Clean Heat Plan Colorado

Colorado passed the first Clean Heat Plan (CHP) of its kind in the U.S. The plan targets emissions from home and building heating systems, requiring gas utilities to cut emissions on a set timeline.

Heating homes and buildings contributes significantly to greenhouse gas emissions since many of these systems rely on natural gas. To address this, Colorado passed Senate Bill 21-264 in 2021, creating a groundbreaking Clean Heat Standard. This law requires gas utilities to cut emissions by 4% by 2025 and 22% by 2030 in comparison to 2015 levels. This standard is also referred to as the Clean Heat Plan or "CHP" in the Colorado energy industry.

As part of the CHP, the Colorado Public Utilities Commission (PUC) works with stakeholders, like utility providers, to plan and provide support for clean technology.

The ultimate goal: reduce the state's reliance on fossil fuels and build a more sustainable energy future.

The plan directs gas utilities to use a mix of solutions:

One major utility, Xcel Energy, has already rolled out its Clean Heat Plan, approved in June 2024. This plan dedicates over $440 million over the next three years to electrification, energy efficiency, and targeted incentives.

For many homeowners and businesses, the Clean Heat Plan will encourage a switch to electric heat pumps, versatile devices that can heat and cool efficiently. Xcel plans to incentivize nearly 100,000 installations by the end of 2026.

The plan also prioritizes equity. A full 20% of customer incentive funds are set aside for low-income and historically disadvantaged communities, ensuring everyone has access to clean energy solutions.

Heating accounts for a significant portion of energy use, so transitioning to cleaner systems can have a major impact on emissions. The Colorado PUC, which approved Xcel's plan, emphasized that electrification through cold-climate heat pumps and efficiency are the most cost-effective and scalable ways to reduce emissions.

The plan focuses on proven solutions, which is why alternatives like hydrogen blending or biomethane are playing a smaller role.

Colorado's leadership is inspiring other states to follow suit. Vermont, Massachusetts, Illinois, and New Jersey have all introduced or passed similar measures to cut emissions from heating. The success of Colorado's Clean Heat Plan could pave the way for nationwide adoption of similar standards.

If you're a homeowner in Colorado, 2026 is a great time to take advantage of the Clean Heat Plan's expanded incentives. Xcel has significantly increased its heat pump rebates - and if your household is income-qualified, the HEAR program can stack on top for additional savings. For a broader look at going all-electric, our electrification guide covers the full picture. Take advantage of increased Xcel rebates while funding is available.