Long, long ago (1958) when 100-octane gasoline flowed eagerly from pumps nearly everywhere at 4.9 cents per gallon and the prospect of limitless nuclear energy seemed less than a decade away, I presented an idea in my college senior seminar that because energy use was a sure measure of industrial activity—and also an area open to abuse—then it, rather than revenue, might be a superior means of assessing taxes.

Today, I can’t recall what prompted the thought or what I considered a fair basis for assessment ... much less an acceptable means for collecting it. But whatever the genesis, the idea kindled considerable classroom debate. Graduation, however, soon reared its head, the Marine Corps called, and yet another academically spawned grand scheme went down the tubes.

Now fast-forward a mere half-century, and once again, with no more sense of how to go about it than before, I found myself spouting the energy tax idea to a colleague. “Hmmm,” she said, and I figured that was that. A week later, when she returned from a conference, she asked, “Have you heard about Boulder’s energy tax plan?”—eliciting from me a somewhat-less-than-articulate “Huh?”

Boulder’s Climate Action Plan
Never shy when it comes to environmental activism, Boulder, CO, is at it again. This past November, the city voters approved Initiative 202, the Climate Action Tax Plan that took effect on April 1, 2007, and that will sunset on March 31, 2013. The revenues generated by the plan will target greenhouse-gas (GHG) emission generated by energy use in buildings, the operation of vehicles, and landfill-gas emissions.

The plan is an outgrowth of policy adopted by the City Council in 2002 seeking cost-effective measures for implementing Kyoto Protocol goals calling for a 7% reduction in GHG emissions below base-year 1990 levels by 2012. Its purpose is to encourage citizens and businesses to look for ways to make their homes and businesses more energy efficient, eliminate unnecessary transportation activities, and look for ways to replace fossil fuels with those from renewable sources. More than just a prescription, the plan is itself an analysis tool for gauging its effectiveness in achieving the goal.

The Tax Approach to Curbing Demand
The first step in Boulder’s plan—bear in mind that the goal is GHG emissions reduction—was for Boulder’s Office of Environmental Affairs to develop an emissions inventory using the use data from Boulder’s gas and electric supplier, Xcel Energy, the city’s Community Transportation Network, and the solid waste management staff. This inventory will be updated annually. Figure 1 is an estimate of the GHG contributions from principle sources.

Based on Xcel Energy’s historical data, Boulder voters approved a tax surcharge based on a per-kilowatt-hour usage with an maximum annual cap (see Table 1). The tax is collected by the utility as part of the normal billing process. However, Xcel customers who subscribe to Windsource (a premium priced renewables portfolio program) will be exempt from the tax for that portion of their electricity that is supplied through wind power. The Windsource Adjustment is priced at a charge of $0.963 per 100-kWh block as of April 1, 2007.

In 2007, the tax is expected to generate $860,265. If the tax is raised to the maximum rate, however, the tax could generate $1.3 million.

Tax revenues go to such programs as education, outreach, and marketing, as well as other offset sources and available tax credits. Specific programs established by the plan include weatherization services, energy audits, contractor training, public workshops, promoting renewable energy, recognition programs for achievers, light-bulb incentive programs, and neighborhood sweeps where energy conservation kits and information will be distributed to residences.

Does This Approach Make Sense?
Obviously it did to Boulder voters last fall, but will it still be around for its 2013 sunset? Only time will tell, but I for one hope so, if only to stand as a beacon to the rest of us that we need to get off the pot and pay attention to our energy future. My Susan B. Anthony $2 coin says that not only will Boulder’s citizens hold steady, but somewhere along the way they’ll up the ante even more.

Send John an E-mail

DE - May/June 2007