minimal and can be accomplished within existing appropriations.
Centrally Appropriated Costs
Pursuant to a Joint Budget Committee policy, certain costs associated with this bill are
addressed through the annual budget process and centrally appropriated in the Long Bill or
supplemental appropriations bills, rather than in this bill. These costs, which include employee
insurance and supplemental employee retirement payments, are shown in Table 2 above.
Local Government
The C-PACE Program within the Colorado New Energy Improvement District may see increased
expenditures and revenue to the extent that building owners conducting embodied carbon
improvements apply for financing through the program. Page 5
March 4, 2025 SB 25-182
Effective Date
The bill takes effect 90 days following adjournment of the General Assembly sine die, assuming
no referendum petition is filed.
State Appropriations
For FY 2025-26, the bill requires an appropriation of $20,246 from the Decarbonization Tax
Credit Administration Cash Fund to the Colorado Energy Office, and 0.2 FTE.
State and Local Government Contacts
Colorado Energy Office
Information Technology
Revenue
The revenue and expenditure impacts in this fiscal note represent changes from current law under the bill for each
fiscal year. For additional information about fiscal notes, please visit the General Assembly website.