Climate Activists Push for Carbon Tax With Measure GG, But Critics Warn it Could Backfire

A group of climate and labor activists, who call themselves Fossil Free Berkeley, are bringing a tax on natural gas use in large buildings to Berkeley voters on Nov. 5 in the form of Measure GG. They argue that a large tax is just the kind of “stick” society needs to cut emissions from buildings, and the climate crisis necessitates an aggressive timeline.

But many in the city, including its state senator, mayor, assemblymember — and the David Brower Center, a “home for the environmental movement” — said while the measure is well-intentioned, the tax would essentially double the cost of gas for some in a very short timeframe and could backfire for future initiatives to decarbonize, and would likely drive businesses and nonprofits out of Berkeley.

The tax would apply to large, mostly commercial, buildings and be paid by their owners. Berkeley city staff estimate it would apply to 609 buildings and generate roughly $26.7 million annually, which would be larger than the city’s annual sales tax revenue. The first tax would be due in early 2026.

Roughly a third of Berkeley’s climate emissions are from methane released from buildings: from appliances like furnaces, hot water heaters, clothes dryers and stoves.

Funds raised would help convert buildings powered by gas to electricity, focusing on protecting tenants and concentrating on communities experiencing disproportionate pollution. And it would help Berkeley residents comply with costly rules set by the Bay Area Air Quality Management District requiring new water and space heaters to be zero-emission by 2027 and 2029, respectively. Some money would be spent on a workforce to accomplish this electrification.

The idea for Measure GG came after a federal appeals court struck down a prior effort by the city to chip away at pollution from buildings. Berkeley introduced a landmark ban on gas hookups in new construction in 2019, and more than 70 local and state jurisdictions followed suit before the 9th Circuit Court of Appeals said the regulation conflicted with federal law.

Daniel Tahara, a Berkeley resident, Tesla engineer, and climate activist, wrote it. He said the high cost of a carbon tax should come as a shock to people.

“It’s a signal of how much we are underestimating the cost of the status quo,” Tahara said. “That’s how much damage we are doing to society. That’s how much we are subsidizing the use of methane.”

Tahara pointed to the city’s own paper outlining the need for building electrification, which states, “UCLA researchers estimate that if we electrify all of the fossil fuel appliances in the Bay Area, we could avoid over 300 respiratory illnesses, save over 130 lives, and save $1.2 billion in healthcare costs — every year.”

Tahara responded to pushback on how quickly the tax would go into effect – in January 2025, with the first collection in 2026.

“The principle here is the climate’s not really giving us a phase-in,” Tahara said.

Additional proponents include environmental groups like 350 Bay Area and Citizens Climate Lobby of Alameda County, tenants rights organizations, and some labor unions.

But many of the city’s political, business and nonprofit leaders don’t think Measure GG is the policy to meet Berkeley, and California’s, climate goals.

The policy “is a very well-intentioned effort to reduce our carbon footprint and move large buildings off of natural gas,” said Maria Hassid, executive director of the Brower Center, which houses 25 nonprofits and businesses with like-minded missions. “Unfortunately, the people who wrote this well-intentioned measure didn’t really think through all of the consequences, and it has some really concerning ones.”

It will hit nonprofits like the Brower Center and the YMCA hard, Hassid said. While the measure exempts nonprofits with a revenue of under $1,000,000 from paying the tax, many will not make that cut-off.

She estimated the tax will cost the Brower Center $90,000 annually (the city report estimates a slightly lower $78,952), and would force her organization to cut their extensive public programming as a result.

Ric O’Connell, who heads a nonprofit working to create a low-carbon grid, called Measure GG a bad policy that would be neither effective nor durable. His organization, GridLab, is based at the Brower Center.

“Moving off of gas takes time and significant investment in new equipment. Large buildings can’t simply install new, capital-intensive retrofits overnight, and PG&E often needs several years to install an upgraded power drop,” O’Connell wrote in a letter to the city council. “It’s like doubling the cost of gasoline at the pump and expecting people to switch to electric cars immediately. Businesses need time, and a tax that takes effect immediately and more than doubles costs will simply raise prices for everyone.”

Multiple businesses and nonprofits also oppose the measure, like Berkeley Bowl and the Berkeley Repertory Theatre.

Details of the carbon tax

The tax would apply to buildings 15,000 square feet or larger, with certain exceptions, like for government buildings, single-family residences and residential buildings with at least 50% affordable units.

Berkeley residents currently pay about $2.33 per therm of gas, the unit of energy used to measure the commodity, according to UC Berkeley energy and economics professor Severin Borenstein. The tax would more than double that cost to $5.29 per therm of gas.

The tax calculation is based on methane emissions, the largest component in natural gas, and the social cost of carbon, which estimates economic damage to society caused by greenhouse gas emissions.

In its first year, Public Storage would pay around $900, Berkeley Bowl roughly $47,800, and the pharmaceutical company Bayer would need to shell out nearly $6.5 million for its main campus on Dwight Way, according to city estimates.

Building owners would pay the tax and be prohibited from passing the cost on to tenants in residential or mixed-use buildings through either increased rent or other costs.

Measure GG would take effect Jan. 1, 2025, and the first tax would be due in early 2026.

“From the standpoint of economics, the idea of a tax is very appealing because it encourages behavior and doesn’t mandate a specific action,” said Andrew Campbell, executive director of the Energy Institute at Haas at UC Berkeley, which takes no position on the ballot initiative. “But there are quite a few challenges around this particular measure.”

Campbell called the tax rate “very, very high.” And while Berkeley’s former ban on gas hook ups applied to new buildings, this measure affects existing buildings, which are expensive to update. “If you plan for all-electric, no natural gas at the time of construction, it’s a much lower cost than coming in later,” Campbell said.

“The biggest concern I would have is: how will the building owners respond and what will happen to the businesses?” he said.

If businesses and nonprofits moved out of a place like Berkeley, Campbell added, which is very walkable and bikeable, they may land in a city less welcoming to pedestrians and bikes. That could lead to an unintended consequence of increased fuel use when people drive to get to the displaced ventures.

Campbell said he is troubled by the state’s extraordinarily high electricity rates. “When we’re talking about switching to electricity,” he said, “it’s pushing people into some very high rates.”

Measure GG requires a simple majority to pass.