Denver released its 2025 annual report on the Energize Denver program as federal officials step into a growing legal fight over the city’s and state’s rules for cutting energy use and emissions.

The 2025 annual report shows continued progress, with Denver cutting greenhouse gas emissions by a projected 4.5% in 2025.

Key accomplishments include 2,000 clean energy systems installed, 4,500 trees planted and 20 million gallons of municipal water usage cut, according to the report.

It also noted a 15% increase in clean energy system installations, 26% more heat pumps permitted than in 2024 while gas space heating permits declined 10%, and three times more all-electric buildings were permitted compared to 2024.

Denver’s Climate Protection Fund, supported by a voter-approved 0.25% sales and use tax, generates roughly $40 million to $53 million annually for climate initiatives, including Energize Denver. In 2025, 55% of the fund’s dollars were directed to disproportionately impacted communities.

Energize Denver requires owners of buildings larger than 5,000 square feet to track their energy use each year and make improvements aimed at lowering greenhouse gas emissions.

City officials said the program is not a forced switch to all-electric systems and will save money over time while making buildings more comfortable. The 2025 report highlights progress in benchmarking and reductions among covered buildings.

The program supports Denver’s goal of net-zero greenhouse gas emissions in existing buildings by 2040, which envisions the elimination of fossil fuel use such as natural gas.

Similar rules under state air-quality Regulation 28 set targets for large buildings to cut emissions over the coming years.

Recent building code amendments at the state and local levels raise the bar for energy efficiency that can make the use of natural gas more expensive than electrification of existing buildings or in new construction.

The Colorado Apartment Association, Colorado Hotel and Lodging Association and other industry groups sued Denver and the state in 2024.

They argue the rules effectively force owners to electrify working gas equipment before it needs replacing, violating the federal Energy Policy and Conservation Act — and that the long term net zero goal amounts to a de facto mandate for complete electrification over time.

Denver and state officials counter that the programs set overall goals for buildings rather than banning specific equipment. They say owners have flexibility to meet targets in the most practical ways for each property.

The controversy centers on EPCA, a law that sets national appliance efficiency standards and generally prevents states and cities from imposing conflicting requirements.

Industry groups said the local rules cross that line by effectively dictating what equipment can be used long-term by setting energy efficiency and emissions standards at levels that cannot be met by appliances using natural gas.

Denver and environmental officials argue the standards are about whole-building performance and emissions, not individual appliance design and, therefore, are not preempted.

The U.S. Department of Justice notified the federal court in Denver in June that it is considering getting involved. The notice points to important questions about how much the federal EPCA limits state and local energy rules.

Courts have split on the issue.

The Ninth Circuit in California struck down a local Berkeley ordinance banning natural gas infrastructure in new buildings, reasoning that it effectively prevented consumers from using covered gas appliances.

In contrast, the Second Circuit recently upheld New York City and New York State laws that prohibit fossil-fuel-powered appliances in new buildings via CO2 emissions thresholds and direct bans on fossil-fuel appliances, finding they do not directly regulate appliance efficiency as manufactured.

Legal experts say the conflicting decisions create uncertainty that the federal government’s interest may help clarify and that such circuit court splits are ripe for Supreme Court resolution.