Opinion: City staff must do what the council mandated: tell PG&E to tax natural gas for its pollution, not cost

Natural gas pollutes more than electricity per dollar, yet PG&E only allows cities to tax them the same. As an incentive to switch to electricity, customers should pay more for gas

If your apartment, house, condo, dorm or coop is like most, it puts out far more greenhouse pollution from burning natural gas in the building than using electricity. If so, the building where you live is like the entirety of Berkeley, Albany, and Emeryville. In each city, buildings put out more pollution from natural gas burned within than from the electricity consumed from without. Each city is also on track to miss its 2020 greenhouse pollution reduction goal (references at the end).

If you see your energy utility bills, you may wonder how your home can put out more pollution from burning natural gas even though you spend about the same amount or more on electricity. The answer is using natural gas in our homes releases far more greenhouse pollution per dollar than using electricity. Currently about seven times as much per dollar. So if you spend almost anything on natural gas, that is the main source of pollution from your home (calculations below).

Currently, each city charges the same tax rate per dollar of natural gas or electricity. The tax rate is 7.5% in Berkeley, 7.0% in Albany, and 5.5% in Emeryville. Consequently, the structure of each city’s tax is providing an incentive to pollute more. Instead, the League of Women Voters of Berkeley, Albany, and Emeryville supports aligning these taxes with each cities’ greenhouse pollution reduction goal, particularly as each is on course to miss its goals. To this end, the rates should be based on pollution not cost. Currently, this means the tax rate on natural gas should be about seven times the rate on electricity. This would accelerate the economic viability of clean technologies. For instance, it would make electrically powered heat pumps a more viable alternative when replacing gas combustion space and water heaters. (Heat pumps operate on the same principle as refrigerators, but instead of moving heat out of the box they move it into the box, the box being your home or water heater tank.)

Restructuring energy utility taxes to reflect greenhouse pollution can be done in a variety of revenue neutral manners (no overall revenue increase to the cities). Lower-income households can be protected from possible individual household tax increases by exempting them from energy utility taxes altogether (this would be a small step to making our cities’ taxes less regressive than they are currently). PG&E says it can do this now by exempting accounts enrolled in CARE. However, PG&E’s billing system cannot currently charge a different tax rate on natural gas than electricity and reports it would cost $500,000 to $1 million to do so. Even after the East Bay Community Energy begins to operate, PG&E will still be doing all the billing.

So PG&E needs a push. To this end, the League of Women Voters of Berkeley, Albany, and Emeryville advocated that Berkeley pass a resolution calling on PG&E to upgrade its billing system, which the City Council passed unanimously in May 2017. In doing so, it followed Albany’s passage of a similar bill in December 2016. The Oakland City Council did the same in November. Yet the staffs of the three cities have yet to take up this charge from their city councils. Please contact your City Council member to ask for action on this item. If you or your organization would like more information, or to collaborate with the League on this issue, please email action@lwvbae.org.

References:

City greenhouse pollution targets and progress: Berkeley’s goal is a 33% reduction from 2000, but slide 14 of a 2017 update indicates a reduction of only about 14% as of 2016.

Albany has not adopted an official inventory since the 2004 baseline, but its Sustainability Committee projects a reduction of 18% against 2004 by 2020 versus the 25% goal.

Emeryville’s goal is a reduction of 25% over a 12 year period to 2020, while its actual reduction as of 2014 was 7% .

Greenhouse pollution per dollar: Combusting a therm of natural gas releases 11.7 pounds of CO2 , and therm from PG&E costs $1.25 average over the last year , so 9.4 pounds CO2 is released per dollar of natural gas; using a kWh of electricity from PG&E in 2016 (latest available) released 0.294 pounds CO2  and a kWh from PG&E for residential use cost $0.21 , so 1.4 pounds CO2 were released per dollar of electricity.

Preston Jordan, action director, League of Women Voters of Berkeley, Albany, and Emeryville