City Approves ‘Carbon Tax’ in Effort to Reduce Gas Emissions

By KATIE KELLEY

NY TIMES-Published: November 18, 2006

BOULDER, Colo., Nov. 14 — Voters in this liberal college town have
approved what environmentalists say may be the nation’s first “carbon
tax,” intended to reduce emissions of heat-trapping gases.

The tax, to take effect on April 1, will be based on the number of
kilowatt-hours used. Officials say it will add $16 a year to an average
homeowner’s electricity bill and $46 for businesses.

City officials said the revenue from the tax — an estimated $6.7
million by 2012, when the goal is to have reduced carbon emissions by
350,000 metric tons — would be collected by the main gas and electric
utility, Xcel Energy, and funneled through the city’s Office of
Environmental Affairs .

The tax is to pay for the “climate action plan,” efforts to “increase
energy efficiency in homes and buildings, switch to renewable energy
and reduce vehicle miles traveled,” the city’s environmental affairs
manager, Jonathan Koehn, said.

The goal is to reduce the carbon levels to 7 percent less than those in
1990, which amounts to a 24 percent reduction from current levels, Mr.
Koehn said.

“The climate action plan serves as the roadmap to meet our reduction
goal,” he said.

The tax grew out of efforts by a committee of residents and members of
the City Council and Chamber of Commerce to try to enable Boulder to
reach goals set by the United Nations Kyoto Protocol, which seeks to
curb global warming.

The protocol requires 35 developing nations to reduce their emissions
of heat-trapping gases like carbon dioxide. The world’s top two
polluters, the United States and China, have not signed the pact.

The Boulder environmental sustainability coordinator, Sarah Van Pelt,
said residents who used alternative sources of electricity like wind
power would receive a discount on the tax based on the amount of the
alternative power used.

A total of 5,600 residents and 210 businesses use wind power, Ms. Van
Pelt said.

A program similar to Boulder’s began in Oregon in 2001. There, a 3
percent fee is assessed on electricity bills by the two largest
investor-owned utilities, said Michael Armstrong, a policy analyst in
the Portland Office of Sustainable Development.

The tens of millions of dollars is transferred to the Energy Trust of
Oregon, a nonprofit organization, rather than the state government. The
trust distributes cash incentives to businesses and residents for using
alternative sources like solar and wind power, biomass energy and
structural improvements to improve efficiency.

Mr. Armstrong said that although Portland had several programs for
“sustainable living,” it had not enacted a carbon tax and that he knew
of no other American city with one.

“We are interested to see how it plays out and see what we can learn
from that,” he said of the Boulder tax. “We certainly follow other
local governments, and there are lots of innovative initiatives all
over the country. It’s a great exchange among local communities.”