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HomeMy WebLinkAbout2025-04-04 Climate Action and Sustainability Committee Summary MinutesCLIMATE ACTION & SUSTAINABILITY COMMITTEE SUMMARY MINUTES Page 1 of 8 Regular Meeting April 4, 2025 The Climate Action & Sustainability Committee of the City of Palo Alto met on this date in the Community Meeting Room and by virtual teleconference at 1:32 P.M. Present In-Person: Veenker (Chair), Burt, Lu Absent: None Call to Order Chair Veenker called the meeting to order. The clerk called roll and declared all present. Councilmember Burt noted another committee meeting had asked for clarification on the Council action as to whether not taking public comment from Zoom was for Council meetings versus committee meetings. He suggested as a follow-up to this meeting getting clarification on the motion and the action. Public Comment None. Action Items 1. Discussion of Preliminary Sustainability and Climate Action Plan (S/CAP) Funding Study Results; CEQA Status: Not a Project. Jonathan Abendschein, Assistant Director Sustainability Climate Action, provided a slide presentation about the preliminary funding results from the S/CAP funding study including context and prior Council direction, project background, scenarios modeled, key insights about the high local action scenario, emissions reductions from the three scenarios, technology contributions to 80% reductions, cost-effectiveness of various types of electrification, single- family household expense savings, 80 x 30: community annual net benefit, funding need for 80 x 30 and the next steps. Councilmember Lu queried if they had a top line number to back into of the high action scenario. He asked how the $15 per month per household debt was calculated. He inquired if there were any particularly surprising takeaways in terms of the costs, scale or just savings expenses for any of these methods or anything suggesting a need to pivot a strategy forward, SUMMARY MINUTES Page 2 of 8 Climate Action & Sustainability Committee Meeting Summary Minutes: 4/4/25 double down in a different area or change anything. He wondered if the scenarios accounted for population growth or behavior change with the addition of AC, etc. Assistant Director Abendschein said it was on the order of hundreds of millions of dollars in upfront investment offset by the long term benefits and the avoided costs of installing gas like- for-like equipment. He noted the amount of investment the whole community put into new equipment every year would be hundreds of millions of dollars a year. He commented the $15 per month per household debt represented a funding number. It would assumed the incremental cost would be debt financed and the revenue stream needed to pay back that debt financing would be about $15 for the median residential customer. It referred to the need for an additional $20 million per year if the incentive only approach was applied, which they did not recommend. He remarked it was encouraging and surprising that the amount of revenue they thought they would need or the balance between the costs and benefits was better than the impact analysis they did a few years ago. They had the benefit of gathering the best data from the region thanks to their partnership with E3. The benefits exceeding the costs opened the door to new strategies that might be easier to implement with the community and more acceptable. He believed the increased electricity use associated with the addition of AC was included. He explained this was about retrofits of existing homes and it assumed all electric construction going forward. He added they might need to probe on that because of the Ninth Circuit Court decision. This project got started before the Ninth Circuit Court decision. Jared Landsman, Associate Director at Energy and Environment Economics, Inc., explained it was assumed that any customer getting a heat pump would also be using it for cooling. They did not do any modeling of customers getting a new AC unit but all of the scenarios had any customer who purchased a heat pump using it for cooling. Assistant Director Abendschein added they ignored people who would have gotten AC anyway but did not get a heat pump. They did model in the fact that people who converted their furnace to a heat pump and had air conditioning would probably use that air conditioning as an added benefit. Councilmember Burt recalled requesting information about the assumptions on technology advancements, costs and other drivers and did not see anything in this presentation that fill in that information. He asked if Air Board mandates were built into the model. He wanted to know if the assumption was that the incentives and subsidies would continue to drive as they had in the last couple years or if they were making adjustments to the model. He asked if benefits on slide five referred to direct economic benefits. He queried if they had estimates of the co- benefit quantitatively and qualitatively. He was interested in what is emerging in comparative risk analysis and the quantitative factors there. He thought they should make the distinction that it was a net life cycle benefit when done as part of new construction. He asked if they made high-level assumptions on declining costs and increasing efficiency of appliances. He wondered if anyone had mapped the efficiency gains they were seeing in the appliances. He wanted more understanding of whether they had the policies, programs and funding necessary to achieve 20% mode shift. He queried what role they had for mode shift. He inquired if they were making any assumptions as to any mode shift toward greater transit use and about decarbonization of transit. SUMMARY MINUTES Page 3 of 8 Climate Action & Sustainability Committee Meeting Summary Minutes: 4/4/25 Assistant Director Abendschein noted there were assumptions built in around declining costs. He recalled a lot of the questions their Working Group had were about some of the underlying assumptions that differed with some of their own assumptions and modeling. They had one stakeholder meeting where some of that underlying information was presented and there was a request for specific pieces of additional information. They had not had that second stakeholder meeting. He had followed off with one stakeholder who had a very in-depth model and they were able to identify the ways in which that model differed with this funding study model. That was noted in the last slide. He was hesitant to bring too much detail to this meeting because of the time constraints but could share some of the detail offline. He confirmed Air Board mandates were built into the model. He remarked they were not assuming tax code changes yet but might need to adjust accordingly. Other forms of funding were relatively small relative to the scale of the community transition. He did not think those changes would affect the funding study outlook significantly but the tax code changes could. He confirmed Councilmember Burt’s definition of benefits on slide five and described co-benefits. He explained there were numbers the Air District put out around the regional air quality. They did not have a lot of information on individual air quality yet. Putting numbers on some of these things quantitatively was out of their skill set but it was something they could consider. Qualitatively, they had already done a co-benefits analysis with the last ACOM study they did. They could share that back out with the Committee. He confirmed that this was the conclusion of a retrofit when looking at complete electrification and also the conclusion for most pieces of equipment but if the assumptions are tweaked slightly more optimistically some of the appliances flip over into a net benefit. He stated they built the VMT reductions assumed in their goals and key actions into this model. The VMT reductions were not based on any single program but the combination of all the different programs listed in their goals and key actions including substantial mode shift. He remarked electrification of transit was included in the assumptions around transportation emissions reduction. Associate Director Landsman indicated they were primarily focused on the declining costs. They did not incorporate any sort of significant technological changes. It was more the assumption that as heat pumps get more dominant in the market, there was an assumption that some of those costs were able to come down from a contractor side. Assistant Director Abendschein added there may be some additional upside benefit on the efficiency as well. Although the faster they move, the less they would be able to take advantage of those efficiency benefits over time. Associate Director Landsman agreed they might see some slight improvements in heat pump efficiency over time but it would be a minor factor in the overall cost trajectory compared to the cost reductions that would come from scaling of the technology and it becoming more of a dominant technology in the market. Chair Veenker encouraged having the sensitivity analysis as the next step. She wanted to know the range of assumptions about the timeline for abandonment and shutdown of gas systems. Assistant Director Abendschein explained they had tried to be as conservative as possible with their initial estimates on total abandonment costs. For operational savings, the conservative estimate was effectively that the gas system continue as it is. There is a not unlikely scenario SUMMARY MINUTES Page 4 of 8 Climate Action & Sustainability Committee Meeting Summary Minutes: 4/4/25 where large swaths of that gas system continue to need to operate for very small gas loads and the removal of gas lines would take place suddenly. They needed to understand those dynamics better. He thought it would be helpful to have that in there as a conservative placeholder. He thought they could expect that some of the reduction in city resource needs to make all this stuff happen would come from finding ways to make abandonment happen and seeing operational savings from that. The goal was to get preliminary results of the study by fall but they were working out what they could accomplish in that timeframe. Item 1 Public Comment 1. Bruce H. mentioned that he did not think the presentation brought out that future projected gas rates had a huge impact on the sensitivity analysis. He stated Palo Alto's exceptionally low electric rates gave them a unicorn opportunity. He wanted to ensure there would be more sensitivity analysis runs based on varying assumptions of those two rates. He wanted to call out that the assumptions of the efficiency in the E3 model were quite low and mentioned units could not be bought at the low federal standards anymore. It would behoove them to think in terms of available efficiency standards. He was curious about the timeline for the proposed programs. 2. Stephen R. opined the presentation left out discussion of Palo Alto’s utilities. He described how this offered opportunity to encourage electrification and achieve electrification goals keeping their rates low. He urged to include Palo Alto's control of its electrical and gas utilities in any future discussions. 3. Andrea G. stated it was important to talk about electrification holistically and to monetize the co-benefits. She thought they could couch the discussion about AC and the elderly population in terms of resiliency and preparedness for climate change. 4. Cedric D. advised it would be good to know at what cost of natural gas each of these various electrification measures would break even. He wondered if any of the cost and benefit values included the individual and communal costs of dealing with the impacts of climate change. He wanted to know if they envisioned policy changes including mandating net zero energy buildings for both residential and commercial buildings. Assistant Director Abendschein explained one margin code they adopted last year encouraged net zero buildings but did not have specific net zero requirements. He encouraged Cedric D. to reach out with any resources he had on the 2026 through 2028 code cycle. They did not have climate change impacts modeled in. They tend to range from the large to the extremely large. It was worth noting that in addition to the monetary benefits and the day-to-day co-benefits, the other monstrous co-benefit would be avoiding the worst impacts of climate change. Chair Veenker asked if there was any budget for emergency preparedness or any connection regarding the elderly getting AC with heat pump HVACs. She wanted to underscore quantifying the dollar health benefit. She stated it might be helpful if they could reference and cite it. She wanted to underscore baking the sensitivity analysis and efficiency assumptions being low in. SUMMARY MINUTES Page 5 of 8 Climate Action & Sustainability Committee Meeting Summary Minutes: 4/4/25 She hoped to agendizing a discussion of the impact and potential impact of DERs and BESS systems and how that would fit into the City's S/CAP work plan and goals. She noted Stanford’s 10-year celebration of their SESI system. Brad Eggleston, Director of Public Works, indicated the only potential connection he was aware of was the City’s program for having cooling centers. It could have some impact but he did not know that having more people with AC would necessarily stop them from opening cooling centers. He did not believe quantifying the dollar health benefit was part of E3’s scope but they could discuss it further. Councilmember Lu was interested in knowing if the multifamily household costs would be similar to the single-family household expense savings from the perspective of a condo or townhome owner. A takeaway for him from slide eight with the bar charts with the width based on climate impact and the height based on cost was that multifamily HVAC and water heating was not far away from the equivalent single-family water heating or HVAC. He thought it was worth confirming those numbers and if those numbers hold true they should accelerate multifamily as well. Councilmember Burt talked about the economic value of a heat pump combination washer dryer. He encouraged they should be looking at that. He thought the costs of broader climate impacts should be put out separately. He was interested in the assumptions on the AC use and on gas and electric cost increases. He observed that since they held off on the utility cost increases over a five-year period, the reserves were depleted so they would have a few years of higher than inflationary increases in gas and electric. How that would factor into the model would be significant. He thought distributed storage and EV charging should be built in. He remarked even though they had not adopted a goal for scope 3 GHG reductions, they needed to be looking at how their actions affect that. Director Eggleston stated they could bring the assumptions on gas and electric cost increases back. Chair Veenker suggested they might fit a discussion of the scope 3 reductions in when they talk about the next S/CAP workplan. Director Eggleston indicated he would address the input, questions and suggestions and come back with clarifications and more information. He stated a lot of other topics were brought up that were not in the workplan that might be included in the 2026 to 2027 workplan discussion in the May meeting. Councilmember Burt noted it might be helpful for the community to understand where the depth of their plan and programs compares to other jurisdictions and where they lead at the forefront or where others were ahead of them. Standing Verbal Reports SUMMARY MINUTES Page 6 of 8 Climate Action & Sustainability Committee Meeting Summary Minutes: 4/4/25 A. Staff Comments Director Eggleston announced details of the Earth Day Festival Sunday, April 27 from 1 to 4 PM at the Palo Alto Arts Center. He noted a California Avenue Third Thursday Earth Week event on Thursday, April 17 from 6 to 9. The City would have some tabling there with Climate Action/Sustainability, Transportation and Urban Forestry staff. • Working Group Role Director Eggleston stated that with the Climate Committee following the Brown Act procedures, there were some changes to the role of the Working Group. For public awareness, the Working Group was a group of 10 community advisors invited to join the group by previous years’ ad hoc committees and they continued. It was a resource to discuss and vet S/CAP implementation plans and ideas. The main change with the Brown Act procedures in place was the group was advisory to Staff rather than to the Committee itself. It meant that while Working Group members were highly encouraged to attend and participate in the committee meetings, the participation would be the same as members of the general public. Staff would continue to schedule separate Working Group meetings as they did in the past and committee members could continue to attend those but only one at a time. Staff would also continue to share perspectives from the Working Group with the Committee at these meetings in the coordinating meetings between Staff and the ad hoc. Any changes to the Working Group’s composition would be managed by Staff. Chair Veenker asked some clarifying questions and Director Eggleston responded the meetings would be in-person with an opportunity for Working Group members to attend remotely. They were not public meetings. He confirmed Staff would invite or appoint community members to the Working Group and take input from Council members but filter it as they see fit to be in charge of the appointments. • Home Electrification Lawn Signs Meghan Horrigan-Taylor, Chief Communications Officer, indicated they took feedback from the Working Group meeting incorporating a number of different competing comments. Part of the opportunity at the meeting was to come up with two designs that tried to weave together different areas of focus. She noted as part of the rollout of the lawn signs, there would be a lot of different ways they would do that outreach. They were working through contacting all program participants and taking video or written testimonials to use in marketing materials. She showed a two-sided sign showcasing their heat pump water heater branding and marketing. She showed a second two-sided sign focused around home electrification. Councilmember Burt asked if there was any competition for naming the guy on the sign. Officer Horrigan-Taylor replied there was not yet. Councilmember Lu inquired how many signs would be made. SUMMARY MINUTES Page 7 of 8 Climate Action & Sustainability Committee Meeting Summary Minutes: 4/4/25 Officer Horrigan-Taylor answered they would do 25 of each sign to allow them the opportunity to test out the signs for feedback and be able to evolve them. Councilmember Lu thought they could make more than 25. Councilmember Burt suggested considering making 100 of each sign out of the gate. Chair Veenker agreed with that. Officer Horrigan-Taylor indicated they were fairly expensive so they wanted to manage that. B. Committee Member Comments and Announcements Chair Veenker reported the mayor forwarded her an email he had received from the earthday.org people who were lifting the City up as being a leader on climate action and sustainability programs. On April 14, she would be participating in a live stream roundtable with a handful of cities around the world. She mentioned going to the Stanford Energy Center's celebration of 10 years of its sustainable power. She stated all the Stanford hospitals and clinics used them setting a good precedent. She was curious to see if there were any partnerships they could explore there. Councilmember Burt stated that as a Brown Act committee, they had the full scope of the Sustainability and Climate Action Plan. On the environmental sustainability part of that, the Dark Skies and Bird Safe Glass Initiatives and the sustainable airport plan were not listed under S/CAP. He wanted to ensure they were thinking broadly enough on the sustainability issues that may have some relationship to the climate plan or may be independent environmental sustainability ones. Chair Veenker reported they were scheduled to debate the burn bill on Wednesday; however, Tuesday night President Trump appointed the bill’s sponsor to be the US attorney for the Central District of California so the assembly member resigned that night and the bill died so there was no debate or follow up report. She mentioned that this year could be somewhat challenging for climate action in the face of federal policy changes. On Wednesday at the Air District, there was an informational item that was an overview of how US EPA initiatives were faring under the new administration and how the Bay Area might be affected. It covered everything from motor vehicle waivers to reconsideration of the PM2.5 standard, to grant funding, to dismantling EPA's Environmental Justice Division. That presentation could be watched online. With respect to their own participation in the Northern California Power Agency and how they get electricity for this electrification, she participated in the executive committee meeting for the first time a week ago, which she thought would be helpful to the City because they could have input and a heads up on projects coming up, financials, litigation and legislation from that vantage point. She mentioned that the City was working on a significant solar power purchase agreement and a battery power purchase agreement for later this year. Last week, the Commission approved a smaller solar PPA, but that was not one the City was participating in but it should be coming up before the end of the year. SUMMARY MINUTES Page 8 of 8 Climate Action & Sustainability Committee Meeting Summary Minutes: 4/4/25 Councilmember Burt was interested in understanding where they were on the power purchase agreements going forward, which ones were replacing expired agreements which were looking at expanded electricity capacity and the cost implications of the costs of the new PPAs versus the average of their portfolio or the ones that were older that might be near replacement. Chair Veenker thought they could get that information from the Utilities department. She noted that with the director's departure and not having a new permanent director, a lot was being juggled and reassigned in the department. She reported that there was a preview of the 2026 budget for NCPA and it should be up for approval at the next NCPA Commission meeting on April 24. That budget would be about $506 million which was lower than the FY25 budget primarily due to lower anticipated net load cost. There was no anticipated increase in staffing of FTEs so the overall budget should be better than it had been. She could make an inquiry about the specific PPAs. Councilmember Burt said even if they did not have the more comprehensive analysis yet, he would be interested in just the new ones cost, why they were participating and what amount of storage there was compared to what they had in their previous PPAs that had storage. Future Meetings and Agendas May 2, 2025 at 1:30pm Adjournment: The meeting was adjourned at 3:20 P.M.