Colorado Shows Impact, Challenges of Billions in Federal Clean Energy Spending

A former semiconductor plant in Colorado Springs stood vacant for 16 years — until a Swiss solar company announced in July that the nation’s most ambitious carbon reduction law was key in its decision to sign a lease for the site.

Billions of dollars in federal tax credits in the Inflation Reduction Act, or IRA, prompted Meyer Burger Technology AG and several other foreign manufacturing giants to bring about 3,500 high-wage clean energy jobs to Colorado since its enactment a year ago. To receive the incentives, such operators must make equipment primarily in America. 

“Our presence in the U.S. will enable us to reach existing and future customers more quickly,” said Gunter Erfurt, the company’s chief executive, in making the lease announcement. “We are already exploring opportunities to add further solar cell and module production capacity in the country.” 

The unprecedented effort to transition away from fossil fuels to wind and solar will likely help the U.S. achieve up to a 42% reduction in greenhouse gas emissions in 2030, projected a July report by the Rhodium Group, an energy think tank. Yet even with the landmark legislation, the U.S. will not meet its pledge under the Paris Agreement to reduce carbon in the atmosphere by 50%-52% below 2005 levels by 2030, the authors of the report found. 

As they did in Colorado Springs, the IRA’s tax credits have provided a significant economic boost to municipalities nationwide. Yet the effort to kick-start such an unprecedented buildout of clean energy infrastructure is running into roadblocks. Community opposition, tight labor markets, bureaucracy and supply chain constraints are slowing down wind, solar and battery projects. 
 

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In Colorado, the pressure is on to get clean energy projects off the ground. The state is among 13 with ambitious decarbonization goals designed to significantly reduce greenhouse gas emissions in part by using wind and solar, instead of coal and natural gas, to generate electricity. Colorado is also the first state to enact stringent emissions reduction targets at regular intervals every five years. 

Doubling down on the effort to reach these benchmarks, the state added multimillion-dollar incentives on top of IRA tax credits to entice clean energy companies to locate in Colorado. Municipalities have also ponied up cash. Such agreements often include requirements that firms meet promised job thresholds within a certain timeline. 

These sweeping incentives have spurred private investment in some of the state’s most disadvantaged communities. In Pueblo, home to Colorado’s highest concentration of Latinos among its 10 most populous cities, South Korea-based CS Wind broke ground in April on an expansion of the world’s largest wind tower manufacturing facility. It’s expected to result in 850 new jobs – with 250 already hired this year. Other multimillion-dollar investments in clean tech were announced by companies about 120 miles north in Windsor and Brighton.

These economic development successes are not without challenges. Firms are already confronting the state’s tight job market — there are currently two positions for every unemployed person — its escalating housing prices and recalcitrant supply chains. 

Expansion powered by time-limited subsidies also highlights thorny tradeoffs that accompany the clean energy revolution. Some new jobs aren’t unionized. Neighbors oppose a lithium-ion battery maker’s plan to take over a former distribution center in the Denver metro area. Even so, the Brighton City Council voted to rezone the facility on Sept. 5, over objections from residents concerned about hazardous materials being used and stored on the site. Lastly, some municipalities and nonprofits are struggling to understand how to apply for grants included in the act — a phenomenon also occurring on a national level. 

“There’s been some success and there’s been some hardship,” said Ean Thomas Tafoya, the Colorado director for GreenLatinos, a nonprofit that advocates for environmental justice. “As with any good policy, we are going to learn as we go.”

The expansion of the state’s nascent manufacturing industry — with Colorado ranking among the top 10 states for the number of projects announced under the IRA so far — is part of President Joe Biden’s push to bring more such facilities to the United States. 

And it’s coming in congressional districts overwhelmingly represented by Republicans, who voted unanimously against the law, something the president noted when he celebrated the act’s one-year anniversary in New Mexico in August. Biden cited the benefits of Pueblo’s CS Wind expansion during his speech. 

“And coincidentally,” he added, “CS Wind is in Congresswoman Lauren Boebert — you know, the very quiet Republican lady — it’s in her district.” 

Boebert’s office did not respond to a request for comment.

 
Kick-starting a wind energy supply chain in the Rockies

Other Republican districts in Colorado are also benefiting. Rep. Doug Lamborn’s district around Colorado Springs received two projects and 750 announced jobs so far, and Rep. Ken Buck’s district in the north central part of the state has seen one IRA-fueled expansion. Lamborn’s and Buck’s offices didn’t return a request for comment. 

The law is responsible for $1.77 billion in investment in the Rocky Mountain State through July 25, creating jobs for electricians, mechanics, construction workers, technicians and others, according to an analysis of public announcements from the private sector compiled by Climate Power, a nonprofit advocacy group. Colorado is already fourth in the nation for its concentration of cleantech employment, according to the Office of Economic Development & International Trade. 

Foreign firms that announced an initial capital infusion of millions of dollars to locate or expand in Colorado will reap big savings over time due to tax credits in the IRA. Meyer Burger, the solar cell maker, expects to be eligible for $1.4 billion under the advanced manufacturing tax credit. This windfall is in addition to a $90 million financial package from the city of Colorado Springs and the state, the company said, as well as a $300 million U.S. Department of Energy loan. 

Danish equipment supplier Vestas Wind Systems said in July it will invest $40 million in expanding and upgrading its two factories in Windsor and Brighton to produce more robust blades and the nacelles that power them. The company said it expects to start hiring up to 1,000 local employees this year. It also received local tax credits. 

“We applaud Colorado’s continued commitment to expanding clean energy as well as the passage of the Inflation Reduction Act, which has helped kick-start a domestic supply chain,” said Laura Beane, president of Vestas North America. 

Officials in the town of Windsor, which is also located atop the state’s most prolific oil and gas play, said they were looking forward to new clean energy jobs after years of layoffs in the region’s wind industry. 

“Because of government subsidies their business demand comes and goes — they’ve been as high as 1,200 employees, and right now they’re around 500,” said Terry Schwindler, a business development specialist for the city, who is working with colleges and other municipalities to help the firm attract workers. Employment fluctuates because when subsidies for wind development expire, demand for equipment falls. 

State officials also expect finding thousands of workers to fill new technical jobs in coming years will present a challenge, particularly in mountain towns and smaller communities. 

“It takes time to attract workers and get them trained,” said Dominique Gomez, deputy director of the Colorado Energy Office. “This issue is particularly acute in some of our rural communities, as well as a lack of affordable housing that makes it that much harder.”  

Another Colorado wind behemoth that has seen its workforce fluctuate is Pueblo’s CS Wind, which assumed manufacturing of wind turbine towers from Vestas in 2021. Construction is underway to expand its existing plant by 900,000 square feet, boosting overall production to 10,000 wind turbine towers a year. 

Yet as the manufacturer gears up to hire hundreds of skilled workers, labor leaders bemoan its rejection of a union that organizers said could help provide employees with some job certainty should they be laid off. The firm didn’t return requests for comment. 

“They are a non-union facility,” said Charles Perko, president of the United Steelworkers Local 3267. “Because of this, unlike the steel mill where I work, their employees don’t have recall rights to their job” if they are laid off and the firm starts hiring again when the downturn is over. 

 
Getting the word out about job opportunities, matching funds and grants 

Among the most significant obstacles to growing the nation’s clean energy economy through the IRA is that most people don’t know about the law and the hundreds of jobs and programs it makes available. 

About 70% of Americans have heard “little” or “nothing at all” about the act, according to an Aug. 7 Washington Post poll. This is particularly harmful for front-line communities that already experience high levels of pollution from existing industries, environmental justice experts said. In Colorado, several newly announced facilities are near such areas, including in Pueblo and Brighton. 

“This is the most significant action the United States has ever taken in terms of climate change and renewable energy investment,” said Jessica Goad, vice president of programs for Conservation Colorado. “Yet there are hurdles to moving the money and one of them is public awareness.”

The Biden administration emphasized that it wants 40% of certain IRA investments to go to communities that are disproportionately impacted by pollution. About two-thirds of the 250 projects, many providing high-wage jobs, announced nationwide since Biden took office through Aug. 16 are in counties with above average poverty rates, according to an analysis by the U.S. Department of the Treasury.

Colorado U.S. Senator Michael Bennet touring the CS Wind America wind tower production facility in Pueblo, Colorado. The plant has plans to expand in part to long-term clean energy tax credits in the Inflation Reduction Act (IRA) that Bennet helped write and pass as a member of the Senate Finance Committee.

This is particularly important for parts of the bill that could benefit consumers such as electric vehicle subsidies, heat pumps and other energy-saving technology, including measures in Colorado accelerating building electrification, clean energy advocates said. 

The Colorado General Assembly took action this spring to amplify IRA incentives. The Environmental and Energy Study Institute took note, writing in a news brief, “By modeling how tax incentives can spur electrification and decarbonization in a more equitable way, Colorado is setting an example for other states.” Building on IRA subsidies, the state is making additional rebates available to decarbonize homes and transportation sectors.

Other rebates, incentives and tax credits will not be available until the federal government provides guidance to states on how to administer them, leaving it up to residents to hold the government and companies accountable for spreading the word, conservationists added.  

“It’s hard to understate the potential transformation if this money is put to good use to help support efforts of states to achieve an equitable, clean transition,” said Andrea Marpillero-Colomina, sustainable communities program director for GreenLatinos, during an Aug. 15 virtual meeting to discuss the law’s impacts. 

“We need to make sure we are keeping policy-makers at all levels of government accountable,” she added, “and make sure [the money] is reaching our communities.” 
 

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