Boulder, Colorado, United States - Climate Action Plan and Carbon Tax
Type of initiative: Incentives and Green Procurement
Population: 100,000 city / 290,000 county
The area possesses a vibrant high-tech sector, including a number of federal laboratories and firms specializing in renewable energy technology.
The City of Boulder is the only municipality in North America to have adopted a local carbon tax. The tax is collected from residential, commercial, and institutional customers of Xcel Energy, the local gas and electricity utility. Only customers who chose to purchase electricity from renewable sources (at a premium price) are exempt from the carbon tax. Revenues are used to fund various energy-efficiency initiatives that are being implemented under the City's Climate Action Plan (CAP).
Boulder, Colorado, United States - Climate Action Plan and Carbon Tax
Summary
In 2006, the City of Boulder launched the Climate Action Plan (CAP) to reduce greenhouse gas emissions in both municipal operations and the wider community. The CAP includes emission reduction strategies for residential, commercial, industrial, institutional, transportation, and solid waste sources. Measures include energy audits for households and businesses, incentives for better building practices, rebates for environmental renovations, and support for renewable energy development. In April 2007, Boulder became the first municipality in the world to launch a dedicated carbon tax (on electricity usage) to fund climate change-related interventions.
The most recent available data (from 2006) reveals a slight increase in emissions after three consecutive years of GHG reductions. However, the City expects energy efficiency actions through the CAP will yield emissions reductions ten-fold greater than those achieved by pre-CAP municipal actions. Electricity consumers are already starting to reap the financial and environmental benefits from energy saving measures. Citizens and businesses are now also able to purchase wind power through a program initiated by Xcel Energy, the private utility company that collects the CAP tax for the City. Customers of this program are excluded from paying the CAP tax.
Boulder's climate plan benefits from an extremely high level of environmental awareness among citizens and extensive technological know-how among local academics, research institutions, and industries with climate change or energy efficiency expertise. An extensive consultation process involving these players has benefited the adoption of climate action policies. The Office of Environmental Affairs (OEA), which is responsible for designing and implementing the CAP, meets regularly with local experts and municipal officials, provides regular updates to Council, and publishes a greenhouse gas inventory annually. Other municipalities may learn from Boulder's experience in working cooperatively with local partners, including the electricity utility and local contractors conducting energy efficiency audits and renovations.
Going forward, Boulder plans to continue its efforts to increase energy efficiency in the residential sector through the distribution of compact fluorescent light bulbs and through home energy audits. Through networking programs and partnerships, the City is also working to increase the private sector's involvement in helping Boulder meet its climate objectives. Transportation emissions are projected to continue growing throughout the program period to 2012; the poorly funded, existing efforts to curb transportation emissions are focused primarily on encouraging the use of biofuels for private vehicles. A more comprehensive plan, with the participation of the state, is required in order to change travel behaviour and implement viable public transportation options for the City and the surrounding region.
Boulder, Colorado, United States - Climate Action Plan and Carbon Tax
Municipal Context and BackgroundThe City of Boulder, Colorado has a population of roughly 100,000 with a metropolitan population of close to 300,000, including 28,000 full-time students at the University of Colorado at Boulder. The local economy is driven by a robust high-tech sector with Sun Microsystems and IBM employing nearly 10,000 people. Boulder is home to several federal laboratories conducting research on climate science and renewable energy technology. Several world-class renewable energy institutes and firms are also located in the Boulder area, contributing to a high level of environmental awareness and an active public interest in alternative energy development.
In May 2002, the City of Boulder passed Resolution 906, also called the Kyoto Resolution, to reduce greenhouse gas emissions by seven percent below 1990 levels by 2012. As a result, the Office of Environmental Affairs (OEA), a section of the City Manager's office, was directed to research and develop an action plan to help the City reach this emission reduction target. This led to the creation of a volunteer task force made up of local energy experts, City officials and concerned citizens, dubbed the Boulder Renewable Energy and Energy Efficiency (BREEE) working group.1 In 2003, the group submitted a preliminary inventory of greenhouse gas emissions as well as policy recommendations on how to improve energy efficiency, reduce emissions and develop long-range funding strategies. The plan also laid the foundation for future spending and the organizational objectives underpinning the 2006 Climate Action Plan (CAP).
This early action resulted in a one-time municipal allocation of $100,000 in 2004 to fund a comprehensive assessment of GHG emissions that could be easily updated on an annual basis. Econergy, the energy consultant retained for this project, set up a GHG inventory-tracking tool. The budget was also used to support a preliminary assessment of commercial and residential energy efficiency, and a campaign to replace inefficient lighting in homes and businesses.
In order to provide funding for climate protection measures following the 2004 budget, Council voted to increase the local Trash Tax for two years. The short-term nature of the Trash Tax increase, coupled with public opposition to the tax, prompted OEA staff to explore long-term funding options.
In May 2005, a consultant team composed of local academics and technical experts evaluated various long-range funding options and submitted recommendations to the City. After considering several fee and tax-based options, the City decided on a voter-approved carbon tax. Such a tax was believed to give the City the most flexibility in the allocation of program funding for the CAP – i.e., to fund transportation as well as residential energy efficiency measures.
Subsequently, volunteers launched a highly successful marketing campaign to gather support among residents and businesses for the CAP tax. Public support was seen as integral to the success of the tax in the aftermath of strong opposition to the two-year Trash Tax increase in 2005. Clear public support was also important to Xcel Energy, the private utility responsible for collecting the tax through residential, commercial, and industrial electricity bills. The utility agreed to collect tax revenue for the City on the condition that Boulder voters supported the initiative. On November 7, 2006, the Climate Action Plan Tax passed with unanimous support from City Council, the Chamber of Commerce, and 60 percent of voters. Thus, residents and businesses in Boulder became the first in North America to be charged a levy on their electricity usage (which is produced almost entirely by fossil fuels with three percent generated from wind) with the explicit purpose of funding climate protection measures.2
1 Since the adoption of CAP, the Climate Action Plan Advisory Group (CAPAG) has replaced BREEE as a formal technical review body. CAPAG meets regularly to discuss the City's progress on attaining CAP objectives. Minutes, contact information, and other relevant materials are listed on a City website, allowing citizens to stay current on the most recent decisions and updates.
2 Only customers of Xcel's Windsource program are exempt from the tax (Boulder, 2007). Xcel Energy is the largest single wind energy provider in the country and Windsource is the largest voluntary renewable energy program in the US, with over 70,000 participants.
Boulder, Colorado, United States - Climate Action Plan and Carbon Tax
Description of the initiativeThe Climate Action Plan (CAP) was designed to help the City of Boulder meet its emissions reduction goal of seven percent below 1990 levels (or 19 percent below 2005 levels) by 2012. Environmental Affairs staff have tracked Boulder's GHG emissions using the Econoergy inventory-tracking software since 2004. The system uses electricity and natural gas data from Xcel Energy, along with transportation and solid waste data from City departments to provide Council with regular updates on the effectiveness of emission reduction policy measures. Environmental Affairs releases a full inventory update and assessment annually.
Inventories for 2005 and 2006 show a 4.6 percent increase in emissions for the year the CAP was implemented (16.2% above the 1990 baseline). The City estimates that increased electricity consumption associated with population growth and commercial expansion is largely to blame for this increase.3 In order to reach the 2012 CAP target, the City will have to reduce annual GHG emissions by 22% of 2006 levels (see Table 1).
Table 1 - 1990 baseline, 2005 and 2006 emissions, and 2012 target
|
Year |
CO2 emissions (metric tons) |
% from baseline |
1990 |
1,580,942 tons |
- |
2005 |
1,804,182 tons |
+12.4% |
2006 |
1,887,596 tons |
+16.2% |
2012 (target) |
1,481,107 tons |
-7% |
Source: Office of Environmental Affairs, 5 March 2008
The Office of Environmental Affairs administers Boulder's climate protection measures, which can be grouped into three general aims: (1) to increase energy efficiency in homes and buildings; (2) to facilitate the switch to renewable energy; and (3) to promote the use of alternative vehicle fuels.
Energy Efficiency
In terms of energy efficiency, the City provides low-cost energy audits for households and businesses. The Office of Environmental Affairs also helps households and businesses obtain rebates offered by Xcel Energy for energy-efficiency measures and find qualified contractors to conduct renovations.
The City is also working to increase the availability of energy-efficient products and services such as CFL light bulbs, energy efficient windows, photovoltaic (PV), and solar hot water equipment. To this end, Boulder officials have recruited volunteers to conduct “community sweeps”, distributing low-cost energy conservation kits to households including CFL bulbs and tips for how to reduce electricity consumption using low-cost methods. Furthermore, the plan commits the City to facilitating home energy audits through the Residential Energy Audit Program (REAP) and the Multifamily Performance Program.
In order to build local energy efficiency expertise, the City has embarked on a program to develop the federal Energy Star program for Home Performance (HPwES) among local construction contractors. The end goal is to develop a local homebuilding industry capable of conducting full service energy audits and comprehensive retrofits. In 2007, a total of twelve contractors representing eight companies attended the HPwES training session.
Boulder has also launched a program to provide low-cost, professional energy audits and energy conservation information to homeowners through a partnership with the Center for ReSource Conservation (CRC), Boulder County, and Longmont Power and Communications. Finally the plan commits the City to updating energy codes for new construction and retrain builders, contractors, and architects.
Renewable energy
In terms of renewable energy, the City is promoting greater participation of residents and businesses in wind power and other “Green Energy” purchase programs. Xcel Energy, for example, offers its customers the option of purchasing wind energy through its Windsource program. The City encourages membership in this program by waiving the CAP tax on those who sign up. Boulder also offers grants and rebates to homes and businesses adopting solar energy and other renewable energy technologies.
Vehicle fuels
The primary focus of the CAP transportation plan is an education and marketing campaign to encourage local fuel suppliers to offer clean-burning biofuels and help consumers make the connection between transportation usage and GHG emissions. Other aspects of the CAP transportation strategy, including support for public transit, have been slow to emerge due to limited funding and staff resources. In 2007 the Office of Environmental Affairs hired a full-time staff person to coordinate transportation measures and work with GO Boulder (the local transit authority) to implement transportation demand management programs.
3 Xcel Energy assumes an average growth rate of 1.8% in electricity consumption with increases of up to 7% and decreases of up to 5%. (Office of Environmental Affairs, March 12, 2008)
Boulder, Colorado, United States - Climate Action Plan and Carbon Tax
Policy ContextThe City of Boulder benefits from a collaborative institutional relationship with Boulder County, which has also taken measures to reduce GHG emissions. In 2005, Boulder County passed two important sustainability resolutions with implications for renewable energy and energy efficiency in the Boulder County area. The resolutions called for the development of detailed action plans for each member municipality; the analysis of existing practices and new opportunities to reduce emissions; and an assessment of the environmental, operational, community, and budgetary impacts of climate action.
In December 2007, Boulder County launched its Sustainable Energy Plan with the help of staff from the City of Boulder. Joint programs listed in the county's plan incorporate measures already undertaken by the City such as the “ClimateSmart” campaign to help individuals, families, and businesses increase their energy efficiency and reduce their carbon footprint. Boulder County also plans to integrate City programs to assess household and business emissions while providing technical and financial support through existing programs setup by the municipality.
In 2006, Boulder also joined 14 other US cities in the Energy Freedom Challenge (EFC), which is a campaign to encourage cities across the US to obtain their supply of energy from local and renewable wind, solar and bioenergy sources. The objective is to obtain half of the city's energy from these renewable sources. The city that reaches the objective first will be named the “Clean Energy Capital of the US” (City of Boulder, 2007b).
The City of Boulder is also a member of the Chicago Climate Exchange (CCX) – a voluntary cap-and-trade program, which calculates emission reductions credits for firms and organizations (including municipal governments), which may be sold to offset emissions elsewhere. Furthermore, Boulder's climate efforts benefit from participation in the federal Environmental Protection Agency's (EPA) Energy Star rating system, which is the basis of several local initiatives to improve energy efficiency in homes and businesses.
Boulder, Colorado, United States - Climate Action Plan and Carbon Tax
Financial Aspects The local Trash Tax generated $258,000 annually in 2005 and 2006 to support climate change measures. This temporary tax was replaced by the CAP tax on electricity consumption in 2006, from which the City expects to generate approximately $1 million annually. Revenues started at $860,265 for FY2007 and are expected rise to $1,342,000 by FY2012. The initial tax rate is $0.0022 per kWh for residential customers, $0.0004 per kWh for commercial customers, and $0.0002 per kWh for industrial customers. According to the Climate Action Plan Tax resolution, Council is authorized to raise CAP tax rates, as shown in Table 2.
Procurement expenses as well as operating and administrative costs are covered by revenue from the CAP tax. The allocation of CAP tax revenue to each sector is based on the proportions listed under Percent of Total Public Investment in Table 2. With 31% of planned emission reductions, the residential sector receives 58% of the CAP tax revenue. Commercial CAP programs receive 39% of CAP tax revenue with 53% of total GHG emissions. The allocation of CAP tax revenue to industrial programs is just 3% despite its contribution of 19 percent of total emissions.
The average household will pay a CAP tax of $16 per year and an average business will pay $46 per month. The average industrial user pays $3,226 per year although this amounts to a relatively low share of the CAP tax. According to the Office of Environmental Affairs, the industrial sector pays a smaller CAP tax rate and receives a smaller share of CAP tax revenue because the City has not yet identified cost-effective means to implement emission reduction strategies for local industry. Table 3 provides a summary of rates and average annual charges for FY2007 and the maximum possible rates.
Table 2 - Share of emissions, projected reductions, total private and total public investment by sector
|
Residential |
Commercial |
Industrial |
Percent of Total Emissions (2005) |
27 |
53 |
19 |
Percent of Total Reductions |
31 |
41 |
22 |
Percent of Total Private Investment |
19 |
76 |
5 |
Percent of Total Public Investment |
58 |
39 |
3 |
Source: Brouillard and Van Pelt, 2007: 9
Table 3 - Summary of rates and average annual charges (2007)
Sector |
2007 rate $/kWh |
2007
Avg. Charge (Annual) |
Maximum rate $/kWh |
Avg. Maximum Charge
(Annual) |
Residential |
0.0022 |
$16 |
0.0049 |
$37 |
Commercial |
0.0004 |
$46 |
0.0009 |
$93 |
Industrial |
0.0002 |
$3226 |
0.0003 |
$6428 |
Source: City of Boulder - Climate Action Plan Tax: Frequently Asked Questions
In 2007, the City spent $155,000 on public education and marketing campaigns, $164,000 on commercial and industrial programs to reduce emissions, and $258,000 on household energy efficiency programs. Only $5,000 of CAP tax revenue was spent on transportation-related climate action. (City of Boulder, 2008)
Of the $860,265 allocated to CAP in the 2007 budget, $278,211 was spent on salaries, computers, travel, training, and professional memberships. Office of Environmental Affairs staffing has increased in recent years from two full-time employees in 2006 to four full-time staff in 2007 (one working exclusively on residential programs, one on industrial and commercial programs and one on coordinating marketing and communications). In 2007, a fifth employee was hired to work on transportation emission reduction strategies and programs (City of Boulder, 2008).
Boulder, Colorado, United States - Climate Action Plan and Carbon Tax
OutcomesAs the GHG inventory for 2007 is not yet available, we cannot report on global changes to GHG emissions and energy use since CAP was adopted in 2006. However, outcome data is available for most of the projects being carried out under CAP.
Energy Efficiency
Over the past three years, the number of building audits has fluctuated with corresponding rates in electricity savings and emission reductions. In 2005, there were 31 building audits with a total of almost 2 million kWh in potential electricity savings. In 2006, the number of audits fell to 15 with 350,000 kWh in savings before climbing back up to 35 audits in 2007 and an estimated 4.3 million kWh in electricity savings. GHG reductions are estimated to have increased with these measures, but not to the extent of electricity savings, which increased 55 percent from 2005 to 2007. 2,575 metric tons of greenhouse gas emissions were averted in 2005 compared with 4,053 tons in 2007, representing a 37 percent increase in reductions (City of Boulder, 2008).
The effectiveness of the campaign to deliver energy-efficiency kits to households was measured with a follow-up survey, which indicated residents were using 3,048 compact fluorescent light bulbs with an estimated 1,193 tons of emission reductions. Similar results were recorded in 2007 with another community sweep resulting in 939 tons in greenhouse gas emissions mitigated. The Boulder Housing Partners program also distributed compact fluorescent bulbs over the past two years with an expected combined outcome of 1,745 tons in emissions reductions. A program geared towards affordable housing distributed 181 kits in 2007, cutting emissions by 675 tons of CO2.
Due to the success of the pilot program in 2005, the Residential Energy Audit Program (REAP) was expanded in 2006 to reach 300 homes in the City of Boulder. According to the 2007 Progress Report, 224 audits were performed through REAP. Also in 2007, the City expanded the Multifamily Performance Program launched in 2006. (City of Boulder, 2008).
Results from the Building Performance with Energy Star (BPwES) program were very promising for increasing energy efficiency in commercial buildings through improved lighting and heating systems. Efficiency retrofits implemented through the BPP resulted in 4,053 tons of potential GHG reductions after the City successfully met its target of conducting 35 business audits in 2007 (City of Boulder, 2008).
The City has committed a total of $360,000 to CAP energy efficiency measures including the replacement of old heating, ventilating, and air conditioning (HVAC) units, additional insulation and new efficient windows in municipal buildings. The City is also the number one single participant in Xcel Energy's Windsource program, purchasing 420,000 kWh a year for City-run facilities, resulting in a 624 megaton in reduction in emissions (City of Boulder, 2007b). Over the past two years, the City of Boulder has increased its share of alternative fuel and hybrid vehicles purchases as a proportion of its overall vehicle procurement. In 2006, 51% of vehicle purchases were alternative fuel or hybrids (City of Boulder, 2007b) while that share increased to 78% in 2007 (City of Boulder, 2008). As a result of reducing emissions from municipal buildings and operations by 3.14 percent relative to the baseline, the City has generated 83 carbon financial instruments (CFI's) tradable on the Chicago Carbon Exchange (CCX) representing 8,300 tons of greenhouse gas emissions.
Renewable Energy
CAP programs have encouraged electricity consumers to take advantage of existing renewable energy programs offered through Xcel Energy. According to the utility, there were 313 new Windsource subscribers in the City of Boulder as of December 31, 2006 using 1.1 million kWh of wind power leading to 897 tons of greenhouse gas reductions (City of Boulder, 2007b). Boulder now has the highest customer concentration of Windsource customers in the state of Colorado with about 8,000 customers out of 43,000 statewide.
Solar energy was also expanded after Council passed an ordinance to establish a sales tax rebate on photovoltaic (PV) or solar thermal (hot water) systems installed within the city. Of the total tax rebate, 35 percent is returned directly to the customer while the other 65 percent goes to rehabilitate or install renewable energy systems for low- or moderate-income housing and non-profit organizations. By 2007, the fund had accumulated roughly $80,000 with $25,000 available for rebates and $55,000 dedicated to the ClimateSmart Solar Grant fund.
Vehicle fuels
According to the City's greenhouse gas inventory, emissions from vehicle fuel usage fell from 27 percent of total emissions to 22 percent from 2005 to 2006. This reduction, however, is misleading because the decline is attributed to a greater reliance upon ethanol and other biofuels, whose upstream emissions are not counted in Boulder's greenhouse gas inventory. According to the City, biofuels will continue to be an important feature in Boulder's Climate Action Plan.
Boulder, Colorado, United States - Climate Action Plan and Carbon Tax
Lessons LearnedThe City of Boulder benefits from a strong working relationship with local energy experts, as well as firms, organizations, laboratories, and academic institutes specializing in renewable energy, economics and environmental policy. Many of the innovative components of the CAP were designed, elaborated, publicized and advanced politically by City staff working first with the volunteer Boulder Renewable Energy and Energy Efficiency working group (BREEE). The CAP Advisory Group (CAPAG) has since replaced the BREEE with a municipal mandate to provide technical and professional expertise in helping the City meet or exceed CAP goals.
The first and most substantial accomplishment of this collaborative network was the initial emissions inventory that enabled staff and experts to consider options for reaching feasible emission reduction targets that would later form the basis of the CAP. The initial inventory also strengthened communication and cooperation with other City departments and various private partners including Xcel Energy, which was imperative in aligning existing energy efficiency programs and renewable energy projects as well as advancing the CAP tax.
Despite the successful high-level collaboration on advanced energy policy development, the CAP has suffered from a poor public relations strategy. The result of this oversight was the near rejection of the interim Trash Tax proposal to fund the first steps of CAP. The absence of a detailed communications strategy fueled opposition to the tax, thereby putting the City on the defensive in the local media.
While the City adjusted its public relations strategy with the introduction of the CAP tax, some elements of its public education approach appear to be problematic. In particular, the City must strike the balance between the addressing Council and policy experts with technical information and to reaching out to the public at large with more accessible materials.
For other jurisdictions, barriers to the implementation of a carbon tax similar to Boulder's CAP tax could include the limited availability of local technological expertise and limited public awareness, which might result in an unwillingness to accept taxation of energy consumption. Few cities in North America have such a high level of technological sophistication and environmental awareness as Boulder – favourable conditions that greatly contributed to the development of a highly innovative climate plan and funding strategy.
Other municipalities may learn from Boulder's institutional experience by following its lead in reducing emissions from electricity consumption. One avenue open to many municipalities is the renegotiation of franchise agreements with utility companies to encourage greater energy efficiency and a shift towards renewable energy sources, as Boulder has done with Xcel Energy. Alternatively, municipalities may explore the option of forming their own municipal electricity utility to assume direct responsibility for energy production and distribution. Boulder is considering this option for when its franchise agreement with Xcel Energy expires in 2010.
The Boulder experience demonstrates how small cities may use community spirit and concern for local well being to drive climate initiatives. Small business participation is seen to be an asset, although large players, like IBM, have also taken important steps to embrace the plan by purchasing wind power through the Windsource program.
Boulder, Colorado, United States - Climate Action Plan and Carbon Tax
Next StepsGiven the highly successful programs to increase energy conservation and efficiency for electricity customers, perhaps the most important area for making significant emissions reductions is Boulder's transportation sector. In 2007 a new CAP staff member was hired to manage the CAP transportation strategy in cooperation with GO Boulder and the City's Transportation Division although program funding remains consistent albeit limited at $5,000 annually.
In terms of electricity consumption, the City plans to continue developing a local building contractor industry to conduct professional building audits and renovations. The Office of Environmental Affairs is working with Boulder Green Building Guild and E-Star Colorado to encourage knowledge-sharing networks for residential and commercial building contractors. In February 2008, the City passed a residential ordinance with updated energy efficiency standards.4 The City also established stricter waste management regulations for new construction and renovations.
Finally Boulder is planning to consolidate its business sector strategies into a single “ClimateSmart at Work” program with an expanded level of service, including onsite training, rebates and bid reviews. The new program will build upon existing programs offered to businesses by Xcel Energy, GO Boulder, the Colorado State Industrial Assessment Center (IAC), and Partners for A Clean Environment (PACE).
4 Provisions for Boulder's “Green Points” residential building ordinance were updated to exceed the 2006 International Energy Conservation Code (IECC) in 2007.
Boulder, Colorado, United States - Climate Action Plan and Carbon Tax
Sources, Documents and Web ResourcesInterviews
Van Pelt, Sarah
Environmental Sustainability Coordinator – Office of Environmental Affairs
City of Boulder
(303) 441-1914
vanpelts@bouldercolorado.gov
Mudd, Steve
Windsource Manager
Xcel Energy
(303) 294-2554
steve.mudd@xcelenergy.com
Geller, Howard
Executive Director
Southwest Energy Efficiency Project
(303) 447-0078
hgeller@swenergy.org
Documents
- Boulder County Consortium of Cities. 2007. Sustainable Energy Plan Energy Strategy Task Force. Website
- City of Boulder. 2006. Climate Action Plan – Be Climate Smart. Web document.
- City of Boulder. 2007 a. A Community Takes Charge: Boulder's Carbon Tax. Public document.
- City of Boulder. 2007b. 2006 Progress Report. Public document.
- City of Boulder. 2008. 2007 Progress Report (Draft). Public document.
Web Resources
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