Having seen its first-in-the-nation ban on natural-gas hookups struck down by a federal court, the city of Berkeley, California, is now attempting to accomplish the same thing by taxing gas consumption.
The Large Buildings Fossil Fuel Emissions Tax, a ballot initiative that voters will consider in November, applies to buildings of at least 15,000 square feet. Amy Turner, director of the Cities Climate Law Initiative at Columbia University’s Sabin Center for Climate Change Law, told SmartCitiesDive that 15,000 square feet “is maybe [the size of] a smaller apartment building, maybe a 10- or 15-unit apartment building.”
According to SmartCitiesDive:
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. [Berkeley Environment and Climate Commissioner Daniel] 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.
“[Natural gas] is damaging the world. You’re allowed to do it, but you should pay for those damages,” Tahara told Berkeleyside.
Short-circuiting the Court
Last year, the 9th U.S. Circuit Court of Appeals unanimously overturned a measure passed by the Berkeley City Council that would have prohibited natural-gas hookups in all newly constructed buildings in the city. The Biden administration, which opposes gas stoves, weighed in on the city’s side to no avail.
Outraged left-wing groups “felt a need to ‘defend’ Berkeley’s mantle of being a leader on climate action,” Tahara told Berkeleyside, and immediately searched for a way around the court’s decision. The Berkeley People’s Alliance approached Tahara, who had previously failed to get a similar gas tax passed in San Francisco and was only too happy to give it another try in Berkeley.
Organizers gathered enough signatures to get the measure on the November ballot. The City Council approved the initiative July 30.
If favored by a majority of voters, the measure would take effect January 1, with the initial tax payments due in February 2026.
Organizers estimate the city will rake in $23 million a year from the tax, which will apply to about 609 buildings. The City Council’s report on the initiative forecasts a $26.7 million windfall in the tax’s first year — “larger than Berkeley’s total annual sales tax revenue and a third of the city’s annual property tax revenue,” reported the Daily Californian.
According to Berkeleyside:
Ninety percent of the funds raised from the tax on property owners with large, natural-gas using buildings would be earmarked to support city programs that convert buildings in Berkeley to cleaner energy sources, the ballot measure’s language says. This could include, for instance, the installation of heat pumps, induction stoves, solar panels, battery storage, electric vehicle charging. The remaining 10% would go toward union-represented city positions and cover administrative expenses for the city’s decarbonization program, according to the measure’s language.
Let Them Use Kilowatts
The progressives who champion the tax, of course, rarely stop to ask themselves where building owners are going to get the money to pay it. Their attitude is summed up by Tahara’s remark to Berkeleyside that “developers and property owners who don’t want to pay the tax should use electricity instead of gas in their buildings.” Never mind how much converting existing buildings from gas to electricity might cost.
In fact, the measure actually prohibits landlords from passing along the cost of the tax to their tenants, a provision that would surely exacerbate the city’s already severe housing shortage.
Bye-bye, Bagels
Not everyone who agrees with the measure’s objectives is oblivious to its likely negative effects, however.
“I absolutely support the intent of this measure,” Councilman Igor Tregub told the Daily Californian. “If (the measure) was written in a way that would balance the need to tackle climate change with everyday realities that small businesses, nonprofits, performing arts communities, residential and commercial tenants face, it would’ve had the potential to result in a massive investment toward building electrification to decarbonize our large buildings.”
The measure report noted that the tax would “compound the problem that existing taxes are already considerably higher in Berkeley than other Bay Area locations” and probably lead to higher food and services prices and a loss of businesses.
Emily Winston, owner of Berkeley’s Boichik Bagels, wrote a letter to the City Council expressing her concerns about the tax.
“The gas equipment I purchased is intended to last decades. My intention in growing my business in Berkeley is to be here for decades,” she explained. “But if I am going to be socked with a nearly half million dollar penalty every year, I will have to look seriously at moving out.”
Other Opposition
The David Brower Center, an environmentalist nonprofit, told the council in a letter that the tax would create a “significant expense” for its 44,000-square-foot building. And the Berkeley Repertory Theater, in a statement, said, “While we support electrification, this well-intentioned ballot measure with its immediate implementation would be very harmful to our struggling organization.” In other words, save the planet, but at someone else’s expense.
“The City of Berkeley, whose natural gas ban was recently struck down by the 9th Circuit, now wants to try imposing a tax on facilities that use natural gas,” FTI Consulting’s Steve Everley posted on X. “But remember, no one is trying to ban gas stoves.”
