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City Approves ‘Carbon Tax’ in Effort to Reduce Gas Emissions

by: Katie Kelley    18 November 2006

BOULDER, Colo. — Voters in this liberal college town have approved what environmentalists say may be the nation's first "carbon tax," intended to reduce emissions of heat-trapping gases.

The tax, to take effect on April 1, will be based on the number of kilowatt-hours used. Officials say it will add $16 a year to an average homeowner's electricity bill and $46 for businesses.

City officials said the revenue from the tax — an estimated $6.7 million by 2012, when the goal is to have reduced carbon emissions by 350,000 metric tons — would be collected by the main gas and electric utility, Xcel Energy, and funneled through the city's Office of Environmental Affairs .

The tax is to pay for the "climate action plan," efforts to "increase energy efficiency in homes and buildings, switch to renewable energy and reduce vehicle miles traveled," the city's environmental affairs manager, Jonathan Koehn, said.

The goal is to reduce the carbon levels to 7 percent less than those in 1990, which amounts to a 24 percent reduction from current levels, Mr. Koehn said.

"The climate action plan serves as the roadmap to meet our reduction goal," he said.

The tax grew out of efforts by a committee of residents and members of the City Council and Chamber of Commerce to try to enable Boulder to reach goals set by the United Nations Kyoto Protocol, which seeks to curb global warming.

The protocol requires 35 developing nations to reduce their emissions of heat-trapping gases like carbon dioxide. The world's top two polluters, the United States and China, have not signed the pact.

The Boulder environmental sustainability coordinator, Sarah Van Pelt, said residents who used alternative sources of electricity like wind power would receive a discount on the tax based on the amount of the alternative power used.

A total of 5,600 residents and 210 businesses use wind power, Ms. Van Pelt said.

A program similar to Boulder's began in Oregon in 2001. There, a 3 percent fee is assessed on electricity bills by the two largest investor-owned utilities, said Michael Armstrong, a policy analyst in the Portland Office of Sustainable Development.

The tens of millions of dollars is transferred to the Energy Trust of Oregon, a nonprofit organization, rather than the state government. The trust distributes cash incentives to businesses and residents for using alternative sources like solar and wind power, biomass energy and structural improvements to improve efficiency.

Mr. Armstrong said that although Portland had several programs for "sustainable living," it had not enacted a carbon tax and that he knew of no other American city with one.

"We are interested to see how it plays out and see what we can learn from that," he said of the Boulder tax. "We certainly follow other local governments, and there are lots of innovative initiatives all over the country. It's a great exchange among local communities."