The state of Colorado adopts Senate Bill 25-182, which makes embodied carbon improvements eligible for C-PACE financing. Read more to see how this might be implemented and how it can serve as a model for other states to follow.
C-PACE financing has recently gained momentum as a mainstream construction financing tool to be incorporated into development capital stacks. C-PACE has an accretive nature by lowering cost of capital and elevating incentives for more ambitious climate action goals for adaptive reuse of properties and in new construction. C-PACE’s impact growth continues with Colorado’s recent expansion of eligible measures to include those that reduce embodied carbon.
Embodied carbon refers to the greenhouse gas emissions arising from the manufacturing, transportation, installation, maintenance, and disposal of building and infrastructure materials. While carbon emissions resulting from a building’s operations can be reduced through energy efficiency measures and technology, embodied carbon can only be reduced during construction. Common measures of minimizing embodied carbon levels include mass timber construction, low carbon concrete and insulation, interior efficiencies, space optimization as well as the reuse and rehabilitation of existing buildings. Learn more about embodied carbon reduction here.
Legislative leaders in Colorado have collaborated with the Colorado Office of Energy to encourage real estate developers, architects, and investors to explore sustainable alternatives to reduce embodied carbon through financial incentives and C-PACE financing. By incorporating embodied carbon improvements into the jurisdiction of green property development, real estate owners and developers can now utilize C-PACE to finance the adoption of low-carbon alternatives and retrofit through property tax assessments, ultimately reducing the overall construction costs as well as future operational costs.
This property tax assessment involves an embodied carbon reduction of 15% or greater from the start of the construction process to its completion. In properties where this standard is applicable, there is eligibility for the tax credit in the existing Colorado Industrial Tax Credit Offering (CITCO), making this reduction even more attractive to consider in commercial real estate construction.
“This bill unlocks a new level of green financing for the Colorado commercial building sector,” said Colorado Energy Office Executive Director Will Toor. “Reducing embodied carbon in building materials is crucial to reaching our goal of net-zero emissions in Colorado by 2050. We are excited to see commercial building owners and developers tap into new projects and opportunities through this legislation.”
Through the expansion of C-PACE eligible measures to include embodied carbon reduction and the decision to include embodied carbon improvements in projects eligible for tax credits, Colorado’s political leaders are encouraging new incentives for developers to shift towards a more sustainable, resilient built environment and the green building sector. State leaders around the country will now have a template for implementing their own expanded incentives.
Commercial Property Assessed Clean Energy Financing (C-PACE) provides upfront low cost financing for new construction and renovations seeking to integrate energy efficiency and resiliency measures into properties with repayment through property tax assessments.
Measures to Reduce Embodied Carbon
In order to reduce embodied carbon levels throughout the construction process, low carbon structural materials including mass timber, sustainable steel and low carbon concrete have emerged as alternatives to the burdensome process of procuring construction materials using fossil fuels.
Sustainable steel and low carbon concrete both aim to minimize the usage of fossil fuels during the manufacturing process.
Both the steel and carbon industries are shifting towards more sustainable materials and procedures, with 80% of US Steel makers having EPD’s and the Global Cement and Concrete Association creating the goal of a 50% reduction in carbon by 2030 and net zero production by 2050.[1]
Mass timber refers to “Large pre-manufactured, multi-layered, solid wood panels resulting in solid timber floors and walls.” By building with mass timber instead of concrete and steel could reduce the emissions associated with building materials by 13% up to as much as 26.5%.[2]
CounterpointeSRE evaluated a mass timber new construction in a different state. Under Colorado’s new guidelines, a similar project in the state would qualify for an estimated additional $120,000,000 in PACE eligible items.
[1] New Buildings Institute. (2024, July 11). Embodied Carbon Building Code. Codes & Policy. New Buildings Institute. Retrieved July 2, 2025, from https://newbuildings.org/resource/embodied-carbon-building-code/
[2] American Wood Council. (n.d.). Mass Timber. Retrieved July 22, 2025, from https://awc.org/issues/mass-timber/