Dive Brief:
- Voters in Berkeley, California, will decide this November whether the city should tax large buildings that use natural gas after community organizers collected enough signatures to get a measure on the ballot.
- The “Fossil Free Berkeley Ballot Measure” is in part a response to a federal appeals court’s 2023 decision to strike down Berkeley’s first-in-the-nation ban on gas hookups in new construction, organizer and Berkeley resident Daniel Tahara said. “We want to take a stand against the gas industry,” he said.
- Proponents say the proposed tax would raise $23 million annually for a dedicated fund for building electrification. That’s a novel approach compared with the few U.S. cities that have imposed taxes to fund general climate action, said Amy Turner, director of the Cities Climate Law Initiative at Columbia University’s Sabin Center for Climate Change Law.
Dive Insight:
The proposed tax is “something we’ve had on ice for a couple of years,” said Tahara.
The idea originated from his climate advocacy work in San Francisco. Upon moving to Berkeley a couple years ago, Tahara said he sought feedback on the proposal from local groups but didn’t have time to get it on the 2022 ballot.
Last fall, members of the justice advocacy group Berkeley People’s Alliance approached Tahara wanting to pursue the ballot measure, he said. The organizers began adding signatures in the spring and found out in recent weeks that they had enough to get the measure on the ballot.
If the ballot measure gets the majority vote needed to pass into law, it would take effect on Jan. 1, 2025, with first payments due on Feb. 28, 2026.
The amount each building owner would be taxed is based on how much gas their building consumes and the estimated amount of methane leaked across the natural gas system in delivering that fuel. Tahara said the tax calculations also rely on the social costs of carbon and methane, which reflect the economic damage done by each additional ton of greenhouse gas emissions in the atmosphere.
The tax would apply to buildings 15,000 square feet or larger, which Turner, the Cities Climate Law Initiative director, said is on the smaller side compared with other “big building policies.”
“[15,000 square feet is] not a small building by any measure, but it is maybe [the size of] a smaller apartment building, maybe a 10- or 15-unit apartment building,” she said, noting that some local building performance standards in the U.S. apply to buildings larger than 20,000 or 25,000 square feet.
Tahara said the measure applies to buildings 15,000 square feet and up because Berkeley already has an ordinance that requires buildings that size to report their energy use annually to the city. “That was, like, what would be good policy in terms of not adding a lot of overhead to the city for collecting the tax or having to spin out new city departments,” he said.
City and state buildings are exempt from the tax because “we’re not legally allowed to tax them,” Tahara said. The measure specifically bars landlords from passing on the cost of the tax to tenants. Those who fail to pay the tax on time would be fined.
Most of the fund the tax would create would be used to subsidize building decarbonization, with priority for low-rise residential buildings and restaurants.
The measure would also dedicate some of the proceeds to fund city staffing needed to administer the program, which Turner called a smart move. “This will be something that’s administratively somewhat burdensome to implement,” she said.
Turner noted that this approach won’t work in the many cities that don’t have the authority to enact taxes with a simple ballot measure. “Some places are going to have authority to enact a tax just through legislative action, some places through a referendum and some places only by having a state law enacted,” she said. “As a broad strategy, I could see this being considered elsewhere, but it’s not something that’s just plug and play anywhere.”