Loading...
HomeMy WebLinkAbout2025-05-02 Climate Action and Sustainability Committee Summary MinutesCLIMATE ACTION & SUSTAINABILITY COMMITTEE SUMMARY MINUTES Page 1 of 16 Regular Meeting May 2, 2025 The Climate Action and Sustainability Committee of the City of Palo Alto met on this date in the Community Meeting Room and by virtual teleconference at 1:30 PM. Present In-Person: Veenker (Chair), Burt, Lu Absent: None Public Comments 1. Hamilton H. spoke on behalf of Palo Alto Neighborhoods about Palo Alto Utility’s gas rates. The City proposed using $1.6 million in Cap-and-Trade funds to provide a 1-time $73 rebate for residential customers to mask 8 percent of a 34 percent Tier 1 gas rate increase this year. The City’s communication claimed a 13 percent gas rate increase but this combined Tier 1 and Tier 2 customers and subtracted the $73 rebate. Tier 2 residential customers are the least efficient but are proposed to receive a 10 percent distribution rate decrease, directly conflicting with the City’s climate action objectives. The proposed 54 percent rate reduction for some small businesses and master-metered landlords will remove any incentive for them to electrify. Other California cities have rejected cost of service studies that did not align with community values. Hamilton H. encouraged listeners to email Finance Committee Members Burt, Reckdahl, and Lythcott-Haims or send an email to City Council. Hamilton H. requested that the current gas cost of service study be remanded to the Utilities Advisory Commission for an equitable and climate-friendly revision for Fiscal Year 2027, use existing methodology to increase all gas rates by 5 percent, and retain the $1.6 million Cap-and-Trade funds for their intended purpose of supporting initiatives that permanently reduce carbon emissions. The Climate Committee will discuss this further on May 7 at 9 AM. 2. Eric Nordman is a Pedestrian and Bicycle Advisory Committee Member but provided his individual comments. Active transportation has many benefits and is an effective way to reduce emissions. The South Palo Bike/Ped Connectivity Existing Conditions Report issued in April of 2025 showed that 30 percent of all trips crossing Alma were less than 5 miles long., which Eric Nordman viewed as a potential for active transportation. E-bikes can make longer trips practical. With modern internal combustion cars, particulate pollution in cities is mostly from vehicle tires. Eric Nordman requested the Committee to ensure that active transportation is adequately funded to meet the S/CAP goal to SUMMARY MINUTES Page 2 of 16 Climate Action & Sustainability Committee Meeting Summary Minutes: 5/2/2025 increase the mode share for walking, biking, and transit from 19 percent to 40 percent of local work trips by 2030. STANDING VERBAL REPORTS A. Staff Comments Brad Eggleston, Director of Public Works, announced that applications are open now through June 6 for the Youth Climate Advisory Board (YCAB). YCAB is an advisory body of high school students dedicated to environmental sustainability and climate stewardship. YCAB members meet regularly with City staff, contribute to and provide feedback on Palo Alto’s climate initiatives and policies, and bring sustainability efforts to our local high schools. After the application and interview process, YCAB members are selected by a panel of City staff and Palo Alto School District staff. Interested students can access the application on the City’s website at paloalto.gov/sustainability. The City is starting an e-bike pilot program for City staff. Seven e-bikes have been ordered from Palo Alto Bicycles including maintenance packages. The e-bikes will be available at City Hall in the next couple weeks to provide an active transportation alternative for staff to visit nearby locations. If the pilot is successful, the City can consider expanding this program to other City facilities. A delegation from Heidelberg, our Sister City, will be coming next week and Councilmember Burt wondered if the e-bikes will be ready in time for them to utilize. Director Eggleston will verify the timing of the e-bikes. Vice Mayor Veenker commented that YCAB came to her office hours last Friday and noted the members take their roles very seriously and work very hard. Utilities Chief Operating Officer Alan Kurotori addressed a question that arose at the last S/CAP meeting in regard to procurement and new renewables projects coming forward. Due to technical difficulty, COO Kurotori was unable to display the graph, so he will send it to Director Eggleston. That graph demonstrated under various scenarios that Palo Alto is very long on solar. Some PPAs are rolling off in the future. New solar agreements coming forward will be at a lower rate because the overproduction of solar in California has caused the value of solar to decrease; however, other costs are increasing, especially transmission costs. More renewables projects will be added to the City’s portfolio. The statewide RPS requirement is 44 percent but will increase to 52 percent by 2027 and 60 percent by 2030. New contracts for solar and/or battery will go to the full Council for approval and will go through a comprehensive vetting process with the Northern California Power Agency. Vice Mayor Veenker asked if demand projections will be part of the planning process on increased solar when it comes to Council. COO Kurotori confirmed the report will include multiple scenarios. The 2023 Integrated Resource Plan had low, medium, and SUMMARY MINUTES Page 3 of 16 Climate Action & Sustainability Committee Meeting Summary Minutes: 5/2/2025 high projections of electric use, electrification, and potentially adding large commercial customers into our service territory, and what would be done to meet those projections. COO Kurotori will send a graph that showed battery storage projects and solar projects are being added to the system over the next several years. Councilmember Burt inquired if the evaluation of battery storage will include an analysis of the economic value we derive from batteries as well as the reliability and resilience value, depending on their location. COO Kurotori replied that battery storage will be based outside of Palo Alto. The financials of filling the battery with solar energy at a lower time and getting value for Resource Adequacy will be incorporated as part of the agreement going to City Council. COO Kurotori confirmed Vice Mayor Veenker’s understanding that these were shared projects with certain members of NCPA. COO Kurotori said, as an example, Palo Alto may take 20 percent of a 100 megawatt solar project and another NCPA partner will take the remainder. Some projects have higher value because the City can get Resource Adequacy based on the location and local RA but not all areas have that ability. B. Committee Member Comments and Announcements Vice Mayor Veenker mentioned that the Air District Board will discuss the annual budget at their meeting on Wednesday. Recommendations will be made to the Board on adopting positions on 6 or 7 bills in our State legislature that have been vetted by the Policy Committee. In mid-May, Vice Mayor Veenker, the Chair, and Executive Officer will go to Washington D.C. to raise awareness about clean air issues in the Bay Area. The House voted to block the waivers granted to California by the Biden Administration for stricter vehicle emission standards but there has not been action by the Senate yet. The House voted to preempt California law to phase out the sale of gas-powered vehicles by 2030. The Air District sponsored a panel on clean appliance rules at The Climate Center’s Climate Policy Summit in Sacramento; Vice Mayor Veenker introduced that panel and spoke about the work that has been done in Palo Alto. Regarding residential gas rates, Councilmember Burt stated that staff will be coming back to the Finance Committee to discuss the possibility of continuing to use our previous study while the updated study is reexamined. Vice Mayor Veenker remarked that a detailed report on the NCPA meeting will be given to the Council on Monday. Vice Mayor Veenker attended the Executive Committee meeting in Roseville. Multiple Utility Director positions are open within the NCPA family. COO Kurotori and Vice Mayor Veenker attended the NCPA’s Federal Policy Conference, which included policy updates and advocacy on Capitol Hill. Meetings were held with Senator Padilla, Senator Schiff’s office, Leader Jeffries’ office, Representative Khanna, Representative Carbajal from Lompoc, and staff from Representative Liccardo and Representative Simon’s offices. SUMMARY MINUTES Page 4 of 16 Climate Action & Sustainability Committee Meeting Summary Minutes: 5/2/2025 Director Eggleston noted that Council’s meeting on Monday May 12 will include a study session on a report published yesterday pertaining to policies on the use of Cap-and- Trade funds for implementing S/CAP, Utility rate competitiveness, and other potential uses. Agenda Items 1. Priorities for 2026-2027 Sustainability and Climate Action Plan (S/CAP) Climate Action Work Planning; CEQA Status – Not a Project Jonathan Abendschein, Assistant Director for Climate Action, stated there were about 50 items related to climate in the 2023-2025 S/CAP Work Plan, of which about 15 are ongoing and the remaining were completed or on track for 2025 completion except for 3 items. Successes in the last few years include starting the electric grid modernization project, the launch of the advanced heat pump water heater pilot and EV charging programs, City facility electrification assessment, housing and transportation planning studies, and the S/CAP funding study and related economic studies. Emissions in Palo Alto are down substantially. Many residents bike and walk to work or telecommute. Palo Altans are buying EVs at a high rate; although if federal attempts to roll back California vehicle regulations are successful, it could hinder future progress. Key areas of focus include expanding biking and walking as well as the need for multifamily, commuter, and visitor EV charger access. The public EV charging study will start in late 2025 or early 2026, which is one item that was not completed on the current work plan. Given the funding challenges, staff is looking at cost-efficient approaches. Building emissions are down. Studies have identified some opportunities to expand multifamily and nonresidential offerings in the next few years. An affordable housing electrification grant program was brought to the Committee this year. A larger-scale nonresidential program for rooftop HVAC will be brought to the Committee by the end of the year. The Air District’s zero NOx regulations prohibit the sale of gas water heaters in the Bay Area starting in January of 2027, so staff wants to work with others in the region to develop programs to help people comply. Financing and low-income incentives for building electrification will be further investigated. The advanced heat pump water heater pilot program used utility bill savings, new utility supply revenue, and other revenue sources. This approach will be refined and extended using the findings from the S/CAP funding study as well as making sure to evaluate any potential business or legal risks from using different revenue sources. Financial structures and programs to help with zero NOx compliance and electrification have to integrate risk mitigation and adjust as costs are driven higher by tariffs, the economic climate, or a lack of contractor or equipment availability as demands go up. Items for the next work planning period may include programs coming out of our Reliability and Resiliency Strategic Plan and potentially the consideration of pricing carbon either by purchasing biogas or other approaches that require more legal review. Analyses about local SUMMARY MINUTES Page 5 of 16 Climate Action & Sustainability Committee Meeting Summary Minutes: 5/2/2025 flexible energy resources will be provided with the next update to the UAC and to this Committee in August. Some work has been done in the last few years but there needs to be more of a focus in the next 2 years on planning for carbon neutrality. Some of the challenges with carbon neutrality are the limited commercial availability of technologies, limited local opportunities, and determining where the funding will come from. A working group meeting will be held in the next few weeks to obtain feedback on the 2026- 2027 priorities and focus areas. Staff will review the feedback from this Committee, the working group, and other stakeholders as well as the results from the studies to develop proposals for 2026-2027. Staff will develop a draft work plan and bring it to the Committee in the fall. Item 1 Public Comment: 1. David C. was not aware of Parks and Recreation being present at any S/CAP meetings. David C. suggested that S/CAP partner with Parks and Recreation to promote bike use at all City public events, such as Earth Day, the May Fete Chili Cook-Off, and the music series. E-bike test rides were almost 95 percent effective in getting people to purchase, so David C. recommended partnering with local bike shops on similar programs. David C. opined that a citywide TDM is important and the City can have a bulk purchasing agreement, especially because of the Housing Element, instead of requiring each building project to do a TDM. Mountain View is working on a citywide TDM. David C. felt the City should make a coordinated effort on bike parking because good bike parking encourages bike usage. For under-parked areas, David C. suggested converting 1 car parking space out front for bike parking. 2. Stephen R. noted that Palo Alto having its own electrical utility provided a huge advantage in sustainability and climate action. For example, solar installations over City parking lots and local battery storage can be used as an emergency backup independent of the transmission grid, and people would not need diesel generators to back up their power. Stephen R. suggested looking at virtual power plants, smart appliances, centrally controlled thermostats, and control of vehicle chargers, encouraging people to plug in during the day when there is excess solar energy or store it in a battery and release it during 6-9 PM. Stephen R. did not see any value in the City capturing carbon to attain carbon neutrality and instead thought the City should work on reducing carbon emissions. Carbon capture is necessary but there is not enough land or area to do these projects in Palo Alto. 3. Justine B., Executive Director of the Palo Alto Transportation Management Association (PATMA), clarified that the S/CAP mobility goal is 40 percent of local commute trips by transit or active mobility by 2030 but the slide did not mention transit. The PATMA assists workers making below $100,000/year. Justine B. has heard that workers like the all-electric Caltrain, VTA 522 rapid bus, SamTrans ECR, SamTrans 281, and Dumbarton SUMMARY MINUTES Page 6 of 16 Climate Action & Sustainability Committee Meeting Summary Minutes: 5/2/2025 Express. On-road transportation is 52 percent of Palo Alto’s greenhouse gases, so Justine B. believed the Transportation work plan should have a focus on shifting people to use transit. 4. Bret A. thought the City should establish pollution standards, regardless of the Air District’s upcoming zero NOx standard. Adopting these measures and facilitating people to conform to those standards will improve health, save people money, are cost effective, protect the climate, and are safer. The City needs to remove the barriers to adoption, with the primary barrier being financing or the upfront cost burden. There are options in the type and size of equipment as well as whether you conserve your energy, use technology, or improve your efficiency but we need something to get us off natural gas that is flexible and works for all income levels. Bret A. urged the City to cooperate with others in the region on a consistent program across our cities to provide zero- interest loans for anyone who wants to adopt these measures without a rigorous credit check and guaranteed by the Utility to eliminate the credit issue barrier for people as well as provide income-qualified subsidies. Vice Mayor Veenker asked staff if they wanted to address the public comment about transit not being mentioned on the slides in the Transportation section. Assistant Director Abendschein stated that increased transit use is in the S/CAP goals and key actions. The KPIs were focused on biking and walking but staff will look at how they are tracking transit use and how those are integrated with the S/CAP. The Office of Transportation has a lot of metrics for transit use. Christine Luong, Manager, Environmental Control Program, explained that the KPIs were around transit ridership, the proportion of residents within a quarter mile walkshed of frequent transit, the proportion of residents covered by on-demand transit services, and the number of businesses participating in TDM programs. Councilmember Burt asked if there was a mode shift metric. Manager Luong answered yes; the bundled goal is mode share for active transportation (walking and biking) and transit to move from 19 percent to 40 percent of local work trips by 2030. Assistant Director Abendschein pointed out the apparent error on the slides if the goal is walking, biking, and transit. Councilmember Burt suggested disaggregating the bundled goal and instead having concrete actions to meet specific goals. Vice Mayor Veenker commented on the uncertainty with regulation, legislation, and funding support related to climate from state and federal partners in this political environment. Vice Mayor Veenker advised staff to be optimistic and ambitious but build in flexibility and look more at the worst case scenario. Vice Mayor Veenker and Councilmember Lu were in Sacramento 2 weeks ago with the League of California Cities and met with members of the State Legislature, talking to them about funding various things such as housing and encouraging legislators to live up to the climate bond that state voters passed. Vice Mayor Veenker heard at a conference last Monday from people who do policy work on the Hill who recommended not mentioning clean energy, climate, or carbon; instead try to find ways of tying those goals to this SUMMARY MINUTES Page 7 of 16 Climate Action & Sustainability Committee Meeting Summary Minutes: 5/2/2025 Administration’s agenda and speak in terms of energy dominance, consumer cost, and affordability. The NCPA committed dollars last year to a hydrogen project in Lodi that is ready to go but for 1 more hydrolyzer; however, it is on the cut list. EV infrastructure is one of Palo Alto’s priorities but EV chargers were at the top of the federal cut list. Assistant Director Abendschein stated that the S/CAP funding study identified the need to have economic programs that people want to choose to participate in although the federal tax credit is the biggest contributor in that model. Councilmember Lu wanted to see a more explicit focus on 80 x ’30, with the framing focused on cost effectiveness and scalability. Noting the tons of greenhouse gas reductions per dollar will help focus some of the projects. Councilmember Lu advised having understandable and actionable goals and work items, focusing on the most impactful goals. Councilmember Lu suggested Work Item 4B (idea generation and additional research) should be built into another work item to make it more understandable and not being a separate item to track. Councilmember Lu wanted a significant focus on transportation. Councilmember Lu felt transportation was critical because of climate benefits, community livability, and economic opportunity. Councilmember Lu asked if staff had a centralized repository to track active TDMs and who is the main contact for each TDM. Manager Luong replied that the Office of Transportation is working on it but it is not as robust as it needed to be. Councilmember Lu wanted to see more effective TDMs with reporting and follow-ups. Either alongside TDM expansion or hopefully before expansion, Councilmember Lu felt it was important to at least have a Google Docs spreadsheet of all the TDMs and their updates year by year and who the contact is. Within Buildings, Councilmember Lu suggested staff put a clearer focus and more emphasis on commercial building curbside EV charging, which residents and businesses have an interest in prioritizing. The City has several pilots and programs but Councilmember Lu thought if it was part of the top-level framing that it might help elicit more ideas and stronger reductions. Councilmember Lu emphasized that many of these programs are amazing and the community appreciates them, so we want to continue investment on them. Councilmember Burt asked when the various strategic plans for funding, marketing, reliability and resiliency, and EV, as well as reliability and resiliency sub-strategies were due for their final reviews and adoption. Assistant Director Abendschein stated that staff is working on finalizing the reports, the insights were used to develop the work plans, and the modeling is done although there are some additional scenarios they would like to model. Staff does not have a date for bringing those studies forward but Assistant Director Abendschein thought the final reports will be brought in the fall and the insights from those reports will be brought at appropriate times, such as next month when addressing the e-mobility strategic plan. Councilmember Burt inquired if the e-mobility strategic plan included micromobility and electrification of transit. Assistant Director Abendschein answered yes to micromobility being part of the e-mobility strategic plan. Electrification of transit was not specifically in the work SUMMARY MINUTES Page 8 of 16 Climate Action & Sustainability Committee Meeting Summary Minutes: 5/2/2025 plan but medium and heavy-duty vehicle charging was part of the charging needs assessment. Councilmember Burt mentioned that the VTA Ad Hoc on the University Avenue Train Station had a long-term plan that included a charging center for buses, so he encouraged staff to identify the City’s role in not only getting more people to ride transit but also to decarbonize transit use, even if the City’s role is only to help leverage the roles that others are doing. Councilmember Burt noted that the Council had not seen the Bike and Pedestrian Transportation Plan draft but he did not see micromobility addressed in the presentation at the public meeting. Councilmember Burt spoke of the City’s concern on managing e-mobility, having the appropriate infrastructure, and the danger of e-bikes being electric motorcycles. Assistant Director Abendschein said the June meeting will explain how the e-mobility plan contributes to several other plans related to EVs and bike and pedestrian transportation more broadly. Staff has analysis on the economics of e-bikes that will be brought in the final EV charger needs assessment report. There are studies being done to implement the Reliability and Resiliency Strategic Plan adopted last April. Within Strategies 4 and 5, there are analyses of flexible energy resources, solar and storage, vehicle to grid, microgrids, and efficient electrification measures that look at the impacts on supply and distribution as well as short- term and long-term resiliency; those topics will be addressed in staff’s next update to the Commission and the UAC in August. The Transportation team is an integral part of the interdepartmental climate action team. Staff has regular coordinating meetings on the e- mobility strategic Plan. The Transportation team acts as a liaison to their consultants. Councilmember Burt wondered how bike parking can be put on private space, and if the City was promoting its program to businesses so they can request bike parking on public space. Councilmember Burt was interested in having a discussion on a program to help fund or provide bike racks on private spaces. Councilmember Burt was concerned there were policy decisions to fade away from the Palo Alto CLEAN and net metering programs. Councilmember Burt wanted the Committee and Council to have a policy discussion on how much we value local generation and storage for its long-term reliability, meaning the City can make an economic decision to not only pay the avoided cost but maybe pay a premium for its value, and provide an opportunity for public input. Assistant Director Abendschein pointed out that is one of the policy questions in the Reliability and Resiliency Strategic Plan studies, so that discussion will come to the UAC and this Committee in August. Councilmember Burt was surprised by the slide that stated building emissions were down 25 percent since 1990. Brad Eggleston, Director of Public Works, said it has been tracked in the annual greenhouse gas inventory and reflected carbon-neutral electricity since that time. Even though the city has expanded, gas use has declined since 1990 due in part to increased gas efficiency and electrification. Councilmember Burt noted some of it may be the transformation away from industrial uses in our city. SUMMARY MINUTES Page 9 of 16 Climate Action & Sustainability Committee Meeting Summary Minutes: 5/2/2025 Councilmember Burt asked if an analysis had been performed of what permissible legal mandates the City or the Air District may do on commercial appliances such as HVAC systems. Assistant Director Abendschein replied that the Air District zero NOx regulations say that in 2029 no NOx-generating heating appliances can be sold, including commercial; and zero NOx commercial water heating is in 2031. The principle behind the Ninth Circuit Court decision on Berkeley’s gas ban was that federal law preempts designating a specific fuel. Vice Mayor Veenker felt it was important to enable bike parking. Vice Mayor Veenker wanted to hear more about the status of 2.4B Electrified Fleet. Director Eggleston stated that fleet electrification is an ongoing effort. For the last 2 years, the annual adopted budget for the vehicle replacement plan was to electrify everything that was feasible with the exception of police pursuit vehicles and maybe ambulances but not all those vehicles have been purchased because it takes multiple years to add vehicles to the fleet. The prices of medium and heavy- duty vehicles in some instances are up to triple the internal combustion engine vehicles but the annual budgets have not increased. A couple years ago, the budget was increase for one year but there has not been a solution and funding source to have an increased budget on an ongoing basis. It is not sustainable to maintain the same funding levels with an all-electric program with the City’s fleet age, efficiency, and upkeep. A fire engine is in the current year’s plan but the price to purchase a Pierce Volterra Engine was about $300,000 higher than pricing from 2 years ago, so staff will reevaluate the plan. Vice Mayor Veenker offered to talk to Director Eggleston offline about the Air District’s grant programs for off-road, heavy-duty vehicles that are high emitters. Vice Mayor Veenker was interested in exploring local zero NOx rules so Palo Alto can move ahead if there is any delay in the Air District rules. The Air District is a cosponsor of SB 282, the Heat Pump Access Act, which is pending in the State Legislature and, if approved, would unify permitting and thus make it faster and more efficient. Vice Mayor Veenker wanted staff to explore the suggestion of zero-interest loans using our billing relationships. Vice Mayor Veenker wanted to see carbon reduction first and foremost to the extent possible, then capture, and then carbon neutrality. Councilmember Burt agreed carbon reduction was an important goal but he did not want to think about it sequentially. Councilmember Burt pointed out that Council adopted a carbon neutrality goal, so a plan needed to be developed on how to get to carbon neutrality. Carbon neutrality is the more internationally accepted goal rather than reduction, and a lot of it is through offsets. Opportunities for local capture are not great but some prospective ones have been identified. Councilmember Burt believed that Scope 3 and consumption-related carbon needed to be addressed to achieve true carbon neutrality, with the first step being to identify the problem. Councilmember Burt recalled that the State has mandated Scope 3 accounting for corporations doing over $1 billion of business in California. Councilmember Burt knew the low- carbon concrete proposal was adopted but he was not aware if anything has been done yet. George Hoyt, Chief Building Official, commented that the regulation was part of the green building code and it applied to CALGreen Tier 2 projects. Staff was looking at possibly lowering the criteria for compliance to include more buildings in the new code adoption. Councilmember SUMMARY MINUTES Page 10 of 16 Climate Action & Sustainability Committee Meeting Summary Minutes: 5/2/2025 Burt asked if there would be discussion on climate adaptation aspects in the S/CAP plan. Manager Luong replied that climate adaptation will be included in the discussion on the sustainability sections of the work plan in the fall. Councilmember Burt thought that a wildland wildfire prevention program update will be coming to the Council before the fall. The threat of mega fires is an issue of heightened concern in the community. Assistant City Manager Kiely Nose stated that the annual wildfire mitigation plan for the Utility is coming up this spring. Councilmember Burt wanted to make sure that the potential consequences of mega fires be looked at including public safety, public health, private economic, public economic, environmental, and ecosystem impacts as well as GHG generation. Assistant City Manager Nose said a wildfire audit was done recently from an emergency preparedness standpoint and included a much broader update on the City’s wildfire mitigation and response efforts. Policy and Services reviewed the wildfire audit in detail, and the audit will come to the full Council with some additional information. Councilmember Burt mentioned that he, Councilmember Reckdahl, and the Assistant Fire Chief attended a comprehensive all-day conference at Stanford on the economics of wildfires. Director Eggleston noted an item on Council’s priority objectives is scheduled for Monday, May 5. One of the objectives is to adopt the updated Foothills Fire Management Plan. The Community Wildfire Protection Plan is in the work plan and is coming in the second quarter, before the Council’s summer break. Councilmember Burt thought the bird-safe plan and dark skies should be recognized as part of the environmental sustainability plan. Director Eggleston agreed with Councilmember Burt and invited suggestions on including other items in the work plan for the coming 2 years when the sustainability objectives are addressed. Assistant Director Abendschein added that the sustainability work plan is coming in the fall. Vice Mayor Veenker clarified her earlier comment about focusing on carbon reduction first, she did not mean sequentially in time, she meant prioritization on our way to carbon neutrality. Vice Mayor Veenker mentioned that wildfires was a topic of conversation with members of Congress all week, such as trying to get federal laws to assist in Utilities’ practices with respect to vegetation management. There is a strict liability standard when there is a wildfire involving a Utility and there is no cap on damages. In the last week, they tried to advocate for changing that if there is an aggressive fire mitigation plan or other measures that Utilities could undertake because Utilities and Cities can go bankrupt if there is no cap. NO ACTION TAKEN 2. Review and Discussion of 2026-2028 Reach Code Policy Development Approach; CEQA Status - Not a Project Jonathan Abendschein, Assistant Director for Climate Action, noted that Integrated Design 360 consultants were working on the Reach Code effort and were online to answer questions. SUMMARY MINUTES Page 11 of 16 Climate Action & Sustainability Committee Meeting Summary Minutes: 5/2/2025 Timothy Scott, Resource Planner, explained that Reach Code requirements aim to increase water conservation, lower embodied carbon, reduce fossil fuel use in buildings, and facilitate electric vehicle adoption in Palo Alto by going above the State’s minimum code requirements. These goals are consistent with Palo Alto’s sustainability goals, including 80 x ’30, 2025 City Council priorities, and S/CAP key actions. Regulatory efforts may impact Reach Codes, such as AB 306 could limit the City’s ability to implement residential Reach Codes and the Ninth Circuit decision around providing multiple fuel options for customers. The City’s Reach Codes need to align with outside efforts including the upcoming Air District mandates and voluntary electrification efforts. The City’s Reach Codes are focused on energy codes and green building codes. To avoid lapses in coverage, Reach Codes need to be adopted before the beginning of the next code cycle starting on January 1, 2026. Because of expected delays in the completion of the statewide cost effectiveness studies, staff anticipated the multifamily and nonresidential energy Reach Codes would become effective July 1, 2026. Staff’s proposal is to adopt the green building and single- family energy Reach Codes to go in effect on January 1, 2026. Green building code local amendments: Tier 1 and Tier 2 requirements are optional State amendments. Tier 1 applies to remodel or renovation projects. Tier 2 applies to new construction. Some jurisdictions use LEED certification guidelines in their green building codes. Staff proposed to continue adopting the Tier 1 and Tier 2 requirements as well as continuing with the additional green building codes focused on water conservation, material conservation, environmental quality, and EV infrastructure. For the upcoming code cycle, staff is considering adopting LEED certification as an alternative pathway for compliance and lowering the square footage threshold for embodied carbon requirements. Energy code local amendments: For existing buildings, the two pathways are time of replacement and time of renovation. For new construction and substantial remodel projects, staff is considering an energy performance approach similar to the One Margin codes adopted last year based on an hourly source energy standard. For new construction, staff will use updated numbers based on the latest cost-effectiveness studies. Staff will look into the standards for time of renovation to avoid confusion between substantial remodel. To comply, customers could choose from a menu of cost-effective energy efficiency upgrades. That would complement the electric readiness code which requires installing the necessary wiring, outlets, and electrical capacity to support potential future electric appliances. Based on the new regional and statewide cost effectiveness studies, staff is considering a time of replacement standard for air conditioners and gas water heater replacement projects. These standards would require either heat pump electrification at the time of replacement or complying with the appropriate energy efficiency upgrades. The challenge with implementing these mandates is that people replace equipment without permits. Staff hoped to coordinate with regional efforts across local jurisdictions and the Air District mandates to help make regulation and compliance easier and more consistent. SUMMARY MINUTES Page 12 of 16 Climate Action & Sustainability Committee Meeting Summary Minutes: 5/2/2025 Staff will finalize the proposal in June. Outreach to contractors, advocates, and the public will take place throughout the summer. The proposal will come to the Climate Action and Sustainability Committee in August for recommendation, followed by code adoption in October with an effective date of January 1, 2026. For the multifamily and nonresidential energy codes, staff anticipated finalizing the proposal between November and January, outreach in February and March, and code adoption in April with an effective date of July 1, 2026. Item 2 Public Comment: 1. Dashiell Leeds, Conservation Coordinator for the Sierra Club Loma Prieta Chapter, expressed their support for Palo Alto pursuing a strong Reach Code to achieve its climate goals. Dashiell Leeds requested the Committee to encourage staff to continue working on AC to heat pump policies, which was in line with S/CAP Action E1 to reduce greenhouse gases in single-family appliances and equipment, E2 to reduce greenhouse gases in nonresidential equipment and appliances, and E7 to use codes and ordinances to facilitate electrification in existing buildings and new construction. Dashiell Leeds believed AC to heat pump policies can save residents money while reducing energy consumption and decarbonizing existing buildings. The best time for households to switch to a heat pump is when replacing their air conditioner, which can be done without requiring electrical upgrades and have the added benefit of providing heating and cooling, which can negate the necessity to replace a gas furnace, thus residents will be well positioned for the implementation of the Bay Area Air Quality Management District Appliance Rules phasing out the sale of gas appliances including furnaces and water heaters. 2. Stephen R. hoped the City has a lobbyist and is working with other lobbying organizations to make sure AB 306 is defeated in the State Senate. Stephen R. wanted the City to think about supporting AB 368, the Passive House Initiative, which adds high- efficiency, well-insulated, all-electric homes in parallel with the existing building code so people can choose to build to that standard rather than the existing building code. Stephen R. agreed that wildfire is an extremely important issue. Stephen R. thought one mitigation is for new construction to use reinforced concrete rather than wood frame construction, although it may be more expensive initially, it will be fire resistant and improve the insurability of housing especially in the foothill areas that are at significant risk from mega fires. Vice Mayor Veenker reported that the City sent an oppose letter to the State Legislature on AB 306. In the wake of the LA fires, Speaker Rivas brought forward a package of bills in the State Legislature meant to speed housing rebuilds by not changing building codes in the next cycle, including Reach Codes. AB 306 had an urgency clause and passed through the State Assembly with a 71-0 vote. AB 306 is in the Senate and has been double referred to the Housing and Local Government Committees. Vice Mayor Veenker asked, if new Reach Codes are not adopted, do the current Reach Codes expire, are still effective, or had to be readopted. George Hoyt, Chief Building Official, replied the State will adopt new California Building Standards on January 1, SUMMARY MINUTES Page 13 of 16 Climate Action & Sustainability Committee Meeting Summary Minutes: 5/2/2025 2026, which at this point it is unknown what those standards will be. The City’s Reach Code will sunset on December 31, 2025, then we will go back to the State code level. Reach Codes have to be reevaluated and readopted for each 3-year code adoption cycle. In reply to Councilmember Burt inquiring if the City could adopt new Reach Codes or extend them before January 1, Chief Building Official Hoyt did not believe so but staff can verify with the State and have the City’s legal team investigate further. You can amend the current code cycle but it will expire on December 31, 2025, and has to be readopted. Councilmember Burt asked if the City was constrained from adopting construction codes in wildfire areas. Chief Building Official Hoyt answered there is a carve-out in the bill for high-hazard fire zones. Assistant Director Abendschein pointed out that whatever the City adopts is reviewed by the State before they take effect. Assistant Director Abendschein emphasized this is residential specifically; commercial will not be affected. Councilmember Burt requested staff to send him the detailed current requirements and thresholds on low-carbon concrete. Chief Building Official Hoyt noted the low-carbon content provisions are located in Palo Alto Municipal Code 16.14.080 and 16.14.240. Chief Building Official Hoyt corrected his previous statement; he should have said the low-carbon content requirements apply to single-family, multifamily, and nonresidential new buildings if they are triggered by Tier 1 or Tier 2 requirements. Assistant Director Abendschein offered to have staff take this as a follow-up and their consultant can write a summary for staff to send. Councilmember Lu liked the idea mentioned in public comment of a passive house certification and thought it was a reasonable option if it was equally beneficial. Councilmember Lu asked if the City had green building codes on cool roofs and other efforts to reduce the heat island effect, and if any modifications have been considered. Chief Building Official Hoyt answered yes; and the energy code also has strict provisions for our climate zone. Councilmember Lu wondered if the City could adopt any fire risk reduction codes from neighboring Cities and Counties. Chief Building Official Hoyt stated that staff can follow up with Councilmember Lu because the fire prevention team was not present to answer that question. Councilmember Lu inquired if staff had case studies or examples of time of replacement being applied anywhere in the world, because other Cities may have exceptions or extenuating circumstances that could make people more comfortable with the program. Assistant Director Abendschein acknowledged it is complicated with the Ninth Circuit Court decision. Time of replacement is a new opportunity that has come up from a statewide working group and a regional working group. To be cautious, it was staff’s recommendation to align time of replacement standards with regional mandates or only move forward if several building divisions in the area work with us on it. Councilmember Lu noticed there had not been a discussion of applying time of remodel and replacement standards to condos and townhomes. Assistant Director Abendschein did not think it was restricted to single family but invited the consultant to respond. Leila Silver, Associate Principal of Sustainable Buildings & Communities with Integrated Design 360, SUMMARY MINUTES Page 14 of 16 Climate Action & Sustainability Committee Meeting Summary Minutes: 5/2/2025 explained that time of remodel, replacement, and renovation was targeted at single-family homes, primarily because they are supported by cost effectiveness studies. If the City wanted to look at multifamily, ID360 can have it explored by their statewide team and consultants working on the studies. Some jurisdictions have adopted multifamily under the 2022 code cycle. Assistant Director Abendschein pointed out that multifamily is part of the cost effectiveness study coming later in the year, so that topic will be considered in the second phase of the cycle when staff comes back to the Committee early next year. Assistant Director Abendschein said a staff member told him they looked at the text of the bill and there is a provision that says you could extend energy or green building code standards if they are substantially equivalent to what was already on file, so staff will seek further understanding on this from the City’s Legal Department. Assistant Director Abendschein stated no Cities in California have implemented a time of replacement mandate yet. Vice Mayor Veenker asked what were the reasons, pros and cons of having a LEED certification alternative. Chief Building Official Hoyt explained that Palo Alto had a lot of nonresidential projects that move forward with the LEED certification process. Going through LEED and then green building requirements results in more cost on the development of the property. Staff could consider if LEED Platinum Certification was equal to the green building requirements. Mr. Scott, Resource Planner, stated that other jurisdictions use portions of or the full LEED certification process as their version of Palo Alto’s Tier 1 and Tier 2 requirements, so having a LEED certification alternative would result in more alignment across jurisdictions. Assistant Director Abendschein thought Palo Alto is an outlier because we were ahead of other Cities in using Tier 1 and Tier 2 standards about 10 years ago. Having better alignment would give options to builders and make it easier for them to build. Vice Mayor Veenker liked the idea of standardized permitting and certifications, and was interested in doing joint outreach to contractors. Vice Mayor Veenker looked forward to hearing staff’s opinion on the preference for LEED certifications versus Palo Alto’s standards. Chief Building Official Hoyt mentioned that staff had been looking at ways to make the permitting process easier and cost effective. The instant permitting process for heat pump water heaters has been successful over the last year. Staff is working on an instant permitting process for residential heat pump mechanical equipment installations. Regarding AB 306, Councilmember Burt wanted to explore how long the Reach Codes could be extended or if they could be extended indefinitely. Many people do not obtain a permit for appliances. Councilmember Burt mentioned that staff’s recommendation to the Finance Committee was to reduce the permitting cost for appliances to incentivize people to comply. To increase compliance with permitting, the Finance Committee was interested in increasing penalties, increasing communication that it is a violation to not obtain a permit, and/or triggered at point of sale. NO ACTION TAKEN SUMMARY MINUTES Page 15 of 16 Climate Action & Sustainability Committee Meeting Summary Minutes: 5/2/2025 3. Single-Family Electrification Program Update; CEQA Status – Not a Project Diane Bailey, Sustainability Programs Administrator, stated that over 300 all-electric homes were built. To date, almost 250 heat pump water heaters have been installed through the rebate program. Heat pump HVAC launched in January of 2026. About 20 heat pump HVACs are going through the rebate process and about 7 have been approved so far. The full-service concierge-based program was adopted in 2023 and has had over 420 installations of heat pump water heaters. Staff is working on a similar full-service program for heat pump HVAC. The emergency heat pump water heater replacement program had a soft launch in September of 2024 with 19 heat pump water heaters installed through the program to date. A graph was shown that depicted the running total heat pump water heater installations through the full- service program. About ⅕ of water heaters replaced in Palo Alto have switched from gas to electric heat pump, one of the highest rates in our region. The full-service program is providing a lot of information about the unique circumstances of homes in Palo Alto and the different plumbing considerations to help inform regulatory and policy actions. Ms. Bailey, Sustainability Programs Administrator, spoke of the challenge of moving from early adopters to residents who are more cost sensitive and less committed to switching from gas to heat pumps. There is uncertainty from tariffs as well as changes in federal policies and potential upward pressure on pricing. Analytics show that folks do not want to move forward when a heat pump water heater reaches the $3000 or $3500 price point. Discount campaigns with a deadline or limited time offer have been successful. A campaign was launched on Earth Day to give away a free heat pump water heater. Other tactics being worked on are lawn signs and overpass banners. An emergency water heater sticker will be mailed out as a postcard that you can stick onto your water heater to remind you who to call for emergency service and switch from gas to a heat pump if your water heater fails. Toolkits will be rolled out for community partners. In January of 2025 was Phase 1 of rebates with technical support and free consultations to help residents electrify their homes. Under consideration is how to financially scale programs for a full concierge service to help people through every step of home electrification including the permitting process, starting with free home assessments and electrification plans. Staff will take Phase 2 of the Whole Home Electrification Program to City Council later this month. If approved, Palo Alto will partner with neighboring jurisdictions to provide a regional approach to home electrification and look at creative financing to help make home electrification affordable for everyone to ease the transition of the new zero emission standards from the Air District. The zero emission standard for water heaters becomes effective January 1, 2027. Public Comment: None. Jonathan Abendschein, Assistant Director for Climate Action, stated a detailed review was not performed of the new construction permit data, so the 332 all-electric new construction does not include new construction permits that put in gas cooking but had electrified space heating or water heating. SUMMARY MINUTES Page 16 of 16 Climate Action & Sustainability Committee Meeting Summary Minutes: 5/2/2025 Councilmember Burt was interested in how many 120-volt heat pump water heaters were installed because of the lower cost and not having to pull a circuit or upgrade a panel; and he wanted to understand the use case, where they are adequate. Ms. Bailey, Sustainability Programs Administrator, stated the emergency water heater replacement program has been emphasizing the 120-volt plug-in models, which comprised about ⅓ of that program’s installations. The 120 volts have not been emphasized in the full-service program, maybe 5 or so have been installed. Ms. Bailey said staff could pull the details on the use case and send to Councilmember Burt as a follow-up. The 120 volt is best used for smaller homes, smaller families. Larger homes need the 80-gallon 120 volt because the recovery times are slow. Councilmember Burt has not heard the City promote heat pump washer/dryer combos, which he thought were a great breakthrough and provided space savings, energy savings, and water savings. Ms. Bailey, Sustainability Programs Administrator, said heat pump washer/dryer combos will be part of the full-service home electrification program. The current electrification expert consultation services heavily promote heat pump washer/dryer combos because of their power-efficient design. Councilmember Burt questioned what portions of appliances are imported versus domestic. Ms. Bailey, Sustainability Programs Administrator, answered most appliances have imported components, even if they are made here. Because of tariffs, a 10 percent cost increase is expected for heat pump water heaters. Vice Mayor Veenker requested an explanation of the Other Electrification column on Slide 2, Rebate Programs, disconnect gas meter 1 (4). Ms. Bailey, Sustainability Programs Administrator, stated one $2500 incentive was approved for gas meter removal, 4 customers have submitted applications and were approved but the gas meter has not been removed yet. Vice Mayor Veenker supported regional partnering. Vice Mayor Veenker said that folks on the Climate Center panel at SVCE were welcoming a partnership and there is a lot of interest in shared learnings. NO ACTION TAKEN Future Meetings and Agendas Brad Eggleston, Director of Public Works, announced the next Committee meeting is scheduled for June 6. Tentative topics include the e-mobility strategic plan and scoping of the gas transition study. Adjournment: The meeting was adjourned at 4:06 PM.