That State Grant for Turning Dead Trees into Energy? It's Getting the Axe.

The Bottom Line

Colorado is officially sunsetting a pilot program designed to pay businesses and local governments to turn dead trees and wildfire fuel into electricity or agricultural soil. If you have been eyeing state grants to fund an innovative biomass or biochar project, this specific funding stream is closing for good.

What This Bill Actually Does

To understand this bill, you have to look back at the brutal wildfire season of 2020. That year, more than 625,000 acres burned across the state—including the devastating Cameron Peak and East Troublesome fires—costing Colorado an estimated $214 million to fight. In the aftermath, lawmakers established the Biomass Utilization Grant Program. The goal was highly practical: instead of simply piling up dead trees and underbrush to burn in risky slash piles, the state would offer grants to communities and businesses willing to turn that wildfire fuel into something useful.

The program allowed the state forester to award up to $2.5 million in grants for projects demonstrating the benefits of biomass utilization. This meant turning woody debris into electric or heat generation, or processing it into biochar—a charcoal-like substance created by heating organic matter without oxygen in a process called pyrolysis. Biochar can be mixed into agricultural soil to improve water retention and capture carbon. By subsidizing these projects, the state hoped to build a local industry that could clear out dangerous wildfire fuels while creating a carbon-neutral energy source in line with Colorado's broader greenhouse gas reduction goals.

However, Colorado law includes a built-in auditing mechanism known as a sunset review. Before a temporary program is allowed to become permanent, the Department of Regulatory Agencies (DORA) reviews it to see if it is effectively meeting its goals and justifying its existence. In their 2025 report, DORA evaluated the biomass grant program and formally recommended letting it die. This legislation simply acts on that recommendation. It formally strips the program from the Colorado Revised Statutes, ensuring it expires on its originally scheduled date of September 1, 2026, and officially shutting down this specific avenue of state seed money.

What It Means for You

If you live in the foothills, the mountains, or anywhere near heavy timber, you are likely one of the nearly three million Coloradans residing in the Wildland-Urban Interface (WUI). If so, you already know the drill: protecting your home means constantly clearing dead timber, dry brush, and low-hanging branches from your property. This bill does not stop the state from helping your community develop broader wildfire protection plans, but it does change the landscape of what happens to the debris you clear out.

When you or your local fire district clears land, that woody debris—often called "slash"—has to go somewhere. The hope of the state's biomass program was to foster a network of local businesses that could haul away that fuel and turn it into electricity or biochar for soil enhancement. Because the state is allowing this grant program to expire, you are likely to see fewer state-subsidized options for processing that waste locally. If your local slash collection site relied on this funding to upgrade their chipping or pyrolysis equipment, they will have to find the capital elsewhere. For the average homeowner, this could eventually mean fewer local drop-off options or higher disposal fees, as private processors won't have this specific state grant to help subsidize the heavy cost of hauling and processing.

For home gardeners and small-scale farmers, this also signals a slight pullback in the state's push to manufacture local biochar. Biochar is an excellent, highly sought-after soil amendment that retains water and sequesters carbon, but the specialized equipment required to produce it is notoriously expensive. The grant program aimed to lower that barrier to entry. Without it, you will certainly still be able to buy biochar at the garden center, but the local market will have to mature and scale without this specific injection of state tax dollars.

What It Means for Your Business

If your company operates in forestry, specialized timber transport, agriculture, or renewable energy development, you need to adjust your grant-seeking strategy immediately. The Biomass Utilization Grant Program was a niche but highly attractive funding pool administered by the Colorado State Forest Service. The statute allowed for up to $2.5 million in grants, and historically the agency distributed around $500,000 to a dozen pilot projects across the state to help offset the massive capital costs of purchasing commercial pyrolysis machines and bio-energy processors.

With this program formally repealing on September 1, 2026, any business model heavily reliant on these specific state subsidies for biomass-to-energy conversion will need to pivot. The state is essentially signaling that while biomass utilization remains an interesting concept, this particular grant structure did not meet the state's threshold for permanent reauthorization. Moving forward, you will need to look toward federal grants—such as those available through the US Forest Service or the USDA—or other broad-based state climate and forestry funds that aren't exclusively earmarked for biomass processing.

Contractors and local governments should also take time to review any active or pending projects tied to the Healthy Forests and Vibrant Communities Fund. While that broader fund itself is not going away, the specific statutory carve-out that directed money toward biomass utilization and biochar demonstration projects is being entirely erased. If you are preparing future project pitches or bids for state forestry contracts, make sure your proposals focus strictly on the broader goals of forest health, watershed protection, and direct fuel reduction, rather than banking on the specialized biomass processing incentives that this bill eliminates.

Follow the Money

The fiscal impact of this bill is exactly zero dollars, but the reason why provides a great lesson in how state budgeting works. The grant program was originally established with a statutory expiration date—a "sunset" date—of September 1, 2026. Because state revenue forecasts and departmental budgets already assumed the program would end on that exact date, officially removing it from state law doesn't change the state's math.

Furthermore, the money used to fund these grants didn't come from the state's general tax pool. It came from the Healthy Forests and Vibrant Communities Fund, which is a continuously appropriated cash fund. Since the State Forester had discretion over whether to award these grants in the first place, stripping the authority to do so just means those dollars will remain in the broader forestry pot for other traditional wildfire mitigation efforts, rather than being specifically carved out for biomass projects. Taxpayers won't see a change in their burden, and the state government will simply stop administering this specific grant line item.

Where This Bill Stands

HB26-1213 is currently Signed Into Law. The latest official action came on 06/03/2026: Governor Signed.

That means the legislative process is complete and the bill is now law. The remaining questions are about implementation timing and how agencies, businesses, or local governments respond.