Berkeley’s gas ban was blocked in court. Now a new plan has emerged.

Community members gathered more than 4,500 signatures to get the proposed gas tax on the ballot, which officially qualified at the end of May. The tax would charge large building owners $2.96 for every 100 cubic feet or 100,000 BTUs of natural gas used, a value based on the social cost of carbon, which estimates the damages caused to society by excess greenhouse gas emissions.

Residents in low-income communities would be among the first to receive funding from the taxes to upgrade and electrify older buildings, and union labor would be prioritized for building retrofit work funded by the tax. If approved, the policy would take effect January 1, 2025, and expire at the end of 2050.

Amy Turner, director of the Cities Climate Law Initiative at Columbia University’s Sabin Center for Climate Change Law, said that Berkeley’s proposed tax is a novel approach. Existing policies, such as building performance standards in New York City, Boston, and Seattle, require buildings to lower emissions over time and can fine property owners for failing to comply. But they tend to be ​“fuel neutral,” meaning they don’t explicitly target a specific energy source like fossil gas. ​“We haven’t seen a fee or a payment of any kind be connected directly to the kind of fuel that a building is using,” she said.

Some trade groups, like the county’s building and construction trades council, have criticized the measure for levying additional costs on local businesses in an area with already higher-than-average taxes. And while the measure’s text explicitly prohibits property owners from passing on costs to renters, a city report expressed concerns that the tax could still result in higher rental costs ​“either at the time of lease renewal or, for price-controlled units, adjustments during times of vacancy.” The report also stated the initiative would likely increase job opportunities for contractors and incentivize all-electric new construction of large buildings in Berkeley.

Berkeley’s proposed tax requires a simple majority to pass. But that’s not the only hurdle: The measure will also have to withstand the same legal scrutiny faced by the city’s previous gas ban. In April 2023, the Ninth Circuit Court ruled that the federal Energy Policy and Conservation Act, a law that sets national energy efficiency standards, preempted Berkeley’s ban, stating that the policy would in effect prevent the use of gas appliances that meet those national standards.

Fossil Free Berkeley organizers point out that the court’s decision explicitly allowed for the possibility of a carbon tax similar to the one on the November ballot, making the new measure safe from legal challenges based on the Energy Policy and Conservation Act. Turner likewise noted that the city’s new approach — a tax rather than a ban — is substantially different from the one tossed out by courts.

“Certainly there are incentives of all kinds for buildings to be built or be operated in certain ways, and those are not subject to EPCA preemption,” she said.

Beyond reducing fossil gas use, which accounts for roughly one-third of Berkeley’s greenhouse gas emissions, the proposed tax would also help prepare the city for an energy transition that’s already underway, Tahara said.

In March of last year, California’s Bay Area Air Quality Management District, which governs air pollution in Berkeley and other nearby cities, passed regulations to phase out the sale of gas-powered appliances by 2027. But the regulation ​“left a lot of the thorny implementation issues to local municipalities,” such as how to make it affordable for homes and businesses to make the switch, Tahara said. Revenue from the tax, which would roll in as early as 2026, would help provide the funding needed for electric and building upgrades to ​“prepare for those regulations, so that they can be rolled out equitably,” he said.