UPDATE: State combats cannabis carbon pollution with energy efficiency program

Matt Whittaker

Cannabis with medical radio-frequency identification tag.Photo byDaniel Oberhaus (2015) / Flickr

By Matt Whittaker / NewsBreak Denver

(Denver, Colo.) Colorado energy officials this week will open a round of applications for a program designed to help cannabis growers save energy and reduce greenhouse gas emissions.

The lighting, air conditioning, heating, dehumidifying, irrigation and other equipment needed for indoor marijuana cultivation and infused products production account for about 4 percent of Denver’s electricity consumption. Statewide, the cannabis industry sucks up about 2 percent of Colorado’s energy generation, which includes electricity from coal-fired power plants. 

To combat the cannabis carbon footprint, the Colorado Energy Office has created the Cannabis Resource Optimization Program (CROP). Under contract with the energy office, California-based clean energy services provider Resource Innovations will provide technical assistance, including a facility audit and analysis of historic electricity, gas and water use to identify ways to use fewer resources, such as installing LED fixtures or upgrading HVAC systems. Once those upgrades are identified, cannabis growers accepted into the program can get low-interest loans from the Colorado Clean Energy Fund to make the upgrades.

The CROP program will begin taking applications Wednesday when the energy office will host a webinar from 11:30 a.m. to 12:30 p.m. for business owners to learn about program details. Registration for the webinar can be found here.

“Colorado is leading the charge on sustainability in the cannabis industry with this first-in-the-nation energy management program to reduce greenhouse gas emissions and energy costs for businesses in the cannabis industry,” the energy office said in a press release announcing the application opening. 

Growers will find the program application on the CROP webpage starting Wednesday, when the first round of applications will be open to cultivators seeking technical assistance who do not already have access to that help through their utility providers. 

Xcel Energy, Black Hills Energy and Platte River Power Authority already offer their customers technical assistance and rebates for energy efficiency improvements.

The state will open applications for CROP program financing to all cannabis cultivation businesses in Colorado later in the year.

"Colorado was the first state to legalize cannabis and now will be the first state to help licensed cultivation operators make their operation more energy efficient,” Gov. Jared Polis said in the press release. “Providing innovative ways for cannabis cultivation operators to improve energy efficiency will save business owners money and reduce energy use in the industry.” 

The loan opportunity is a welcome financial respite for an industry where financing is often hard to come by

With marijuana illegal at the federal level where banking laws are set, financial institutions doing business with the industry risk being charged with money laundering or aiding and abetting a federal crime. While there is a loophole allowing marijuana banking if the lender files specific paperwork with each transaction, that requirement is so onerous that most banks simply stay away. 

“Without access to low-interest financing options, cultivators are unable to invest in efficiency improvements that could not only save them and their customers money, but could also help reduce emissions from the cannabis sector as a whole,” the energy office said in the press release.

Also, pot sales in the state have been slumping, exacerbating the financing problem for the industry.

“Between high interest rates, fears of a recession, and the overall state of CO cannabis being in a prolonged downturn, getting any kind of financing in cannabis is almost impossible right now,” said Truman Bradley, executive director with the Wheat Ridge-based Marijuana Industry Group, which is in favor of the CROP program. “We, like all industries, need to be exploring ways to become more sustainable and this a meaningful step in that direction.”

The CROP program dovetails with a Boulder County fund already in place that requires commercial cannabis growers to offset their electricity use with local renewable energy or pay a 2.16-cent charge per kilowatt hour.

“Currently, the lighting and cooling systems that are used to grow marijuana indoors have extremely high rates of electricity consumption, and corresponding greenhouse gas pollution,” the fund website says. “Since the majority of electricity in Colorado comes from coal-fired power plants, the dirtiest source of power, Boulder County is taking steps to reduce the impact of the cannabis industry on the environment.”

In October, coal-fired power plants accounted for more than 1.6 million megawatt hours of electricity generation in Colorado, followed by nonhydroelectric renewable energy, natural gas, and hydroelectric, according to the U.S. Energy Information Administration.

According to a 2018 report on energy use in Colorado’s cannabis sector, the industry was potentially consuming as much as 2 percent of the more than 54 million megawatt hours generated in the state during 2016.

“It is estimated that by simply upgrading their lights, cultivators could reduce their lighting demand by 20-50 percent, resulting in huge reductions in a cultivation’s energy bill,” the report said.

In Denver, between 2013 and 2018, electricity use from cannabis cultivation and infused products manufacturing grew from around 1 percent to about 4 percent of the city’s electricity consumption, according to a 2019 report from Denver Public Health and Environment.

“Indoor cannabis cultivation is a resource-intensive process with energy demands as the greatest contributor to the industry’s environmental footprint,” that report says. “The best time to incorporate energy efficiency and renewable energy measures into a cultivation is before it is built, but there are plenty of retrofit actions that growers can take to improve their energy usage in established facilities, as well.”

This story has been updated to correct attribution and add details and commentary.

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Matt Whittaker writes about natural resources industries, including oil and gas, mining, renewable energy, agriculture and cannabis. He's been based in the Denver metro area since 2013. You can follow him on Twitter @mattswhittaker.

Lakewood, CO

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