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Home My WebLink AboutStaff Report 2608-6662CITY OF PALO ALTO Climate Action and Sustainability Committee Friday, September 04, 2026 Agenda Item 2.Overview of Approaches to Achieving the City's Carbon Neutrality Goal and Committee Feedback on Areas for Further Staff Analysis; CEQA Status - Not a Project Late Packet Report Added Climate Action and Sustainability Committee Staff Report Report Type: ACTION ITEMS Lead Department: City Clerk Meeting Date: September 4, 2026 Report #:2608-6662 TITLE Overview of Approaches to Achieving the City's Carbon Neutrality Goal and Committee Feedback on Areas for Further Staff Analysis; CEQA Status - Not a Project This item will be a late packet publication on 8/27/26. 1 0 3 6 3 Climate Action and Sustainability Committee Staff Report From: City Manager Report Type: ACTION ITEMS Lead Department: Public Works Meeting Date: September 4, 2026 Report #:2607-6581 TITLE Overview of Approaches to Achieving the City's Carbon Neutrality Goal and Committee Feedback on Areas for Further Staff Analysis; CEQA Status - Not a Project RECOMMENDATION This is a discussion item and no action is requested. Staff will present an overview of approaches to achieving the City’s Carbon Neutrality Goal and seek Climate Action and Sustainability Committee feedback on approaches for staff to focus on and types of offsets to consider. EXECUTIVE SUMMARY The 2026-2027 Sustainability and Climate Action Plan (S/CAP) Work Plan, Work Item CA-15, involves investigating how to achieve community carbon neutrality by 2030, offsetting emissions from buildings and vehicles in advance of their electrification. Staff will present various approaches and request feedback on which to explore further. Almost all remaining community emissions come from either natural gas use or transportation, and the City’s gas utility already offsets the natural gas emissions associated with the City’s purchase of gas distributed to ratepayers. Possible strategies for offsetting the 261,600 metric tons of carbon- dioxide equivalent (MT CO2-e) per year of transportation emissions include finding a funding source for the City to use to purchase offsets, instituting a voluntary purchase program, or focusing on carbon neutrality of City operations. Purchasing offsets that avoid emissions elsewhere, like those associated with the City’s gas utility purchases, would cost about $10 per MT CO2-e, or about $2.1 to $3.1 million per year. Removing carbon from the atmosphere, whether in Palo Alto or outside it, is substantially more expensive. BACKGROUND The City Council has adopted two emissions reduction goals for the community: a goal of reducing emissions 80% from 1990 levels by 20301 and a goal of carbon neutrality by 2030,2 1 City Council, April 18, 2016; Agenda Item #10; SR #6754, https://recordsportal.paloalto.gov/WebLink/DocView.aspx?id=79086&dbid=0&repo=PaloAlto 2 City Council, October 3, 2022; Agenda Item #9; SR #14720, https://recordsportal.paloalto.gov/WebLink/DocView.aspx?id=82036&dbid=0&repo=PaloAlto 1 0 3 6 3 with the intent of reducing local emissions as much as possible and neutralizing the remaining emissions. As of the end of 2025, the City had reduced emissions 49% from 1990 levels, resulting in 2025 emissions levels of about 407,000 MT CO2-e per year. Of that, about 134,000 MT CO2-e per year comes from natural gas. The City’s gas utility charges gas users to offset these emissions. To achieve carbon neutrality based on 2025 emissions levels would require offsetting the remaining 273,000 MT CO2-e, 96% of which come from transportation, with the remainder from waste and wastewater processing. ANALYSIS Identify a funding source for the City to use to purchase offsets Create a voluntary purchase program Carbon neutrality for City operations 2-e per year in municipal emissions while simultaneously continuing to prioritize direct emissions reductions. Staff could also research whether there are other innovative approaches to managing operations to offset emissions intensity. 2-e, though market prices change. These are the type of offsets purchased by the gas utility to offset City gas customers’ natural gas use. These offsets fund emissions reductions elsewhere through activities like preserving forests, converting methane from livestock operations to carbon dioxide, reducing its greenhouse gas impacts, destroying refrigerants, or reducing methane emissions from coal mines. These types of offsets serve as stopgap measures, offsetting local emissions temporarily, giving time to electrify local vehicles and building equipment to achieve durable, long-term emissions reductions. 1 0 3 6 3 were assessed on the basis of non-residential square footage to cover the cost of commuter and visitor gasoline vehicle emissions. These numbers are provided solely to give a sense of the scale of the funding needed and do not necessarily reflect the way a future program would be designed. FISCAL/RESOURCE IMPACT 2-e per year in municipal emissions, but these emissions result from wastewater operations, employee commute across all operations, and buildings and facilities, many of which are associated with Enterprise Funds rather than the General Fund. Regardless, these investments could continue to put pressure on operating and capital costs, despite being a more incremental approach. STAKEHOLDER ENGAGEMENT ENVIRONMENTAL REVIEW ATTACHMENTS APPROVED BY: