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HomeMy WebLinkAboutStaff Report 2608-6642CITY OF PALO ALTO Climate Action and Sustainability Committee Friday, September 04, 2026   Agenda Item     1.Preliminary Review of the 2025 Greenhouse Gas Inventory and Overview of Scope 3 Emissions; CEQA Status - Not a Project Climate Action and Sustainability Committee Staff Report Report Type: ACTION ITEMS Lead Department: Public Works Meeting Date: September 4, 2026 Report #:2608-6642 TITLE Preliminary Review of the 2025 Greenhouse Gas Inventory and Overview of Scope 3 Emissions; CEQA Status - Not a Project RECOMMENDATION This is a discussion item; no action or recommendation is requested. EXECUTIVE SUMMARY The City has made significant strides in implementing the Sustainability and Climate Action Plan (S/CAP) to meet its sustainability goals, including reducing greenhouse gas (GHG) emissions by 80% below 1990 levels and achieving carbon neutrality by 2030. Preliminary calculations show that by 2025, Palo Alto had reduced total citywide GHG emissions by 49.1% from the 1990 baseline, despite a 20.5% population increase during the same period. This is a slight emissions increase from 2024, when GHG emissions reductions were 50.2%. For municipal operations, preliminary calculations show that in 2025 the City emitted a total of 15,023 MT CO2e, a roughly 62.9% reduction from the 2005 baseline, although an equivalent comparison cannot be made due to significant changes in methodology. BACKGROUND In June 2023, City Council adopted the 2022 Sustainability and Climate Action Plan (S/CAP),1 certified the Comprehensive Plan Environmental Impact Report Addendum: Update to the Sustainability and Climate Action Plan,2 and accepted the 2023-2025 S/CAP Work Plan.3 The 1 2022 Sustainability and Climate Action Plan; https://www.cityofpaloalto.org/files/assets/public/v/1/sustainability/reports/2022-scap-report_final.pdf 2 Comprehensive Plan Environmental Impact Report Addendum: Update to the Sustainability and Climate Action Plan, 2023; https://www.cityofpaloalto.org/files/assets/public/v/1/agendas-minutes-reports/agendas- minutes/city-council-agendas-minutes/2023/2023comprehensive-plan-environmental-impact-report-addendum- update-to-the-scap.pdf 3 2023-2025 S/CAP Workplan, 2023; https://www.cityofpaloalto.org/files/assets/public/v/1/sustainability/reports/2023-2025-scap-work-plan_final.pdf S/CAP aligns with several goals of the 2030 Comprehensive Plan Implementation Plan, as well as the City Council Value of “Climate Leadership and Environmental Stewardship”.4 The 2025 Greenhouse Gas (GHG) Inventory calculates Palo Alto Citywide and Municipal GHG emissions for calendar year 2025. Preliminary calculations show that, due to various City-led initiatives, programs, and activities focused on sustainability and climate action, by the end of 2025 Palo Alto had reduced total citywide emissions by 49.1% from the 1990 baseline, despite a 20.5% population increase during the same period. Due to changes in methodology, it is not possible to make an equivalent comparison of the 2025 Municipal GHG Inventory with previous inventories. However, by the end of 2025, the City reduced total municipal GHG emissions by roughly 62.9% from the 2005 baseline. A full GHG Inventory analysis will be provided at a City Council meeting later this fall. ANALYSIS The City is committed to a sustainable future. The City owns, operates, and maintains a full- service utilities portfolio that provides electric, natural gas, fiber, water, refuse, and wastewater services to residents and businesses in Palo Alto. Palo Alto’s continued leadership in advancing sustainability commitments has succeeded mainly because of ongoing collaboration among community stakeholders, City departments, and the City Council. One way the City tracks its progress on achieving the goals of the Sustainability and Climate Action Plan (S/CAP) is through a comprehensive accounting of greenhouse gas (GHG) emissions in a GHG Inventory. GHG inventories calculate, quantify, and assess community-associated emissions and their sources. Generation-Based Greenhouse Gas Inventory There are two types of GHG emissions inventories: 1. Generation-based GHG inventory – This measurement method helps a community understand its level of emissions based on community energy use. It includes 1) direct consumption of energy, 2) consumption of energy via the electrical grid, and 3) emissions from the treatment/decomposition of waste. This is the industry-accepted methodology for quantifying community GHG emissions, with emissions reported by emission source category.5 2. Consumption-based GHG inventory – This measurement method helps a community understand its level of emissions based on consumption. It offers an alternative, more holistic approach to quantifying emissions from a community’s activities and the 4 2030 Comprehensive Plan; https://www.cityofpaloalto.org/Departments/Planning-Development- Services/Housing-Policies-Projects/2030-Comprehensive-Plan 5 There are two reporting frameworks commonly used by cities: the U.S. Community Protocol and the Global Protocol for Communities (GPC). Palo Alto uses the GPC framework. consumption of goods and services (including food, clothing, electronic equipment, etc.) by city residents, with emissions reported by consumption category. It includes emissions associated with production, transportation, and disposal of products and services consumed by a community over a given period. Like most cities, Palo Alto completes a generation-based GHG inventory. In 2014, the World Resources Institute, C40 Cities Climate Leadership Group (C40), and ICLEI – Local Governments for Sustainability (ICLEI) partnered to create a global standard protocol for generation-based GHG inventories.6 The Global Protocol for Community-Scale GHG Emissions Inventories (GPC) provides a robust framework for accounting and reporting city-wide GHG emissions for a generation-based inventory. The GPC Protocol is the official protocol specified by the Global Covenant of Mayors and defines what emissions must be reported and how. For generation-based GHG inventories, GHG emissions from community activities are classified into three main sectors: • Stationary Energy (e.g., building electricity consumption, fugitive natural gas emissions) • Transportation (e.g., on-road passenger vehicles, off-road equipment) • Waste (e.g., solid waste disposal, wastewater treatment and discharge) Activities within a city can generate GHG emissions both inside and outside the city boundary. The GPC groups emissions into three categories based on where they occur: • Scope 1: GHG emissions from sources located within the city boundary, such as stationary fuel consumption. • Scope 2: GHG emissions occurring due to the use of grid-supplied electricity, heat, steam, and/or cooling within the city boundary. • Scope 3: All other GHG emissions that occur outside the city boundary because of activities taking place within the city boundary. Figure 1. shows the sources and boundaries of GHG emissions for a generation-based inventory. 6 Formerly the International Council for Local Environmental Initiatives, renamed in 2003 to ICLEI – Local Governments for Sustainability. Figure 1. Sources and Boundaries of GHG emissions for a Generation Based Inventory. Palo Alto’s first generation-based citywide inventory was completed for 2005 and then extrapolated for 1990 (the baseline year). Beginning in 2010, new citywide GHG inventories were completed annually, enabling Palo Alto to track progress over time. Palo Alto’s 2025 Citywide Greenhouse Gas Emissions Inventory The 2025 Palo Alto Citywide GHG inventory follows the calculation and reporting standards outlined in the GPC BASIC reporting level.7 This inventory follows the city-inducted framework in the GPC protocol, which totals GHG emissions attributable to activities taking place within the geographic boundary of the city.8 Preliminary calculations show that in 2025, Palo Alto emitted an estimated 406,607 metric tons (MT) of carbon dioxide equivalent (CO2e) from the residential, commercial, industrial, transportation, waste, water, and municipal sectors. Compared with the 1990 base-year emissions, these emissions represent a 49.1% decrease in total community emissions, despite a 20.5% population increase during the same period. Emissions in 2025 equated to 6.0 MT CO2e per capita. The California Air Resource Board’s 2017 Scoping Plan Update recommends a goal for local governments of 6 MT CO2e per capita by 7 GPC Executive Summary; https://ghgprotocol.org/sites/default/files/2022-12/GPC_Executive_Summary_1.pdf 8 GPC Protocol; https://ghgprotocol.org/sites/default/files/standards/GHGP_GPC_0.pdf 2030 and 2 MT CO2e per capita by 2050.9 To achieve an 80% reduction in GHG emissions, Citywide GHG Emissions need to be 160,000 MT CO2e. Of the GHG emissions reductions to date, 47.4% came from providing carbon-free electricity for the City’s electricity portfolio, 22.3% from declines in transportation emissions, 16.3% from reductions in natural gas (methane) consumption, 11.9% from declines in solid waste emissions, and 1.9% from declines in wastewater-related emissions. In 2025, 64.3% of citywide GHG emissions were from Transportation and Mobile Sources, 31.9% from Natural Gas (Methane) Use, and the remainder from other sources. As shown in Figure 2, the two largest categories of emissions are Transportation and Mobile Sources (including On- Road Transportation, Airport Emissions, Off-Road Vehicles and Equipment, and Caltrain Commuter Rail) and Natural Gas (Methane) Use (including Residential, Commercial, and Industrial). Figure 2: 2025 Palo Alto Citywide Greenhouse Gas Emissions by Sector The majority of GHG emissions, 64.3% (261,430 MT CO2e), are attributed to Transportation and Mobile Sources. The main driver of these emissions is fuel combustion from internal combustion engine (ICE) vehicles, specifically passenger vehicles (72% of all transportation emissions), commercial vehicles (17% of all transportation emissions), and buses (2% of all transportation emissions). Since electricity in the City is carbon-neutral, there are no GHG emissions attributed to passenger, commercial, or bus electric vehicles (EVs). Off-road vehicles and equipment account for 8% of all Transportation and Mobile Sources GHG emissions, while Aviation Fuel accounts for 1%. Additionally, since Caltrain fully electrified the line serving Palo Alto in 2025 and now powers it with 100% renewable electricity, there are no GHG emissions associated with commuter rail. 9 California Air Resources Board 2022 Scoping Plan Appendix D Local Actions, November 2022; https://ww2.arb.ca.gov/sites/default/files/2022-11/2022-sp-appendix-d-local-actions.pdf The second major contributor to GHG emissions is stationary combustion and the leakage of natural gas (methane). Together, these account for 33% (134,123 MT CO2e) of communitywide GHG emissions. About 43% of total Natural Gas (Methane) GHG emissions are attributed to residential natural gas combustion, 48% is attributed to commercial natural gas combustion, and 6% is attributed to industrial natural gas combustion. Natural gas leakage from distribution infrastructure occurs upstream of individual gas meters and is associated with community-wide gas use. Therefore, it is included in the inventory. Natural gas leakage accounts for 3% of total Natural Gas (Methane) GHG emissions. As shown in Figure 3, total GHG emissions steadily decreased between 1990 and 2021. However, emissions increased between 2021 and 2022 and slightly increased between 2022 and 2023. The main driver of the increase in 2022 was On-Road Transportation, in part due to the shift away from pandemic-level (reduced) driving frequency, returning to the office after working from home, and economic recovery. These effects likely persisted into 2023 as employers continued to adjust hybrid work policies and economic and travel activity shifted. Figure 3: Palo Alto Citywide Greenhouse Gas Emissions by Sector, 1990 and 2019-2025 GHG emissions from Transportation and Mobile Sources are estimated to have increased 2.5% between 2024 and 2025 but remain 25% lower than 1990 Transportation and Mobile Sources emissions. Within Transportation and Mobile Sources, On-Road Transportation (passenger vehicle, commercial vehicle, and bus emissions) increased 5.5%. A notable factor contributing to the increase in On-Road Transportation emissions is the update from the California Air Resources Board’s EMFAC2021 to EMFAC2025 emissions factors model. Between the two model versions, the Santa Clara County passenger vehicle emissions factor increased by about 8%, and the commercial vehicle emissions factor increased by over 1%. While emission factors typically decrease year over year as the vehicle fleet becomes cleaner and more fuel-efficient, this increase is attributable to a methodology update in EMFAC2025 that likely also incorporates more recent vehicle registration data from the Department of Motor Vehicles. This update reflects accuracy improvements rather than an actual increase in per-mile GHG emissions. Another factor to note is that vehicle miles traveled (VMT) data for 2025 are not available; however, VMT data will be available for 2026. City staff and external experts calculated a preliminary estimate of 2025 VMT by scaling 2023 per capita VMT (the most recent year VMT data is available) based on 2025 population for passenger vehicles and service population for commercial vehicles and buses. This estimate reflects demographic growth and may not capture actual VMT trends. Electric vehicle (EV) adoption continued to grow significantly in 2025 across all vehicle categories. Internal-internal passenger EV VMT share doubled from approximately 10% in 2024 to 20% in 2025 (vehicles that have an origin and destination within Palo Alto), and internal- external passenger EV VMT share nearly doubled from 7% to 15% (vehicles that have an origin or destination inside Palo Alto and a destination or origin outside of Palo Alto). Commercial EV VMT share also grew substantially, from less than 1% to approximately 2% for all trip types. Bus EV VMT share increased from 2% to 7%. Table 1 shows the number of residential electric vehicles registered in Palo Alto since 2018. Table 1: Palo Alto Residential Registered Electric Vehicles (EVs) Residential Registered Vehicles 2018 2019 2020 2021 2022 2023 2024 2025 Battery EVs (BEV) 2,762 3,253 3,550 4,142 5,062 6,475 7,929 11,599 Plug-in Hybrid EVs (PHEV) 1,038 1,194 1,301 1,357 1,434 1,544 1,744 1,844 Total BEVs and PHEVs 3,800 4,447 4,851 5,499 6,496 8,019 9,673 13,443 All Vehicles 57,340 55,911 50,004 50,192 49,963 50,000* 50,000* 52,170* Percentage EV share 6.7% 8% 9.7% 10.7% 13% 16% 19.3% 26.9% % of New Car Sales that are EV * Estimate, not actual numbers from the Department of Motor Vehicles A significant methodological change in the 2025 inventory is the 100% reduction of Caltrain commuter rail emissions. Caltrain completed full electrification of the line serving Palo Alto in 2025 and operates it on 100% renewable electricity, resulting in zero direct GHG emissions. Accordingly, commuter rail emissions, which were 6,331 MT CO2e in 2024 due to diesel combustion, are reported as zero in 2025. Off-road diesel emissions increased by 5%, while off- road gasoline decreased by 2%, and aviation fuel emissions increased by 4% compared to 2024. Natural Gas (Methane) combustion emissions increased by 2.2% in 2025 compared to 2024, driven by an 8.1% increase in commercial natural gas emissions. Residential natural gas GHG emissions decreased by 1.5% and industrial natural gas emissions decreased by 11.6% compared to 2024. These fluctuations reflect variability in natural gas consumption driven by weather conditions, energy efficiency improvements, occupant behavior, and community growth. Overall, Natural Gas (Methane) emissions were 31.9% below 1990 levels. Figure 4 shows historical trends in residential natural gas (methane) GHG emissions. Figure 4. Palo Alto Residential Natural Gas (Methane) Greenhouse Gas Emissions The City’s electrification programs have contributed to the decrease in residential natural gas (methane) emissions. Table 2 shows the progress in replacing gas water heaters and gas heating, ventilation, and air conditioning (HVAC) systems with electric heat pump water heaters and electric heat pump HVAC systems, as well as the number of all electric homes, through City programs. Table 2: Progress in Electrifying Gas Appliances & All Electric Homes through City Programs City Electrification Program 2019 2020 2021 2022 2023 2024 2025 installed) 3 25 24 27 206 276 213 installed) 2 99 Palo Alto’s 2025 Municipal Greenhouse Gas Emissions Inventory The 2025 Municipal GHG Inventory follows the calculation and reporting standards outlined in the International Council for Local Environmental Initiatives’ (ICLEI) Local Government Operation (LGO) Protocol,10 which aligns with the Global Protocol for Community-Scale GHG Emissions Inventories (GPC) local government operations protocol.11 Under the LGO Protocol, GHG emissions from the City’s municipal operations can also be classified into discrete subsectors related to five main sectors: • Buildings and other facilities: Electricity use, natural gas combustion, water-energy consumption • Streetlights and Traffic Signals: Electricity use • City vehicle and equipment fleet: On- and off-road mobile combustion and electricity use from electric vehicles (EVs) • Wastewater facilities (e.g., wastewater treatment and discharge): Indirect nitrous oxide emissions, process nitrous oxide emissions, electricity use, natural gas combustion • Indirect emissions: Employee commuting, landfilled solid waste generation Preliminary calculations show that in 2025, the City emitted a total of 15,023 MT CO2e from municipal operations, a 3% increase over 2024. GHG emissions from Palo Alto’s municipal operations are from five main sectors: Buildings and Other Facilities, Streetlights and Traffic Signals, Wastewater Facilities, City Vehicles and Equipment, and Indirect Emissions. Since the methodology has changed significantly for certain sectors since the first Municipal GHG Inventory was conducted in 2005, it is no longer possible to do an equivalent comparison with previous Municipal GHG inventories. However, the methodologies for Buildings and Other 10 LGO Protocol Rulebook. Available at: https://icleiusa.org/resources/local-government-operations-lgo-protocol/ 11 GPC Inventories for local government operations. Appendix B. Available at: https://ghgprotocol.org/sites/default/files/standards/GPC_Full_MASTER_RW_v7.pdf Facilities, Streetlights and Traffic Signals, and City Vehicles and Equipment are sufficiently similar to allow rough comparisons across these sectors. By the end of 2025, the City reduced total municipal GHG emissions by roughly 62.9% from the 2005 baseline. The Municipal Greenhouse Gas Emissions Inventory is still being finalized, so further analysis will be provided at a City Council Meeting later this fall. Preliminary results indicate that the largest contributor to municipal GHG emissions, about 38.9%, is the Regional Water Quality Control Plant (RWQCP). Since the RWQCP is owned and operated by the City, 100% of the GHG emissions are attributed to the City. RWQCP emissions increased by 9% compared to 2024 due to higher effluent discharge fugitive emissions, but are 48.2% below 2005 levels. As the City works to bring online renovated aeration basins through the Secondary Treatment Upgrades project, the Plant’s ammonia (and therefore total inorganic nitrogen) is fluctuating more than normal and the Plant saw some decreased removal (more ammonia in the discharge) when comparing 2024 to 2025. This is expected as the City starts to bring online a new secondary treatment system that focuses on full nitrogen removal and not just conversion of ammonia to nitrate. Elevated ammonia concentrations in the discharge are expected to continue until all four aeration basins are renovated and the system stabilizes. Once the system is fully optimized, N₂O emissions should decrease significantly. Based on the current schedule, startup is anticipated in 2027, material improvement is expected in 2028, and the full benefit should be realized around 2030. The second major contributor to GHG emissions is attributed to the Indirect Emissions Sources sector, or the City’s Scope 3 sources. These indirect sources account for about 32.5% of total municipal GHG emissions and include employee commutes and methane from landfilled solid waste. Indirect Emissions Sources increased by 2.4% in 2024, driven by higher employee commute emissions. The largest reduction in municipal GHG emissions is in Buildings and Other Facilities, which decreased 6.2% from 2024 and 72.3% from 2005, due to reductions in Natural Gas (Methane) Combustion. Since electricity in the City is carbon-neutral, there are no GHG emissions from electricity consumption in City-owned buildings and facilities, streetlight and traffic signals, EVs, or City water-energy consumption. The City continues to make progress in replacing internal combustion engine passenger vehicle and light duty truck fleet vehicles with electric vehicles whenever they are due for retirement, provided a suitable EV model is available in the marketplace. Table 3 shows the number of electric vehicles in the City fleet. Table 3: Electric Vehicles in City of Palo Alto Fleet Palo Alto Fleet Electric Vehicles (EVs) (# of vehicles) Number of New EVs Purchased 2 2 19 7 6 Total Active EVs in Fleet 4 6 17 33 41 EV% of Passenger Vehicles and Light Duty Trucks 2.5% 4% 11% 22% 27% Consumption-Based Greenhouse Gas Inventory As previously discussed, there are two types of GHG inventories – generation-based and consumption-based. A generation-based emissions inventory is generally best suited to track GHGs and to inform policies related to energy use in buildings and transportation, as well as emissions from in-city waste sources. A consumption-based emissions inventory is more useful for understanding where embedded emissions generated outside city boundaries constitute a significant portion of the carbon footprint of household and government consumption. These embedded GHG sources include all emissions associated with the production, transportation, distribution, and disposal of the goods and services consumed. A consumption-based emissions inventory can lead to insights about where local consumption gives rise to emissions outside a city’s borders and suggests additional opportunities for reducing emissions. Unlike generation-based emissions inventories, there is no standard protocol for calculating a consumption-based emissions inventory. The California Air Resources Board (CARB) was tasked with developing an implementation framework and accounting to track consumption-based emissions over time, but progress updates are not currently available.12 In particular, this framework needs to address how to account for the embodied emissions in the food, goods, and services the community purchases that are not covered by generation-based GHG inventories. At the most basic level, the calculation of a consumption-based emissions inventory entails two main inputs: a measure of what is consumed, multiplied by a measure of the GHG emissions associated with each unit of consumption.13 For example, if a community consumes one million tons of cement each year, and producing and transporting each ton of cement releases 1 ton of CO2, the community’s consumption-based emissions inventory would include 1 million tons of 12 Executive Department State of California. (2019). Executive Order B-55-18 to Achieve Carbon Neutrality. https://www.ca.gov/archive/gov39/wp-content/uploads/2018/09/9.10.18-Executive-Order.pdf. 13 Stockholm Environment Institute Consumption Based Emissions Inventory Guidebook. https://sustainableconsumption.usdn.org/climate/cbei-guidebook/overview CO2 associated with cement consumption, regardless of whether that cement was produced inside or outside the community’s jurisdictional boundaries. A full consumption-based emissions inventory would, in principle, do something similar for all the products and services consumed in a city. However, this can prove challenging in practice because calculating consumption-related emissions precisely is highly complex. Communities consume thousands of different products and services, and the emissions associated with each are affected by many decisions made by different actors throughout their life cycles. It takes substantial effort to understand the emissions associated with every consumption decision in order to create an accurate consumption-based emissions inventory. Any precise estimate is likely to become obsolete quickly as production processes and supply chains change over time (sometimes month-to-month or week-to-week).14 Consumption-based emissions inventories can provide useful insights, but they can also paint an incomplete picture of urban emissions patterns. Most consumption-based emissions inventories lump consumption into categories, which can mask the fact that some goods are more emissions-intensive than others. For example, meat production has a larger emissions footprint than other foods. Such categorization also treats all residents’ consumption as equal, whereas in reality, consumption levels tend to vary widely within cities. For example, research shows that high-income households typically have a larger consumption footprint than lower- income households. In addition, most emissions associated with different goods and services can occur at different life-cycle phases. For instance, for food, most emissions are associated with production, whereas for appliances, most of the emissions result from use. These distinctions can be important when considering and prioritizing policy interventions. The City does not currently complete a consumption-based GHG inventory, however, efforts are underway to better understand the impact of specific Scope 3 emissions. The City adopted a Low Carbon Concrete Ordinance which went into effect on January 1, 2023. The Ordinance limits the amount of cement used in construction projects to reduce GHG emissions. It requires all new construction projects to use concrete that meets strict, lower cement and embodied carbon limits. While we do not yet have data quantifying the concrete volumes (in cubic yards) for each building, the City began requesting concrete quantities and mix designs in June of 2025 and is developing a strategy to collect detailed data on larger commercial projects, where multiple elements (e.g., walls, slabs, beams, footings, and piers) often use different concrete strengths. To date, there are 270 new residential and commercial buildings that must comply with the City’s low-carbon concrete requirements. 119 projects were completed and 151 permits were issued for projects under construction. 14 Stockholm Environment Institute Consumption Based Emissions Inventory Guidebook. https://sustainableconsumption.usdn.org/climate/cbei-guidebook/overview FISCAL/RESOURCE IMPACT No funding is being requested. STAKEHOLDER ENGAGEMENT Stakeholder engagement for S/CAP implementation is broad-based and coordinated across multiple departments. Efforts include direct engagement, webinars, social media and other digital marketing/outreach, website updates, public signage, participation in Sustainability and Climate Action Committee meetings, leveraging the City’s communication platforms, and more. ENVIRONMENTAL REVIEW The Climate Action and Sustainability Committee’s preview of the 2025 Greenhouse Gas Inventory does not meet the definition of a project requiring CEQA review under Public Resources Code section 21065, since it will not cause a physical change in the environment. In June 2023, City Council certified the Comprehensive Plan Environmental Impact Report Addendum: Update to the Sustainability and Climate Action Plan. The strategies proposed in the 2026-2027 S/CAP Work Plan are consistent with the Sustainability and Climate Action Plan (S/CAP), the 2023-2025 S/CAP Work Plan, and the Comprehensive Plan. Potential environmental impacts of this project were studied in the June 5, 2023, S/CAP Addendum to the 2017-2031 Comprehensive Plan EIR. ATTACHMENTS None APPROVED BY: Brad Eggleston, Director Public Works/City Engineer