Coming soon: City of Portland carbon tax
Here's a sleeper that the Daily Journal of Commerce slipped in yesterday. One of the City of Portland's sustainability people, profiled on this blog a week ago, is putting together a plan that would impose a carbon emissions tax on residents' utility bills and have the city take over "greening" of entire neighborhoods, including both private homes and businesses. It's not entirely clear from his planner-speak, but it sounds as though the "greening" part may not be voluntary. Certainly the carbon tax wouldn't be.
The headline and lead on the DJC story make it sound like it's some sort of benign grant program he's proposing, but when you read down into the interview, the facts become much more interesting:
Osdoba: In order to have any hope of meeting greenhouse gas reduction targets, we would need to increase energy efficiency work in this city by a factor of 10 immediately and we’d need to do it for 20 years. We’re not even having that conversation right now. It’s been about how we make our existing incentives more attractive, which is important, but we shouldn’t do that to the exclusion of saying (that) maybe we shouldn’t be talking about incentives at all. Maybe we need to be talking about creating an investment fund that will pay for energy-efficiency improvements for all.Mr. Vancouver, B.C. 's latest import is likely to provoke quite a bit of conversation -- as soon as the average person around here gets wind of what he's up to.
DJC: So what’s your strategy?
Osdoba: The best corollary I could give is there are energy service companies who do energy-efficiency work on big campuses and industrial facilities that use a lot of energy. They say we’ll guarantee energy savings and we’ll help work with you to finance those capital investments, which will be paid for off the savings.
That same model needs to be brought… to thinking about neighborhoods because we can’t go building by building -- it will simply take too long. We have too many barriers to making good investments in energy efficiency. Not only do people not have time, they don’t have access to that kind of capital. So we should be helping them because they’re just going to be burdened with ever more increasing energy prices. Incentives don’t quite get them over the hump.
So that’s a question we’re asking: What if we take that responsibility off them and say "we’ll do it for you?" Missoula, Montana, has a program where if a neighborhood can self-organize and get 90 percent of homeowners to sign up they’ll do it for free.
DJC: The city should be the investor in this case?
Osdoba: The city is the only entity that can draw lines on a map and say we want to do it here as a single investment for all these buildings....
DJC: So what’s the city’s role?
Osdoba: It’s going to be two things. To attract this kind of investment we need to reduce the risk to investors. And we need to build certainty that these investments are going to happen.
So having an aggressive policy that ensures we’re going to do this over the next 20 years is one step. Being able to create the institutional mechanism for financing improvements in private buildings is another step.
DJC: How would that work?
Osdoba: Hypothetically, consider what they have in British Columbia, where they have a carbon tax that goes into effect July 1 and it’s equivalent to $10 a ton (of carbon emissions), and it’s on your utility bill and has very little impact on your price, really. But in the aggregate, it raises a lot of money, and at the provincial level it’s $400 million. What the province is choosing to do is rebate that out. But if hypothetically, Vancouver, B.C., was told by the province we’re going to give you all the money that would be allocated on a per-capita basis to the city, (then) what would the city do? If you can show a return on investment of 4 (percent) to 5 percent, it wouldn’t be inappropriate for the city to use that revenue to issue bonds. And a 20-year based revenue bond would essentially give you leverage of 10 to one.
There’s still a lot of questions about that model… We haven’t really thought through all that yet, but what we can say is that’s a lot of new economic activity and it would create a lot of new jobs....
And one of the things that’s interesting is if you’re going to do that approach for energy efficiency, you can do the same thing for solar and the same thing for district heating and cooling infrastructures. So arguably you could be looking at districts or neighborhoods and saying let’s do it all....
DJC: Why should builders and buildings be the ones to shoulder the burden of [emissions] reductions?
Osdoba: What burden are they shouldering if someone else is paying for it? They get the benefit of a more efficient building that’s going to be more valuable in the marketplace, and it’s going to shield its occupants and owners from future energy increases. We will only see more policy activity around greenhouse gas emissions.