Oakland lays the groundwork for possible greenhouse gas pollution tax

Last week, the Oakland City Council passed a resolution that would urge Pacific Gas and Electric (PG&E) to allow the city to set utility user taxes based on greenhouse gas pollution. The move is expected to help reduce household usage of natural gas as a heating source, and instead encourage using electricity, which is increasingly being sourced from clean energy.

Some cities and counties impose utility user taxes on the consumption of services such as gas, electricity and telephone connectivity. Oakland currently imposes a tax rate of 7.5 percent on both gas and electricity. PG&E, which is based in San Francisco, collects the tax and returns the revenue to the city. Councilmember-at-large Rebecca Kaplan’s resolution, however, proposes that the tax rate should be set differently for gas and electricity, as natural gas is more harmful to the environment.

“It’s not just Oakland doing this. It’s a broader coalition working to get PG&E to change their billing system, so we can have a kind of tax structure that would encourage and reward being more environmentally responsible,” said Kaplan in an interview following last week’s council meeting.

Kaplan clarifies that the resolution does not change the tax rates and does not establish a new tax—it merely requests that PG&E make upgrades to their billing system in order to allow cities to have this option in the future.

The resolution comes as part of Kaplan’s efforts to combat environmental pollution in the East Bay.

“If people are paying attention to what’s going on this year, we’ve had the worst droughts in history. We’ve had the biggest fire here in Northern California in our history. Other parts of the country had the biggest hurricanes and mass flooding. The people of Puerto Rico still don’t have power or water. We’re in serious danger of losing a lot of our agriculture land from climate change and having food problems and more droughts,” Kaplan said.

This kind of resolution originated in the nearby city of Albany, where one was passed last December. Preston Jordan, principal scientific engineering associate at the Energy Geoscience Division of the Lawrence Berkeley National Laboratory and one of the proponents of the Albany resolution, said that cities across the East Bay are trying to build momentum before approaching PG&E to request this upgrade to the billing system.

“It took six years for Albany to pass this resolution last December,” said Jordan. “Then from there it took six months until Berkeley passed it. And now that Fremont and Oakland have passed it, other people are now working on other cities. So, it seems to really gain traction.”

While a city government can upgrade the tax rate following a public vote, Jordan said that the resolution asks PG&E to upgrade its billing system, and subsequently pay for this upgrade, instead of a city government handling the cost.

He added that when PG&E was first approached with the idea five or six years ago, representatives told advocates that it would cost around $500,000 to make the change.

When asked about the cost of the upgrade of the billing system, PG&E spokesperson Tamar Sarkissian told Oakland North in an emailed statement that the the city government has not sent a proposal for the change yet, so they’re unable to evaluate it. “We’re aware of this proposal, and we’ll need to review it before we can comment on it,” she wrote.

Jordan said that now that energy sources for electricity have become cleaner, thanks to the use of solar or wind generation, burning a dollar’s worth of natural gas at home releases four times as much greenhouse gas pollution as consuming a dollar’s worth of electricity.

The pipes that deliver natural gas to homes are leaking significant amounts of methane, which is a much worse polluter than carbon dioxide, as it is much more efficient at trapping heat, according to an online “Overview of Greenhouse Gases” published by the U.S. Environmental Protection Agency.

The new billing system would encourage Oakland residents to install electric heat pumps instead of gas-fired water and space heaters. In order to discourage residents from using natural gas, the city could try some different options, Jordan said. One option would be to raise the rate on natural gas and keep the rate on electricity and all other utilities the same—that would mean higher prices for consumers who use gas.

But, said Jordan,“Whatever they decide it has to be approved by the voters. My guess is that no city would propose that because it’s not politically tenable.” Instead, he said, lowering the rate on other utilities would be a more politically-sound option.

Since last week’s resolution merely allowed the city to make a request to change the billing system, a new pricing system has not been set.

“We would do a whole public process to get public input. It wouldn’t be proper for us to say what the rate should be,” said Kaplan.

Dan Johnson, who works as a sustainable architect at green building consulting firms Beyond Efficiency, said that there is a significant shift towards using electric heat pumps in homes in the Bay Area.

“It’s worth pointing out that heat pumps are cleaner and safer than burning gas at home, and pretty much at cost parity. I think the building industry will drop gas soon enough and go to fully electric,” Johnson said.

He attributed this shift, however, to the fact that electric heating systems “are much cheaper to install than gas heat,” a factor that influences the decisions of the apartment building owners he works with.

“We’re going to electric in that situation because it’s cutting construction cost. They’re not really concerned about fossil fuels or the environment,” Johnson said.

He added that Oakland’s resolution would help raise environmental awareness, but wouldn’t necessarily convince people to change their minds when it comes to how they source their energy.

“I don’t see much change in the market. I don’t see much benefit to us, because I don’t know if changing the tax would sway anyone’s decision-making. But it will raise awareness. That’s probably the most important benefit that I see,” Johnson said,

He added that more clients are now taking safety issues into consideration.

“People I talk to are concerned about safety of gas, as gas can explode. The reason we strap the water heaters is so they won’t tear off the gas pipe when they fall down in an earthquake,” he said.

For now, Kaplan says Oakland and other cities will approach PG&E with the request. “I think there’s a decent chance we’ll get it, but they need to hear officially from the city that we want that. It would influence their decision,” said Kaplan. “So, I think its very important that Oakland is now officially on record requesting this, and other cities would do it as well.”

“I think one of the things that we should realize from the recent fires that just happened in the North Bay is that we are at great risk and because it’s hotter and dryer, the fire burns faster and further,” she added. “We’re going to have to take a lot of steps to heal the environment, and how we tax utilities is one of these steps.”