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Home My WebLink About11/05/14 ACTION MINUTES PUBLIC WORKS COMMISSION MEETING OF WEDNESDAY, SEPTEMBER 17, 2014 CITY HALL, COUNCIL CHAMBERS 1315 VALLEY DRIVE COMMISIONERS Janice Brittain Julian Katz Kimberlee MacMullan Rob Saemann Justin Schnuelle All public testimony and the deliberations of the Public Works Commission can be viewed on the City’s website at http://www.hermosabch.org/index.aspx?page=358. 1. Call to Order 7:00 PM 2. Flag Salute 3. Roll Call Present: Commissioner Katz, Commissioner MacMullan, Commissioner Brittain, and Commissioner Schnuelle. Absent: Commissioner Saemann Also present: Diane Strickfaden, Interim Director of Public Works; Ells Freeman, Public Works Superintendent and Liz Zeigler, Administrative Assistant. 4. Approval of Action Minutes: July 16, 2014 ACTION: MOTION was made to approve the minutes of July 16, 2014, seconded and the motion carried by a unanimous vote. 5. Public Comment: Anyone wishing to address the Commission on items not on the agenda and pertaining to Public Works may do so at this time. No action. 6. Correspondence No action. 7. Presentations 8. Items for Consideration a. Proposal for a Permanent Bicycle Corral Near Beach Restrooms Diane Strickfaden presented the report and noted that the corral is not budgeted and would require a Coastal Commission permit. Commissioners opened the floor to public comment: Jim Hannon, Board Member of the South Bay Bicycle Coalition and Public Works Commissioner City of Redondo Beach stated that at last Fiesta Hermosa the Coalition assisted in providing free bicycling parking for 7,818 bikes and noted that many patrons indicated a desire to have permanent bicycle parking in the Downtown area. He suggested that a special team be formed by the City to evaluate the options for additional bicycle parking. 2 Jeff Duclos, stated he spoke with the Deputy Director of the Coastal Commission and that he recommended getting in touch with one of the regional directors such as Teresa Henry. He stated he did not believe the Coastal Commission would approve the project and recommended that the City come up with more innovative ways to address the need for additional bicycle parking. He urged the Commission to form a working group to develop options and contact the Coastal Commission. Steve Collins with Hermosa Cyclery suggested that intermediary steps be taken while the City considers a permanent bike corral including roll out materials for events and expressed his support for a permanent bike corral. Pete Hoffman, Loma Drive, spoke in favor of permanent bike corrals, but opposed any paving of the beach and believes that paving the beach is contrary to the City’s General Plan. Andrea Giancoli, resident lives 14th Street, recognized need for more permanent bicycle parking but wants permeable solutions and preservation of the beach. Commissioner Schnuelle indicated the need to consider more solutions and locations, but recognizes the need for additional parking. Commissioner MacMullan stated that bicycle parking demand is driven by events and would like a solution that is more mobile and agreed that more parties need to be involved in the process of developing bicycle parking options. MacMullan also suggested the Parking Structure be used as a possible location. Commissioner Brittain expressed her concern that the business community was not present and that Staff’s time and resources would be diverted to support downtown businesses when they are not showing interest in the project. Additionally, she voiced concern that the Coastal Commission would not approve the project. Commissioner Katz reported that work is progressing on the selection of mini corrals for the Beach Cities and said there are more permeable solutions available. He articulated that forming a committee is a good idea. ACTION: Motion was made by Commissioner Katz to form a subcommittee composed of Public Works Commissioners, Planning and Parks and Recreation Commission members, the public, and the business community to develop and evaluate options for additional bicycle parking, seconded by Schnuelle; the motion passed by unanimous approval. Commissioner Schnuelle volunteered to chair the subcommittee. 9. Commissioners’ Reports Commissioner Schnuelle presented his report and indicated that the Superintendent of Hermosa Valley School requested the discussion regarding the pick-up/drop-off problem at the school be tabled until after the November election. 10. Monthly Reports a. Monthly Activity Report – June 2014 and July 2014 b. Project Status Reports – June 2014 and July 2014 Above items are presented for information purposes only. c. Verbal Capital Improvement Report by Ms. Strickfaden No Action 11. Commissioners’ Announcements – No Action 12. The Regular Meeting of the Public Works Commission for September 17, 2014 was adjourned at 8:12 p.m. to the Regular meeting of Wednesday, November 19, 2014 at 7 pm. October 29, 2014 Honorable Mayor and Members Regular Meeting of of the Hermosa Beach City Council November 5, 2014 TENTATIVE FUTURE AGENDA ITEMS NOVEMBER 13, 2014 @ 5:30PM INTERVIEWS FOR PUBLIC WORKS COMMISSIONERS NOVEMBER 13, 2014 @ 6:00PM STUDY SESSION: EMERGENCY PREPAREDNESS AT EOC THURSDAY, NOVEMBER 13, 2014 PRESENTATION SPECIAL OLYMPICS WORLD GAMES, LOS ANGELES 2015 – HOST TOWN PROGRAM CONSENT CALENDAR Recommendation to receive and file the action minutes of the Parks, Recreation and Community Resources Advisory Commission meeting of October 7, 2014 Assistant to the City Manager Strand/Pier EIR Contract Community Development Director CONSENT ORDINANCES Stormwater MOU Public Works Director Special Olympics World Games 2015 – Host Town Program Endorsement Assistant to the City Manager PUBLIC HEARINGS - 7:30 PM (Continued from meeting of October 14, 2014 and October 28, 2014) Resolution Placing E&B Oil Project Ballot Measure on the March 3, 2015 Special Election Community Development Director MUNICIPAL MATTERS Video Cameras – Pier Plaza Police Chief Downtown Core Revitalization Strategy: Catalyst Projects/Use of City Assets Community Development Director MISCELLANEOUS ITEMS AND REPORTS - CITY MANAGER Living Streets Update Report Public Works Director MISCELLANEOUS ITEMS AND MEETING ATTENDANCE REPORTS - CITY COUNCIL Board/Commission Expiration of Terms – Appoint Public Works Commissioners City Clerk TUESDAY, NOVEMBER 18, 2014 @ 6:00PM PUBLIC HEARINGS - 7:30 PM (Continued from meeting of October 14, 2014, October 28, 2014, and November 13, 2014) Resolution Placing E&B Oil Project Ballot Measure on the March 3, 2015 Special Election Community Development Director NOVEMBER 25, 2014 @ 5:30PM CLOSED SESSION: CITY MANAGER PERFORMANCE REVIEW TUESDAY, NOVEMBER 25, 2014 PRESENTATIONS LEADERSHIP HERMOSA EMERGING LEADER AWARD WINNERS CONSENT CALENDAR Recommendation to receive and file the action minutes of the Emergency Preparedness Advisory Commission meeting of September 15, 2014 Fire Chief Recommendation to receive and file the action minutes of the Planning Commission meeting of November 18, 2014 Community Development Director PUBLIC HEARINGS - 7:30 PM (Continued from meeting of October 14, 2014, October 28, 2014, November 13, 2014, and November 18, 2014) Resolution Placing E&B Oil Project Ballot Measure on the March 3, 2015 Special Election Community Development Director MUNICIPAL MATTERS Compensation Study and Policy Direction Assistant to the City Manager MISCELLANEOUS ITEMS AND REPORTS – CITY MANAGER City Attorney Services City Manager Cypress Avenue – Direction on Zoning Changes for Manufacturing Uses Community Development Director 2 PENDING ITEMS Consideration of reduction of business license fee request from Carol G. Weiss, Ph.D. Finance Director Green Zone Recommendations and the Installation of Silver and Green Meters Downtown Police Chief Procurement Policies – RFP City Manager Ethics Policy City Manager & Finance Director SCE Update City Manager Food Truck Community Development Director Pier Plaza Smoking Enforcement & Underage Ordinance Police Chief National Citizen Survey Overview Assistant to the City Manager Public Information and Communications Plan Adoption City Manager DECEMBER 2014 Comprehensive City Facilities Master Plan – Award Contract Public Works Director Carbon Neutral Municipality: A. Final SCAG Report: Setting Target, Action Plan, Funding – Employee Commute Program B. Net Zero Carbon Policy for City Facilities and Service Delivery Analysis C. Renewable Energy Policy for City Facilities and Service Delivery Community Development Director Strategic Plan – Quarterly Update City Manager Storm Drain Maintenance Contract Public Works Director Events Policy Discussion (Continued) Assistant to the City Manager Fiesta Discussion Assistant to the City Manager Oil Project Update Community Development Director General Plan/Coastal Land Use Plan: Confirmation of Vision and Guiding Principles Community Development Director JANUARY 2015 Minutes Discussion City Manager FEBRUARY 2015 Employee Salaries/Benefits Funding Assistant to the City Manager MARCH 2015 Green Building and Green Energy Implementation Update Community Development Director 6b Hermosa Beach Municipal Carbon Neutral Plan November 5, 2014 City Council Meeting Carbon Neutral Plan Objectives How-to guide for achieving carbon neutrality for municipal operations Early actions / Quick Implementation Prioritize cost-effective reduction options Visible progress on renewable energy generation, alternative fuel vehicles, and employee commutes Environmental claims are considered valid in California’s complex policy environment Demonstrate regular reductions in gross emissions through an ongoing, transparent monitoring program Municipal and Community Emissions Municipal •City Facilities & Lighting (e.g. the lights, computer, projector, & climate control in this room) •City Fleet (Public Works trucks, Police Cars) •Contracted Services (Athens Waste & Recycling) •City Employee Commutes Community •Home & Business Electricity and Natural Gas Use •Waste and Recycling •Water Delivery •Resident & Employee Vehicle Travel The City of Hermosa Beach has greatest authority over municipal emissions The City of Hermosa beach affects community- wide emissions through policies (like General Plan implementation measures) Municipal vs. Community Emissions 2005 2007 2012Metric Tonnes CO2-e Municipal Community Source: 2005 & 2007 Inventories and 2014 Inventory & Forecasting Report from the Draft Energy Efficiency & Climate Action Plan Municipal GHG Inventory 2005 2007 2012Metric Tonnes CO2-e Buildings & Facilities Outdoor Lighting Employee Commute Vehicle Fleet Solid Waste Water Pumping Source: 2005 & 2007 Inventories and 2014 Inventory & Forecasting Report from the Draft Energy Efficiency & Climate Action Plan Municipal GHG Inventory 2012Metric Tonnes CO2-e Buildings & Facilities Outdoor Lighting Employee Commute Vehicle Fleet Solid Waste Water Pumping Electricity Transportation Waste Source: 2005 & 2007 Inventories and 2014 Inventory & Forecasting Report from the Draft Energy Efficiency & Climate Action Plan Electricity Initial actions: •Continue to pursue efficiency measures •Purchase high-quality renewable energy certificates (RECs) •Install solar PV panels at a municipal facility Long-term Action: •Pursue Community Choice Aggregation with other interested communities Long-term Challenge: •SCE-owned streetlights (about 20.5% of municipal electricity use) Transportation Initial actions: •Continue to implement Clean Fleet Policy and Master Plan, particularly electric vehicles •Start a shared bicycle program for employees •Designate an Employee Transportation Coordinator and improve incentives to address employee commutes Long-term Action: •An incentive program for employees to commute in zero-emissions vehicles Long-term Challenges: •Public Safety fleet •Long-distance commute trips Waste Initial actions: •Implement High-Efficiency Product Procurement Policy Long-term Challenge: •Landfills are owned and operated by others –there’s limited action that Hermosa Beach can take to reduce gross emissions Challenges highlight a role for offsets Offsets •Every entity that has claimed carbon neutral status thus far has used offsets •Rules recommended by the California Air Resources Board allow Cities to adjust net emissions for Renewable Energy Certificates & GHG Offsets •Offsets are not a free pass; their use is most effective when –High-quality offsets combined are with demonstrated, early actions –Investments in specific offset projects form part of a complete, transparent story A Commitment to Neutralize GHG Emissions Changes the Payback Analysis 0 2 4 6 8 10 12 14 16 18 Without Offsets With OffsetsCost in Cents Energy Costs Energy cost GHG Cost 0 2 4 6 8 10 12 14 Without Offsets With OffsetsYears to Payback Project Payback Analysis Don’t pursue the project Pursue the GHG reduction project payback threshold Which Offsets? Advantages Disadvantages Voluntary •Are 50% cheaper than California Compliance Offsets. •Sends a price signal •Offer a greater variety of projects. •Most projects are located outside of California. •Perceived as lower quality California Compliance •Perceived as the highest quality offsets. •Establish a strong connection between Hermosa Beach and statewide actions; can help the City explain statewide actions including Cap-and-Trade program. •Use of CARB offsets additional emissions reductions within California; effectively reducing the statewide cap on GHG emissions. •Sends a price signal •CARB offsets are more expensive; and these additional expenditures could be used to reduce gross emissions. •Potential difficulties with households and businesses within Hermosa Beach investing in the same offset project as the City. Which Offset Projects? U.S. Forest Project Livestock Project Mine Methane Capture Project Use of forest offsets can create a tangible connection with a place Which Goal to Set? Which Goal to Set? Recommendation Desired Leadership Status Recommended GHG Goal Be seen as a “leader” Carbon Neutral municipal operations by 2020 Claim “first-to” (U.S.) status for GHG emissions from municipal operations Carbon Neutral municipal operations by 2015 Next Steps •Adopt key decisions by resolution: 1.Choose one of the following goals •Carbon Neutrality goal, Carbon Negative, or Zero Emissions 2.Consider a “gross” emissions, before any use of offsets 3.Determine the future year by which the City plans to achieve its goal •Report the City’s decision to the Carbonn Cities Climate Registry •Initiate a public education and outreach program Thank You juan@kaizenergyllc.com Sector Least Aggressive Recommended Most Aggressive Electricity •cost-effective on-bill financing (projects with payback <10 years)1 •Pursue any cost-effective solar PV project •Use Green-E RECs to offset electricity purchase •Use Green-e RECs until CCA begins •Dedicate $25,000 net costs toward Solar PV through PPA or municipal lease •Pursue any cost-effective PV project •Dedicate additional $50,000 to retrofit projects with payback >10 years •Dedicate $250,000 toward CCA •Use PCC Bundle 1 RECs until CCA begins •Dedicate $100,000 net costs toward Solar PV through PPA or municipal lease; •Pursue any cost-effective solar PV project •Dedicate additional $236,094 to retrofit projects with payback >10 years1 •Dedicate $250,000 toward CCA Municipal Fleet •Continue to implement Clean Fleet Policy and Master Plan with no additional funding for implementation •Continue to implement Clean Fleet Policy and Master Plan; dedicating an additional $250,000 for implementation •Purchase 10 bikes , 5 electric-assist bikes, and 2 Neighborhood Electric Vehicles for fleet & commute use •Dedicate $50,000 for EV chargers •Continue to implement Clean Fleet Policy and Master Plan; dedicating an additional $500,000 for acceleration/implementation •Purchase 20 bikes, 10 electric-assist bikes, and 5 Neighborhood Electric Vehicles for fleet & commute use •Dedicate $150,000 for EV chargers Employee Commute •Assign 0.1 FTE (assistant) as the City’s Employee Transportation Coordinator •Increase commute incentive from $30 to $50/month •Assign 0.2 FTE (assistant) as the City’s Employee Transportation Coordinator •Increase commute reduction incentive from $30 to $50/month2 •Assign 0.25 FTE (assistant) as the Employee Transportation Coordinator and Increase commute incentive from $30 to $50/month2 •Offer a $125/month to employees who use zero-emissions vehicles for commute Other •Dedicate 0.1 FTE analyst to municipal climate action •Dedicate 0.25 FTE analyst to municipal climate action initiatives •Dedicate 0.5 FTE analyst to municipal climate action initiatives Offsets •Use voluntary offsets towards Carbon Neutral Goal •Use California ARB offsets in pursuit of a Carbon Neutral Goal •Use California ARB offsets in pursuit of a Carbon Negative/Climate Positive Goal Est. Cost One-time: $0 Annual: $42,286 One-time: $675,000 Annual: $92,419 One-time: $1,340,594 Annual: $233,422 Pros Most cost-effective option to pursue neutrality Balances cost-effectiveness and need for visible, impactful actions that serve as a stepping stone to community actions Carbon Negative/Climate Positive goal seen as most aggressive; package serves as a stepping stone to community actions Cons Unlikely to be seen as aggressive; isn’t a stepping stone for community-wide action One-time implementation costs are much higher than in “least aggressive case” Most expensive option Draft Hermosa Beach Municipal Carbon Neutral Plan Executive Summary Prepared for the City of Hermosa Beach and the Southern California Association of Governments Draft Version: October 29, 2014 kaizenergy Prepared by Juan Matute • em: juan@kaizenergyllc.com • ph: LOCLIMATE-1 (562-546-2831) Executive Summary: Page 2 Hermosa Beach Municipal Carbon Neutral Plan Executive Summary Table of Contents Introduction ................................................................................................................................ 3 Determining the City’s Climate Action Goal ................................................................................ 5 Base Year .............................................................................................................................. 6 Magnitude of the Reduction .................................................................................................... 6 Applicable Boundary and Control ........................................................................................... 8 Future Year ...........................................................................................................................10 Climate Commitment Recommendation for Hermosa Beach .................................................11 Reducing Gross Emissions .......................................................................................................12 Electricity ...............................................................................................................................13 Municipal Fleet ......................................................................................................................14 Employee Commute ..............................................................................................................14 Using Offsets ............................................................................................................................15 Should Hermosa Beach Use Compliance or Voluntary Offsets? ............................................16 Selecting Among California Offsets .......................................................................................17 U.S. Forest Projects ...........................................................................................................18 Urban Forest Offsets ..........................................................................................................19 Next Steps for the City ..............................................................................................................19 Executive Summary: Page 3 Introduction California’s Executive Order S-03-05 sets a statewide goal of an 80% reduction in greenhouse gas emissions below 1990 levels by 2050. This requires an annualized 2.7% reduction in greenhouse gas emissions after the state meets its Global Warming Solutions Act (AB 32) goal of returning to 1990 levels by 2020. Successfully meeting this goal will require that municipalities, communities, and other entities lead the way to substantial reductions in greenhouse gas emissions. In considering a Carbon Neutral goal, Hermosa Beach is considering becoming one of these leaders. Hermosa Beach has a head start on municipal climate action, having already produced municipal and community greenhouse gas inventories and a Sustainability Plan. Additionally, Hermosa Beach is in the process of creating an Energy Efficiency Element for its Climate Action Plan. Furthermore, being located in California gives Hermosa Beach access to additional programs and funding, as well as the benefit of the nation’s most aggressive state-level energy and climate action policies. However, the pursuit of municipal Carbon Neutrality will not come without challenges. Climate policy is a complex issue with multiple layers of governance affecting each other, sometimes producing counterintuitive outcomes. Precisely because Hermosa Beach seeks to be a leader, there is not yet a clear-cut pathway for municipalities to achieve this goal. Hermosa Beach will need to fully understand risks and opportunities in order to successfully achieve a Carbon Neutrality goal. The greatest impact from the successful implementation of Hermosa Beach’s Municipal Carbon Neutral Plan will come from the City demonstrating its success to others, as a shining beacon of a low-carbon future. When the community sees the municipal government’s example, it will be easier for them to follow. Hermosa Beach can also show other municipalities that it’s not only large cities like Seattle and Austin that can pursue municipal carbon neutrality. There are many potential pathways that will take Hermosa Beach toward achieving the climate and renewable energy goals listed above. Several pathway objectives were determined through discussions with City staff and review of letters and discussion pertaining to the City’s consideration of municipal climate goals at its March 9, 2014 study session. Climate action pathway objectives incorporated into this plan: ● The City focuses on early actions that can be quickly implemented. ● The City demonstrates visible evidence of renewable energy generation, especially solar photovoltaic panels on municipal and school district buildings. ● The City makes visible alternative fuel vehicle additions to the municipal fleet. ● The City adopts an innovative program to address employee commutes. Executive Summary: Page 4 ● Any environmental claims the City makes are considered valid in California’s complex policy environment. ● The City makes cost-effective reductions that don’t crowd out expenditures on City services and infrastructure. ● The City demonstrates regular reductions in gross emissions through an ongoing, transparent monitoring program. This plan expands on the existing Carbon Neutral Road Map for Municipal Facilities and Operations and supporting documents by presenting a strategy for the City to achieve “first-to” status. The plan will help position the City as a leader by further detailing options to procure renewable electricity, articulating a strategy for employee commutes, and recommending a specific plan to neutralize gross emissions in support of an aggressive Carbon Neutrality commitment. The plan presents a unified approach to neutralizing greenhouse gas emissions across local government operations sectors and emissions reductions projects. Hermosa Beach should continue to evaluate individual projects and programs to reduce gross greenhouse gas emissions, incorporating the full cost to offset carbon in its cost-benefit analysis. This plan makes recommendations that answer a number of questions: Key Questions answered in this plan: ● Which emissions should Hermosa Beach seek to address? ● Should Hermosa Beach use greenhouse gas offsets to accomplish its goal? Should Hermosa Beach use Renewable Energy Certificates (RECs)? If so, how should it use them? ● What goal must Hermosa Beach set in order to be seen as a top-tier climate action leader? What level of commitment must Hermosa Beach demonstrate for their goal to be seen as credible? ● How should Hermosa Beach navigate the somewhat complex world of California’s Cap- and-Trade Program, Renewable Portfolio Standard, Low Carbon Fuel Standard and other environmental regulations that affect the City’s goals and actions? In support of answering those questions, Kaizenergy has consulted various greenhouse gas emissions protocols and state and federal regulations. Kaizenergy also performed extensive research on climate commitments by other cities, companies, and educational institutions to benchmark how outside stakeholders would perceive varying greenhouse gas emissions goals. Executive Summary: Page 5 Determining the City’s Climate Action Goal Like many communities in California, the City of Hermosa Beach has developed a number of plans and strategies to address climate change and reduce the City’s greenhouse gas emissions. The latest effort, an Energy Efficiency Climate Action Plan (EECAP), has provided the City of Hermosa Beach with a foundation to develop a comprehensive Climate Action Plan (CAP) by understanding community and municipal energy use, identifying local level strategies resultant in long term energy efficiency, developing implementation plans, and establishing progress reports. The keystone of Hermosa Beach’s existing climate action planning activities is the Hermosa Beach Sustainability Plan prepared by its Green Task Force and accepted by the City Council in 2011. This plan is estimated to support a 25% reduction in emissions below 2005 levels by 2020. The City’s next step is toward Carbon Neutrality. Local governments have various options in defining their climate commitment. The timeframe, magnitude, boundary, and control options are detailed in the table below. Goals with larger magnitude reductions and sooner future years are seen as more aggressive. For instance, an 80% reduction in emissions by 2030 is viewed as far more aggressive than an 80% reduction in emissions by 2050 or a 50% reduction in emissions by 2030. Hermosa Beach’s Choices for Climate Action Goals Goal Element Goal Choices Time Frame Choose both: ● a Base Year; typically in the past ● a Future Year by which the City commits to meeting its goal Magnitude Choose an absolute or percentage reduction, relative to the base year For neutralizing emissions, this is a 100% reduction or 0 absolute emissions. Thus, the base year is unimportant for a neutrality goal. Applicable Boundary Choose one depending on the type of goal: ● Organizational boundary (for entities) ● Geographic boundaries (for communities) Control over Emissions Determine which emissions are within and outside of control: ● Direct & indirect emissions (scopes 1 through 3, for entities) ● Activities & sources (communities) Note: Communities and entities will typically use a greenhouse gas accounting protocol to aid in identifying applicable boundaries and control over emissions. Executive Summary: Page 6 The most common local climate commitment is the U.S. Mayor’s Climate Protection Agreement. Mayors from the 1,060 cities that have signed onto the agreement indicated their City’s commitment to “strive to meet or exceed Kyoto Protocol targets for reducing global warming pollution by taking actions in our own operations and communities.” Kyoto targets were 7% below 1990 levels by 2012. Former Hermosa Beach Mayor Sam Edgerton III signed onto this agreement. Base Year The base year becomes important if Hermosa Beach seeks to go beyond Carbon Neutral by offsetting additional emissions to become “Climate Positive” or “Carbon Negative”. Magnitude of the Reduction “Carbon Neutrality” is defined as a zero balance of net greenhouse gas emissions on a municipal inventory, after accounting for use of offsets and renewable energy certificates (RECs). Possible Goals for Municipal Greenhouse Gas Emissions Goal What it means for municipal operations What it means for the community Zero Emissions Zero gross scope 1, 2, or 3 emissions attributable to municipal operations, before accounting for offsets and RECs. Zero gross greenhouse gas emissions from emissions-generating activities or emissions sources attributable to the community, before accounting for offsets and RECs. Carbon Neutral or Climate Neutral A zero balance of net emissions on a municipal greenhouse gas inventory after accounting for offsets and RECs. A zero balance of net emissions on a municipal greenhouse gas inventory after accounting for offsets and RECs. Carbon Negative A real, additional, and verifiable reduction in California (and global) greenhouse gas emissions equivalent to a municipal baseline. A real, additional, and verifiable reduction in California (and global) greenhouse gas emissions equivalent to a community baseline. Executive Summary: Page 7 Possible Goals for Greenhouse Gas Emissions Reductions Executive Summary: Page 8 Determining the Magnitude of the City’s Greenhouse Gas Reduction Goal Applicable Boundary and Control The Local Government Operations Protocol is currently recommended and is the most likely candidate if municipal accounting and reporting were ever made compulsory. Hermosa Beach should use this protocol to determine which emissions from local government operations are subject to its Carbon Neutrality goal. To become Carbon Neutral, Hermosa Beach would have to reduce or offset emissions from all sectors, activities, and sources for which it reports emissions. The Local Government Operations Protocol suggests that municipalities report scope 1 and 2 emissions over which they have operational control from the following 9 sectors: Executive Summary: Page 9 Local Government Operations Protocol Sectors and Reporting Recommendations for Hermosa Beach Sector Operational Control in Hermosa Beach Recommendation Buildings and other facilities ✔ Operational control over City- owned buildings. Report these emissions. Streetlights and traffic signals ✔ Operational control over City- owned streetlights. ✘ Limited or no operational control of streetlights provided by Southern California Edison. Report these emissions, including emissions from SCE- owned street lighting. Water delivery facilities ✘ No operational control. Consider reporting emissions from water distribution. Vehicle fleet ✔ Owned municipal vehicle fleet. Report these emissions. Transit fleet ✘ No operational control. Consider these emissions as an informational item. Power generation facilities ✘ Service provided by Southern California Edison. Emissions reported in other sectors as scope 2. Solid waste facilities ✔ Operational control via contracting. Athens Services provides haulage and sorting, landfills are owned by a third party. Report community-wide collection and haulage emissions. Report landfill emissions from waste generated by municipal operations. Wastewater facilities ✘ Services provided by the Southern California Sanitation Control District / South Bay Cities District. Consider these emissions as an informational item. Other process & fugitive emissions These are cross-sectoral emissions. Control varies. Report fugitive emissions of common high-GWP gases (refrigerants and fire suppression systems) over which the City has operational control. Executive Summary: Page 10 Emissions from transit and wastewater are not currently included in Hermosa Beach’s greenhouse gas inventory. We recommend they are included as an informational item because these services are provided in Hermosa Beach, but by other local government entities. Entity-based accounting guidance classifies emissions into three scopes depending on the operational control possessed over the emissions. Hermosa Beach should report and neutralize all scope 1 and scope 2 emissions, and certain scope 3 emissions. Emissions Scopes and Local Government Protocol Reporting Requirements Emissions Scope Reporting Recommendation for Selected Sectors 1 - Direct Emissions Include per Local Government Operations Protocol. 2 - Indirect Emissions from Imported Energy, Steam, & Cooling Include per Local Government Operations Protocol. 3 - Other Indirect Emissions Optional per Local Government Operations Protocol. Hermosa Beach should include emissions from: ● waste generated by government operations, but disposed of outside its organizational boundary; ● emissions from employee commuting; and ● emissions from employee business travel (not currently included in the City’s municipal inventories). Hermosa Beach should consider including: ● upstream life-cycle emissions from goods and services consumed by Hermosa’s municipal government. Future Year The future year is the critical variable in Hermosa Beach’s climate commitment. Hermosa Beach will be seen or not seen as a local climate action leader based on both the future year the City chooses and the depth of understanding the City has over its climate commitment. The higher education sector is leading the way toward carbon neutrality. To date, 684 U.S. & Canadian Universities have made climate neutrality commitments. Climate Neutrality as a term unambiguously encompasses all six categories of greenhouse gases. The graph below displays the number of climate commitments by period. Executive Summary: Page 11 The University of California System is seen as a leader in this effort. The System hopes to be the first research university to achieve carbon neutrality by 2025. Climate Commitment Recommendation for Hermosa Beach To be seen as a leader in municipal climate action, Hermosa Beach would need to commit to neutralizing emissions from municipal operations within the next 10 years. While a future year goal of 2025 would still help Hermosa Beach be seen as a leader, the City should match goals set by the City of Austin and County of Boulder and commit to a 2020 goal. Committing to the same goal as other leading local governments would unambiguously establish Hermosa Beach as a climate action leader. While many British Columbia municipalities have already achieved Carbon Neutral status for 2010, many have backed off the use of offsets to neutralize greenhouse gas emissions. Hermosa Beach has an opportunity to achieve “first-to” status for municipal operations in the United States by committing to neutralize emissions as early as 2015. ➤ ➣ ➢ If Hermosa Beach seeks to be seen as a “leader” it should set 2020 as its goal for Carbon Neutral municipal operations. If Hermosa Beach seeks “first-to” status, it should commit to neutralizing emissions as early as 2015. Executive Summary: Page 12 Reducing Gross Emissions Hermosa Beach should continue to make gross emissions reductions. The City’s existing on-bill financing program for energy efficiency improvements and vehicle and supply procurement policies will help the municipal government address the “low-hanging fruit” of emissions from operations. The City should continue and expand upon existing energy efficiency programs. As the GSE Solutions report indicates, the City has opportunities to improve building energy efficiency by 40% or more. When evaluating energy efficiency and retrofit projects, the City should now include the additional cost to neutralize emissions from electricity (approximately 0.3 cents additional per kWh). Opportunities to reduce gross emissions will continue to evolve with new developments in technology, new financing methods, and changing prices of equipment relative to energy. In setting a municipal Carbon Neutral goal, the City should strive to keep abreast of future opportunities for gross emissions reductions. This plan outlines several options for the City to reduce gross emissions from vehicles (both fleet and employee commutes) and building energy (primarily electricity). A recent draft update to Hermosa Beach’s greenhouse emissions inventory for municipal operations indicates that streetlights and traffic signals, vehicle fleet, and building and other electricity make up Hermosa Beach’s top three municipal emissions sources. The 2005 inventory is compared to the draft 2012 inventory below. Executive Summary: Page 13 Top Municipal Operations Emissions Sources in Hermosa Beach (2005 to 2012) Emissions Source/Activity (Scope) 2005 MT CO2e (% of total) 2012 MT CO2e (% of total) % Change in MT CO2e (2007-2012) Streetlights and Traffic Signal Electricity (2) 405 (27%) 359 (26.2%) -11.4% Employee Commute (3) 348 (23.2%) 218 (15.9%) -37.4% Building & Other Facility Electricity (2) 301 (20%) 305 (22.2%) 1.3% Vehicle Fleet (1) 227 (15.1%) 328 (23.9%) 44% Solid Waste - Contract Services (3) 215 (14.3%) 162 (11.8%) -24.7% Total 1,501 1,372 -8.6% Source: EECAP Draft Inventory, Forecasting, and Target-Setting Report. Draft figures for 2012 are subject to change. Note: Some 2005 figures in EECAP Draft inventory are inconsistent with 2005 & 2007 Inventories. Electricity The City should continue and expand upon existing energy efficiency programs. As the GSE Solutions report indicates, the City has opportunities to improve building energy efficiency by 40% or more. The City should now include the cost to neutralize emissions from electricity (approximately 0.3 cents additional per kWh) when evaluating whether to pursue electricity efficiency and retrofit projects. To take a highly-visible climate action step, Hermosa Beach should take steps to install solar photovoltaic systems on municipal property. The City should continue to explore the options of a Power Purchase Agreement and a Solar Lease. The City should also request the retirement of greenhouse gas emissions allowances through the state’s Voluntary Renewable Electricity Program in order to claim unambiguous emissions reductions. RECs are a commonly-accepted element of a green or Carbon Neutral portfolio, and should be an element of Hermosa Beach’s municipal carbon neutrality efforts. Some entities employ RECs as a short term strategy while they wait for new power-generating projects to be built. Executive Summary: Page 14 Hermosa Beach can retire Green-e RECs to make greenhouse gas reduction claims under The Climate Registry’s General Reporting Protocol. Over the long term, Hermosa Beach should establish a CCA program with a 100% renewable, emissions-free option and become one of program’s first customers. This would allow for a unified approach to community and municipal greenhouse gas emissions reductions, with community members participating in the same program as the municipality. Municipal Fleet Consistent with the City Fleet Policy’s guideline stating “Review available green vehicle options including: electric vehicles, hybrids, CNGs, hydrogen, biodiesels, and any other emission reducing vehicles,” the City of Hermosa Beach should continue to consider the latest and lowest-emission alternative fuel technology when replacing fleet vehicles. Hermosa Beach should continue to prioritize plug-in electric vehicle purchases where they are practical. The convenience and future expansion potential of electric vehicle supply infrastructure and the low carbon intensity of electricity for vehicles makes plug-in electric vehicles an ideal choice for reducing gross emissions. Hermosa Beach should also consider utilizing Neighborhood Electric Vehicles (NEVs) and electric-assist bicycles within its vehicle fleet. Hermosa Beach could establish a program for employees living near the City to take these vehicles home. Combined with Carbon Neutral electricity for charging, this program would reduce greenhouse gas emissions from commutes. However, as identified in the City’s Clean Fleet Policy, some fleets, particularly public safety, have limited or no alternative fuel options that meet their requirements. When this is the case, the City could look to purchase and retire greenhouse gas emissions credits produced under the Low Carbon Fuel Standard. This would allow Hermosa Beach to offset its own emissions with reductions within the transportation sector. Employee Commute The City of Hermosa Beach’s current employee commute reduction challenges are twofold. First, Hermosa Beach is a relatively small employer, with only 142 employees across multiple sites. This limits the potential for rideshare matching. Second, the City’s 2013 Employee Commute Survey indicated that due to the structure of existing incentives, their effectiveness is limited. To reduce gross greenhouse gas emissions attributed to employee commutes, the City of Hermosa Beach should revise its Employee Commute Reduction Program (ECRP) to better Executive Summary: Page 15 incentivize employees to adopt alternative modes of commuting and to generate lasting program participation. Hermosa Beach can do this by appointing an Employee Transportation Coordinator to coordinate rideshare partnerships and restructure alternative commute incentives. Additionally, the City should consider adding bike accommodations and determining a telecommuting policy. Using Offsets Offsets are an important part of an aggressive climate commitment, as demonstrated by other cities, corporations, and colleges that have claimed or plan to achieve carbon neutrality status. Offsets put a price signal on carbon emissions. By purchasing offsets, Hermosa Beach can claim that there is a real environmental cost of greenhouse gases emissions from municipal operations and that the City is looking for other ways to reduce its emissions. However, offsets are not a free pass to emit; they are only effectively utilized as part of a larger climate action strategy. Hermosa Beach stakeholders may have a negative perception of the City’s use of offsets, especially if they feel the City’s efforts to reduce gross emissions are inadequate. Use of offsets alone will not accomplish the City’s other objectives or lead to the desired co-benefits from the City’s climate action efforts. Transparency is exceedingly important in climate action, especially when offsets are used. Hermosa Beach should establish a performance monitoring program that includes regular reporting of the City’s climate action efforts, along with publishing greenhouse gas emissions inventories. Offsets should be utilized within a public education and outreach campaign that focuses on the City’s efforts to reduce its gross greenhouse gas emissions from municipal operations. The offsets should tell a story that people can connect to when understanding the City’s climate actions and considering their own. The experience of existing cities and entities, particularly the three educational institutions mentioned above, highlights the possibility to connect offsets with a community as part of a public education program about a City’s climate action efforts. By investing in certain projects – projects whose stories resonate with residents – Hermosa Beach can communicate its own challenges in reducing gross emissions while connecting the community with specific projects they can also invest in to offset their own emissions. While a wide range of offset project types exists, Hermosa Beach may find some more suitable than others if the City wishes to include its own offset purchases as part of a public education and outreach program. The public may feel more of a connection with offsets generated within the United States, especially those from projects in California. Executive Summary: Page 16 Should Hermosa Beach Use Compliance or Voluntary Offsets? Hermosa Beach must decide whether to use the cheaper voluntary emissions offsets or the more expensive California Compliance Offsets. The annual price of offsets to cover the City’s 2007 municipal inventory in all cost projection scenarios is less than 0.1% of the City’s general fund budget. Range of Costs to Offset 1,552 Metric Tonnes of CO2-e Scenario Offset Price per Metric Tonne Annual Cost to Offset 1,552 MT ARB - Current $11.50 (August 2014 auction price) $17,848 ARB - Future High $21.51 (high-case projection for 2020) $33,383 Voluntary - Current $5.00 $7,760 Voluntary - Future High $7.50 $11,640 Under this range of prices, the City will find that many of its opportunities to reduce gross greenhouse gas emissions are not cost competitive with offsets or allowances. For example, for $99.84, the City could retire the more expensive ARB-eligible allowances (at $11.50/metric ton) to offset the tailpipe greenhouse gas emissions of a 2002 Ford Expedition traveling 60 miles round trip, 4 days per week, 48 weeks per year. The annual cost of ARB-eligible offsets to neutralize the emissions from a Prius traveling 15 miles per day is approximately $7.74. Incidentally, the Expedition driver would save $2,051.30 per year in fuel costs (at $4.00/gallon) by switching to a Prius. This example illustrates both how inexpensive greenhouse gas emissions are, even within California’s Cap-and-Trade system, and also the need for strategic climate action policies that are well-integrated within the City’s existing municipal operations. It also illustrates that use of offsets can be the most cost-effective option to achieve a given level of reductions: the use of offsets allows Hermosa Beach to achieve Carbon Neutrality in the most cost-effective way possible. Executive Summary: Page 17 Advantages and Disadvantages of ARB and Voluntary Offsets Advantages Disadvantages Voluntary ● Are 50% cheaper than California Compliance Offsets. ● Offer a greater variety of projects. ● Most projects are located outside of California. ● Voluntary offsets can be perceived to be lower quality than compliance offsets. California Compliance ● California offsets are perceived as the highest quality offsets. ● There exists a strong connection between Hermosa Beach and statewide actions: these offsets can help the City explain statewide actions including Cap-and-Trade program. ● Their use creates additional emissions reductions within California; effectively reducing the cap. ● Their use shows Hermosa Beach is willing to put a higher price on greenhouse gas emissions. ● California offsets are more expensive; and these additional expenditures could be used to reduce gross emissions. ● It may be more difficult for consumers to acquire and retire offsets if households and businesses within Hermosa Beach want to invest in the same offset project as the City. ➤ ➣ ➢ Hermosa Beach should primarily rely on California Compliance Offsets to validate its emissions claims. Although California offsets are slightly more expensive, their higher perceived quality and the connection they provide to statewide climate actions will make Hermosa Beach’s climate commitment more robust. Selecting Among California Offsets Offsets have a story: a project location, emissions removal process, and organization associated with their production. As of September 2014, Hermosa Beach can choose from projects among the five ARB-approved offset protocols. Offsets from each type of project are functionally-equivalent in mitigating climate change: they are denominated in metric tonnes of CO2-equivalent. However, each individual project can tell a different story. In choosing among project types, Hermosa Beach should consider how stakeholders can relate to the project’s location, the type of project, and the organization that produces the offset and receives payment. In addition, attractive photographs of the project itself would aid in any public Executive Summary: Page 18 education and outreach efforts the City conducts. Forest-based offsets provide a compelling story for a public education campaign. Offsets from livestock projects are another alternative. U.S. Forest Projects The link between trees and carbon dioxide emissions is well-established in middle school biology classes. Trees are tangible, beautiful, and provide a range of ecosystem services besides converting carbon dioxide into oxygen. Projects certified under the U.S. Forest Protocol provide for the preservation of large, contiguous forest lands in the United States, including some locations in California. These forests will provide for attractive photographs, and the sites could even be visited by Hermosa Beach stakeholders. The offsets are produced by non-profit conservation organizations or private landowners. U.S. Forest Project Harvego Bear River Preserve Project / Photo by Placer Land Trust Executive Summary: Page 19 Urban Forest Offsets Urban forests, including street trees, parks, and wildlands within city limits, are highly sought- after amenities that provide shade, mitigate the urban heat island effect, and give character to streets and parks. The Climate Action Reserve approved two Urban Forest protocols in June 2014. The Urban Forest Management Protocol offers a programmatic approach to the updated Urban Tree Planting protocol. The California Air Resources Board previously adopted the Climate Action Reserve’s Urban Forest Protocol and will need to adopt the Urban Forest Management protocol for the programmatic approach to create California Compliance Offsets. The Reserve hopes that these new protocols facilitate implementation of more urban forest projects. Because the annual amount of emissions sequestered from an urban forest in a 1.4 square mile city would be low relative to the municipality’s emissions from operations, Hermosa Beach may wish to express interest in participating in any potential future SBCCOG-wide or countywide urban forest management protocol effort. ➤ ➣ ➢ Hermosa Beach should prioritize U.S. Forest and Urban Forest offset projects, but may consider other projects within an offset portfolio. Other important considerations are whether Hermosa Beach stakeholders can invest in the same project as the city and how the specific project would fit within the city’s outreach and education efforts. Next Steps for the City Following in the footsteps of Davis, Seattle, Austin, South Miami, and other cities, Hermosa Beach should adopt key decisions by resolution. The City should: ● Decide whether to adopt the recommended Carbon Neutrality goal, or an alternate Carbon Negative or Zero Emissions goal; ● Decide whether to set a goal for “gross” emissions, before any use of offsets, in addition to net emissions; ● Determine the future year by which Hermosa Beach plans to achieve carbon neutrality; and ● Decide which local government emissions are subject to the goal by adopting the recommendation or an alternate boundary for municipal emissions. Upon adoption of the resolution, the City should report the City’s climate goal, past inventories, indicators, plans, and actions to the Carbonn Cities Climate Registry. The City should continue to pursue reductions in gross greenhouse gas emissions, adjusting its payback analysis to incorporate the added cost of a California Emissions Allowance. Executive Summary: Page 20 Within 6 months of adopting the resolution, the City should also implement a performance monitoring program using ICLEI’s ClearPath tool to track municipal emissions and municipal climate action indicators. The City should also begin to implement recommendations for an employee commute reduction program, including designating an employee transportation coordinator. Within 12 months of adopting the resolution, the City should solicit and enter into a power purchase agreement to install solar photovoltaic panels on a facility that meets several criteria (structural integrity, load sufficiency, absence of plans for redevelopment or reconstruction, and visibility of solar photovoltaic panels). This action will demonstrate the City’s commitment and form the cornerstone of an education and outreach plan to explain the City’s goal, actions, and use of offsets. For each calendar year after adopting the resolution, the City should also report updated inventories, new actions, and the use of offsets and RECs to the Carbonn Cities Climate Registry. When Hermosa Beach completes an inventory for the first year it plans to achieve a greenhouse gas goal, it should have that inventory verified by an outside auditor to certify the City’s claim. All the while, Hermosa Beach should continue to pursue community climate actions, especially a Community Choice Aggregation, which can leverage buying power to offer 100% renewable zero-emissions power to all electricity accounts in Hermosa Beach. Draft Hermosa Beach Municipal Carbon Neutral Plan Prepared for the City of Hermosa Beach and the Southern California Association of Governments Draft Version: October 29, 2014 kaizenergy Prepared by Juan Matute • em: juan@kaizenergyllc.com • ph: LOCLIMATE-1 (562-546-2831) Existing Actions: Page 2 Hermosa Beach’s Climate Action Baseline ................................................................................ 3 Defining Hermosa Beach’s Climate Commitment ....................................................................... 8 Electricity ..................................................................................................................................31 Municipal Fleet ..........................................................................................................................48 Employee Commutes ................................................................................................................60 Other Emissions ........................................................................................................................70 Use of Greenhouse Gas Offsets ...............................................................................................73 Performance Monitoring, Transparency, and Outreach .............................................................91 Existing Actions: Page 3 Hermosa Beach Municipal Carbon Neutral Plan Hermosa Beach’s Climate Action Baseline Municipal Greenhouse Gas Emissions Inventory A recent draft update to Hermosa Beach’s greenhouse emissions inventory for municipal operations indicates that streetlights and traffic signals, vehicle fleet, and building and other electricity make up Hermosa Beach’s top three municipal emissions sources. The City’s municipal operations inventory is being updated as part of the Energy Efficiency Climate Action Plan process. The 2005 inventory is compared to the draft 2012 inventory below. Top Municipal Operations Emissions Sources in Hermosa Beach (2005 to 2012) Emissions Source/Activity (Scope) 2005 MT CO2e (% of total) 2012 MT CO2e (% of total) % Change in MT CO2e (2007-2012) Streetlights and Traffic Signal Electricity (2) 405 (27%) 359 (26.2%) -11.4% Employee Commute (3) 348 (23.2%) 218 (15.9%) -37.4% Building & Other Facility Electricity (2) 301 (20%) 305 (22.2%) 1.3% Vehicle Fleet (1) 227 (15.1%) 328 (23.9%) 44% Solid Waste - Contract Services (3) 215 (14.3%) 162 (11.8%) -24.7% Total 1,501 1,372 -8.6% Source: EECAP Draft Inventory, Forecasting, and Target-Setting Report. Draft figures for 2012 are subject to change. Note: Some 2005 figures in EECAP Draft inventory are inconsistent with 2005 & 2007 Inventories. City of Hermosa Beach Actions toward Carbon Neutrality Like many communities in California, the City of Hermosa Beach has developed a number of plans and strategies to address climate change and reduce the city’s greenhouse gas emissions. The latest effort, an Energy Efficiency Climate Action Plan (EECAP), has provided the City of Hermosa Beach with a foundation in development of a comprehensive Climate Existing Actions: Page 4 Action Plan (CAP) by understanding community and municipal energy use, identifying local level strategies resulting in long term energy efficiency, developing implementation plans, and establishing progress reports. In pursuit of carbon neutrality, the City of Hermosa Beach has taken progressive steps in the planning, collaborating, and goal-setting for GHG reductions. Since setting the goal of carbon neutrality, the City Council has developed or is working on community discussions, strategic plans, and updates to the General Plan in keeping with its new sustainability targets. They have contracted outside vendors to inventory municipal GHG emissions so City operations and building may become the beacon of carbon reductions for the entire community. As a result of this inventory, the City has begun specific financial and technical assessments of its energy procurement. It has also begun exploring options to reduce energy use, including park and street lighting, and minimize GHG emissions by City operations. In doing so, the City set green purchasing and fleet policy goals to allow considerations for their target reductions and initiated a preliminary review of their employee rideshare program. The keystone of Hermosa Beach’s existing climate action planning activities is the Hermosa Beach Sustainability Plan prepared by its Green Task Force and accepted by the City Council in 2011. This plan is estimated to support a 25% reduction in emissions below 2005 levels by 2020. Existing Actions: Page 5 Existing Plans, Measures, and Documents Related to Climate Action Title Description Assessing Options to Deliver Carbon Neutral Electricity to the City of Hermosa Beach A report assessing options to deliver carbon neutral electricity to the City. It focuses on Community Choice Aggregation (CCA) and SCE's version of a Green Tariff Shared Renewables (GTSR) program as solutions. Assessment and Planning Report for an Energy Efficiency Climate Action Plan (Draft) Describes actions that the City, the SBCCOG, and region have already taken toward the goals of reduced energy use and GHG emissions, and outlines the process for planning and implementing new measures to continue to work toward those goals. (Prepared by SBCCOG in consultation with city) Beacon Award Program Resolution to participate in recognition program “Beacon Award: Local Leadership toward Solving Climate Change Leader Partnership Program” run by the Institute for Local Governments. Carbon Neutral Issue Paper: City Council Staff Report The document summarizes issues and actions taken toward carbon reduction for municipal operations. (January 3, 2014) Carbon Neutral Road Map for Municipal Facilities & Operations Definitions, actions and target date for carbon neutrality. Summary of accomplishments, 2005 baseline, Sustainability Plan Targets. (SCAG Grant). Carbon Neutral Scoping Plan Provides analysis of emissions conditions by sector and identifies scenarios and options for GHG reduction to achieve carbon neutrality (GHG emissions model). City Council Strategic Plan The plan sets City Council goals and action plans (5-year/current year), such as a road map to carbon neutrality. Clean Fleet Policy and Action Plan and Update City Council adopted the policy, targets, and a plan to green the City fleet. Community Dialogue: Decision-Making Tool, Quality of Life, Fiscal/Financial A summary of the community character and what people value about the City. Provides a comparison of the City's financial/fiscal condition as compared to other peer communities. City Council incorporated Decision Making Tool into its Strategic Plan, 2014. Existing Actions: Page 6 Title Description Employee Commute Survey and Reduction Strategies (Draft): 2013 Employee Commute Survey. Summary identifies strategies for the Employer Commuter Program to support the City's carbon neutrality goal. Enterprise Energy Management Information System A program designed to track electricity, natural gas, and water data in real time. Energy Savings at a Glance Quarterly Report Reports created by GSE Solutions for the SBCCOG. The reports summarize total annual energy use for all municipal facilities and energy-savings projects completed, in progress, and planned/identified and quantify opportunities for reducing operating costs. Energy Study Report This report, by GSE Solutions, assesses the City’s options for energy efficiency retrofits and makes recommendations to pursue the most cost-effective options through on-bill financing. Greenhouse Gas Emissions Inventory: Community-wide and Municipal Community and municipal GHG inventories per Local Government Operations Protocol and International Local Government GHG Emissions Analysis Protocol. The baseline year is 2005, interim year is 2007, and 1990 is the historic level. Municipal High- Efficiency Product Procurement Policy Allows energy efficiency to be a consideration in purchasing. Solar Project Proposal Conceptual proposal by PSOMASFMG for 2 solar sites (total system size of 176 kW-DC) with a net purchase price of $740,843 and annual O&M of $4,893 in year 1. Sites include solar energy systems mounted on carports at City Hall and Community Center. Strategy and Steps to Accelerate Energy Reduction and Cost Savings Report includes recommendations to implement energy reduction projects for City building, park lighting, and street lighting through CIP funds and on-bill financing agreement with SCE and adoption of a Municipal High Efficiency Product Procurement Policy. Sustainability Plan A plan of actions to reduce GHG emissions City-wide by 15% from 2005 by 2020. Existing Actions: Page 7 In-Progress Plans, Measures, and Documents Related to Climate Action Title Description Energy Element: Climate Action Plan The South Bay Cities Council of Governments (SBCCOG) is developing the EECAP, which is the electricity section of the City’s Climate Action Plan. The Energy Element will provide the foundation and framework to develop a comprehensive CAP and put the city on a measurable path toward energy and GHG emissions reductions. This report will describe actions already taken towards reducing energy use and GHG emissions. It will also provide an energy and emissions inventory, forecasts, and targets, potential measures for energy efficiency and GHG reduction, and the proposed processes for public participation, environmental review, and ongoing monitoring processes. General Plan Update Integrating the Coastal Land Use Plan Focused on Sustainability and a Low Carbon Future A General Plan Update will be focused on sustainability and carbon reduction targets adopted by the City prior to or through the process. Municipal Carbon Neutral Plan This plan helps the City navigate its pathway to Carbon Neutrality and ancillary benefits. Hermosa Beach’s Climate Commitment: Page 8 Hermosa Beach Municipal Carbon Neutral Plan Defining Hermosa Beach’s Climate Commitment Determining the City’s Municipal Climate Action Goal The Elements of a Climate Action Goal Local governments have various options in defining their climate commitment. The time frame, magnitude, boundary, and control options are detailed in the table below. Goals with larger magnitude reductions and future years that are nearer are seen as more aggressive. For instance, an 80% reduction in emissions by 2030 is viewed as far more aggressive than a 80% reduction in emissions by 2050 or a 50% reduction in emissions by 2030. Choices for Climate Action Goals Goal Element Goal Choices Time Frame Choose both: ● Base Year - typically in the past ● Future Year - the year by which the entity commits to meeting its climate commitment Magnitude Choose an absolute or percentage reduction, relative to the base year Applicable Boundary Choose one depending on the type of goal: ● Organizational boundary (for entities) ● Geographic boundaries (for communities) Control over Emissions Determine which emissions are within and outside of control: ● Direct & indirect emissions (scopes 1 through 3, for entities) ● Activities & sources (communities) Note: Communities and entities will typically use a greenhouse gas accounting protocol to aid in identifying applicable boundaries and control over emissions. Most goals follow the following format: an X% reduction in boundary-wide greenhouse gas emissions versus Base Year levels by the future year. For example, California’s greenhouse gas reduction goal is to achieve 1990 levels in statewide emissions by 2020. This is a 0% reduction in all statewide emissions (adjusting for electricity imports) versus 1990 levels by 2020. The most common local climate commitment is the U.S. Mayor’s Climate Protection Agreement. Mayors from the 1,060 cities that have signed onto the agreement indicated their City’s Hermosa Beach’s Climate Commitment: Page 9 commitment to “strive to meet or exceed Kyoto Protocol targets for reducing global warming pollution by taking actions in our own operations and communities.” Kyoto targets were 7% below 1990 levels by 2012. Former Hermosa Beach Mayor Sam Edgerton III signed onto this agreement. In commissioning this Carbon Neutral Plan for Municipal Operations, Hermosa Beach wishes to explore the feasibility of a 100% reduction in net greenhouse gas emissions. While this determines the magnitude, the City has yet to determine the future year, boundary, and control over emissions. The base year becomes important if Hermosa Beach seeks to go beyond carbon neutrality by offsetting additional emissions to become “climate positive” or “carbon negative”. Defining the “Carbon Neutral” goal for Municipal Operations In pursuing carbon neutral municipal operations, Hermosa Beach is striving for a 100% reduction in emissions from local government operations. The key remaining decisions are: ● Determining the future year by which Hermosa Beach plans to achieve carbon neutrality. ● Deciding which local government emissions are subject to the goal. ● Deciding whether to set a goal for “gross” emissions in addition to net emissions. Gross emissions are subtotals before any use of offsets. In determining the future year, Hermosa Beach must balance its desire to be a state, national, or international climate action leader with a desire to make pursuit of carbon neutrality as cost- effective as possible. Prior work on greenhouse gas accounting for local governments and prior actions by the California Air Resources Board (ARB) have largely determined which emissions should be subject to Hermosa Beach’s goal. An understanding of these accounting procedures and consideration of the boundary and control decisions made by other cities are useful in determining which emissions the City should seek to neutralize. Accounting Standards for Local Government Operations The California Air Resources Board recommends that municipalities that seek to inventory their entity’s emissions use the Local Government Operations Protocol, which it helped develop. The Local Government Operations Protocol provides specific guidance for accounting and reporting Greenhouse Gas Emissions throughout North America, with additional guidance for California. The Local Government Operations Protocol is based on the North America-specific General Reporting Protocol, published by The Climate Registry. Forty-one US States have declared The Climate Registry’s General Reporting Protocol as their preferred greenhouse gas emissions accounting and reporting guidance. The General Reporting Protocol is based on the Hermosa Beach’s Climate Commitment: Page 10 worldwide Corporate Standard, jointly published by the World Business Council on Sustainable Development and the World Resources Institute. All three documents are used for entity-based greenhouse gas emissions accounting and reporting. Entity-based accounting differs from geographic-based accounting and reporting, which is used to account for and report emissions from the community, a state, or a nation. The U.S. Community Protocol for Accounting and Reporting of Greenhouse Gas Emissions and the IPCC Guidelines for National Greenhouse Gas Inventories are two commonly-accepted guidance documents for geographic-based accounting. Both entity-based and geographic-based accounting and reporting guidance require an inventory to include gross emissions totals before adjusting for any offsets. Offsets and the inventory’s gross emissions after adjusting for offsets are included as an informational item. Looking at requirements for state agencies may shed light on what accounting procedures local governments would need to use should the state one day mandate greenhouse gas reductions from local government operations. California Law requires state agencies that are members of the Climate Action Team to estimate their greenhouse greenhouse gas emissions from their operations. An Executive Order (B-18-12) requires all other state agencies to prepare an annual inventory. The guidance to state agencies dictates that inventories should be conducted using protocols established by The Climate Registry, which includes the Local Government Operations Protocol. The following cities in Los Angeles County are members of The Climate Registry: Lomita, Long Beach, Santa Monica, and Vernon. Only Vernon has reported a third-party verified GHG inventory to The Climate Registry. Los Angeles County is also a member of The Climate Registry. The 2005 and 2007 municipal inventories and current draft of the City of Hermosa Beach GHG Inventory, Forecasting, Target-Setting Report for an Energy Efficiency Climate Action Plan also uses the Local Government Operations Protocol. ➤ ➣ ➢ Because the Local Government Operations Protocol is currently recommended and is the most likely candidate if municipal accounting and reporting were ever made compulsory, Hermosa Beach should use this protocol to determine which local government operations emissions are subject to its carbon neutrality goal. Defining Organizational Boundaries for the Local Government Organization Each of the three entity-based reporting standards discussed earlier allows entities the option of reporting emissions using operational control or financial control. Hermosa Beach’s Climate Commitment: Page 11 ● Operational Control: Occurs when an entity wholly owns the operation, facility, or source, or when it has the full authority to introduce and implement operational and health, safety, and environmental policies (including both GHG- and non-GHG-related policies). ● Financial Control: Occurs when a local government wholly owns an operation, facility, or source, or is a majority partner in a joint venture. A local government may own an asset (e.g. a transit bus), but not maintain operational control (e.g. transit operations and maintenance are contracted out). Because of the unique nature of local governments, the Local Government Operations Protocol “strongly encourages local governments to utilize operational control when defining their organizational boundary.” In addition, the Local Government Operations Protocol makes several reporting recommendations for jointly-controlled operations, sources, or facilities. Organizational Boundaries for Local Governments Structure Reporting Recommendation in Local Government Operations Protocol Joint Powers Authority (JPA) A JPA is considered a distinct entity; a local government should not report emissions from a JPA of which it is a member. Special Districts Special Districts are considered distinct entities; however, a local government may optionally report as scope 3 those emissions which are attributable to the local government (e.g. emissions at a special district operated landfill attributable to the municipal government’s waste) Community Choice Aggregation Community Choice Aggregation is a distinct entity when implemented through a Joint Powers Authority; a local government should not report emissions from community electricity used through a CCA. The local government should report emissions from municipal electricity procured via a CCA. ➤ ➣ ➢ Hermosa Beach should use operational control to define its organization for purposes of GHG emissions accounting and reporting. Scope 3 emissions from special districts can be incorporated on a case-by-case basis, as determined by the relevancy of emissions to municipal operations. Determining Appropriate Emissions within the Municipal Operations Boundary To become carbon neutral, Hermosa Beach would have to reduce or offset emissions from all sectors, activities, and sources for which it reports emissions. The Local Government Operations Protocol suggests that municipalities report scope 1 and 2 emissions over which they have operational control from the following 11 sectors: Hermosa Beach’s Climate Commitment: Page 12 Local Government Operations Protocol Sectors and Reporting Recommendations for Hermosa Beach Sector Operational Control in Hermosa Beach Recommendation Buildings and other facilities ✔ Operational control over City-owned buildings. Report these emissions. Streetlights and traffic signals ✔ Operational control over City-owned streetlights. ✘ Limited or no operational control of streetlights provided by Southern California Edison. Report these emissions, including emissions from SCE-owned street lighting. Water delivery facilities ✘ No operational control: ○ Water is imported, recycled, treated, and supplied by West Basin Municipal Water District. ○ Water is delivered by California Water Service Company (Rancho Dominguez/Hermosa-Redondo). Consider reporting emissions from water distribution. Port facilities ✘ No port facilities. Do not report. Airport facilities ✘ No airport facilities. Do not report. Vehicle fleet ✔ Owned municipal vehicle fleet Report these emissions Transit fleet ✘ No operational control. Hermosa Beach is served by Beach Cities Transit (controlled by Redondo Beach, operated by Transportation Concepts), the Los Angeles County Metropolitan Transportation Authority Lines 130 & 232, (operated by MV Transportation), Los Angeles Department of Transportation Commuter Express Route 438 (operated by MV Transportation). Consider these emissions as an informational item. Power generation facilities ✘ Service provided by Southern California Edison. Emissions reported in other sectors as scope 2. Hermosa Beach’s Climate Commitment: Page 13 Sector Operational Control in Hermosa Beach Recommendation Solid waste facilities ✔ Operational control via contracting. Athens Services provides haulage and sorting, landfills are owned by a third party. Report community- wide collection and haulage emissions. Report landfill emissions from waste generated by municipal operations. Wastewater facilities ✘ Services provided by the Southern California Sanitation Control District / South Bay Cities District. Consider these emissions as an informational item. Other process & fugitive emissions These are cross-sectoral emissions. Report fugitive emissions of common high-GWP gases (refrigerants and fire suppression systems) over which the City has operational control Other special districts of which Hermosa Beach is a part These sectors are not included in the Local Government Operations Protocol Flood Control Los Angeles Flood Control District Do not report. Vector Control Los Angeles County West Vector & Vector- Borne Control District Do not report. Community Health District Beach Cities Health District - preventative healthcare for the residents of Hermosa, Manhattan, and Redondo Beach. Do not report. Emissions from transit and wastewater are not currently included in Hermosa Beach’s greenhouse gas inventory. We recommend they are included as an informational item because these services are provided in Hermosa Beach, but by other local government entities. Greenhouse Gas Emissions Scopes & Biogenic Emissions Entity-based accounting guidance also classifies emissions into three scopes depending on the operational control possessed over the emissions. Hermosa Beach should report and neutralize all scope 1 and scope 2 emissions, and certain scope 3 emissions. Hermosa Beach’s Climate Commitment: Page 14 Emissions Scopes and Local Government Protocol Reporting Requirements Emissions Scope Reporting Recommendation for Selected Sectors 1 - Direct Emissions Include per Local Government Operations Protocol 2 - Indirect Emissions from Imported Energy, Steam, & Cooling Include per Local Government Operations Protocol 3 - Other Indirect Emissions Optional per Local Government Operations Protocol Hermosa Beach should include emissions from: ● waste generated by government operations, but disposed of outside its organizational boundary; ● emissions from employee commuting; and ● emissions from employee business travel (not currently included in the City’s municipal inventories). Hermosa Beach should consider including: ● upstream life-cycle emissions from goods and services consumed by Hermosa’s municipal government. Anthropogenic versus Biogenic Emissions Anthropogenic sources represent new greenhouse gas emissions, above and beyond the atmospheric carbon balance that existed before industrialization and use of fossil fuels. Much of the carbon emitted is new atmospheric carbon, formerly trapped underground. Biogenic or non-anthropogenic sources are considered part of the carbon cycle or result from emissions not caused by humans. Because of this difference, greenhouse gas reporting guidelines differentiate between biogenic and anthropogenic sources of greenhouse gas emissions, reducing gross or net inventory figures by biogenic emissions totals. Biogenic CO2 emissions from the combustion of biomass should be quantified and reported as an informational item rather than as part of scope 1 emissions. Climate Action Goals by Other Cities This section examines the context for Hermosa Beach’s climate commitment by looking at aggressive local government goals for both the community and municipal operations. In general, cities have set and pursued aggressive climate action goals because of internal pressure to take action to mitigate climate change and provide an example to others rather than to capitalize on any economic benefits that may accrue to climate action leaders. Hermosa Beach’s Climate Commitment: Page 15 Hermosa Beach seeks a reputation as a prominent local climate action leader. While the City’s position in California gives it clear guidance on choosing the minimum set of emissions which it should neutralize, Hermosa Beach should look to other cities’ goals and use of offsets in order to position itself as a climate action leader. When Hermosa Beach adopts and publicizes a goal, it will be compared first and foremost to current and future goals by other cities in California, followed by cities elsewhere in the U.S. Less weight will likely be placed on comparing goals set by Hermosa with those of major world cities. Cities in California Davis: Carbon Neutral Community by 2050 In 2008, the City of Davis adopted, by resolution, GHG targets for community and municipal operations that put the City on a path toward carbon neutrality by 2050, with average reductions of 2.6% per year between 2015 and 2040. Davis plans to use offsets to neutralize emissions it cannot reduce on its own. Davis uses the Local Government Operations Protocol to account and report municipal emissions and the U.S. Community Protocol for Accounting and Reporting of Greenhouse Gas Emissions for community emissions. Within its inventory, Davis includes its vehicle fleet, special equipment, refrigerant leakage, natural gas and facility emissions, electricity (buildings, streetlights, traffic lights, and water & wastewater conveyance), as well as direct emissions from treating and processing water and wastewater. In 2010, Davis adopted its Climate Action and Adaptation Plan, which details the City’s past and future climate actions. The City of Davis reported verified emissions to The Climate Registry for calendar years 2009 and 2010. Berkeley: Reductions by Popular Demand In 2006, the voters of the City of Berkeley adopted a GHG reduction target of 80% below 2000 levels by 2050. 82.3% of voters favored Measure G. The Office of Energy and Sustainable Development within the Department of Planning & Development regularly tracks community and municipal progress. Berkeley does not have a carbon neutrality goal. Palo Alto: Carbon Neutral Electricity The City of Palo Alto Utilities Electricity Supply Portfolio Carbon Neutral Plan outlines a strategy to secure long-term contracts for renewable energy, with use of RPS-eligible unbundled RECs and greenhouse gas offsets in the interim (2013-2016). In 2007, the Palo Alto City Council adopted a goal to reduce municipal and community GHG emissions 15% below 2005 levels by 2020. Hermosa Beach’s Climate Commitment: Page 16 Lancaster: “Solar Capital of the World” The City of Lancaster’s goal is to become the Solar Capital of the World. In 2011, the City formed the Lancaster Power Authority to install solar photovoltaic arrays at local schools and to partner with private clean energy companies. On March 26, 2013, the City adopted an ordinance that required new single family homes to provide solar-generated power. In 2014, the City started Lancaster Choice Energy, a pending community choice aggregator. The City does not have a climate action plan. In 2010, it passed a resolution asking the state to suspend AB 32. San Francisco: A Cautionary Tale on Ephemeral Climate Goals In his January 2008 inaugural address, Mayor Gavin Newsom pledged to make the City completely carbon neutral by 2020: “The most important step we can take is make this city completely carbon neutral, and that is exactly what were going to do.... Today I want to pledge to make this City -- and this, by the way this is not one of those fanciful pledges that never gets done, you can't measure, and nothing ever happens, and we come and go, and no one holds us to account. Let us pledge today -- with a specific plan that will follow -- to make San Francisco and City government carbon neutral by 2020. I think that's a fair, reasonable, as well as an audacious goal.” The resulting plan, released later that year, contained a goal to reduce community emissions to 20 percent below 1990 levels by 2012 through implementation of reduction strategies and the use of offsets. The plan mentioned neutrality, but did not express a future year to make the goal concrete. In 2008, the City adopted an ordinance to reduce community-wide emissions 25% below 1990 levels by 2017 and 80% below 1990 levels by 2050. San Francisco failed to meet its 2012 goal for reductions in municipal greenhouse gas emissions. Sacramento: Acting Through the General Plan Sacramento incorporated its 2012 Climate Action Plan into its 2035 General Plan Update in 2014. The City did this to strengthen the plan’s objectives by including them as general plan policies and implementation measures. The 2014 Draft includes a general plan policy to reduce community-wide emissions 83% below 2005 levels by 2050. The Sacramento Municipal Utility District (SMUD), which provides electric service to the City and surrounding areas, maintains an offset program and offers opt-in 50% and 100% renewable options through its Greenergy product. Neither the City nor the utility have a carbon neutral goal. Hermosa Beach’s Climate Commitment: Page 17 Santa Barbara: Concerned about the Cost of Carbon Neutrality Santa Barbara considered a municipal carbon neutral goal in 2008 through 2009, but ultimately decided against setting aggressive greenhouse gas reduction targets. According to an agenda from their March 10, 2009 meeting, “The [Finance] Committee is in favor of having City goals in this regard, but has requested additional financial information. Once the Committee receives the additional information, the Committee will review the options and return to the full Council in the near future.“ No evidence in the council record suggests that the council ever reconsidered a carbon neutral goal. In Santa Barbara’s 2012 Climate Action Plan, the City adopted the standard AB 32 target of reducing community emissions to 1990 levels by 2020. Cities Elsewhere in the United States Seattle, Washington: A Gross Emissions Reduction Goal In 2005, municipal utility Seattle City Light became the first carbon neutral electric utility, aided by the fact that 90% of the utility’s portfolio comes from hydroelectric resources. Seattle City Light offsets the balance of emissions using offsets registered with the Climate Action Reserve and other third-party organizations. In May 2011, the City released Getting to Zero: A Pathway to Carbon Neutral Seattle. In October 2011, the City Council adopted a resolution to set a goal of 87% gross reduction in community emissions by 2050, with the balance neutralized by offsets. The City does not have a separate target for municipal operations. In 2013, the City adopted the Seattle Climate Action Plan, which relies on a combination of pricing, transportation electrification, and integrated transportation and land use planning to move the city towards its long-term goal. Seattle’s approach to climate action and long-term goal highlight both the urgency of the effort, but also the deliberate process in deciding to decarbonize a local economy. The City made its carbon neutral community commitment 10 years after its first notable climate action, a LEED building incentive program, and five years after its first Climate Action Plan. Control over the electric utility -- and the revenues it provides -- will undoubtedly aid the City in its pursuit. Austin, Texas: Carbon Neutral Community by 2050; Municipality by 2020 In 2007, Austin adopted, by resolution, a goal of carbon neutral municipal operations by 2020. The resolution included an interim goal to power all City facilities with renewable energy by 2012 (achieved), implement an ordinance to mandate zero net-energy capable1 new homes by 2015, and create an interdepartmental climate action team to address emissions from the community, and a unified approach to obtain offsets for municipal and community emissions. 1 Austin defines a net-zero energy capable” homes as a home that is energy efficient enough would produce as much energy as it uses if it were to have a reasonably-sized solar system on the roof Hermosa Beach’s Climate Commitment: Page 18 In 2014, Austin adopted a resolution to pursue community carbon neutrality by 2050, which reiterated the City’s 2020 goal for a carbon neutral municipality. Austin’s City Council has control over its electric utility, Austin Energy, which gives the City substantial leeway to fund and implement climate action programs. The City has its own offsets program, which prioritizes local sources of offsets. Offsets are funded by voluntary contributions from various large events in Austin, including Austin City Limits. Boulder County and City, Colorado Boulder County has a goal of carbon neutral municipal operations by 2020. The County plans to use offsets to achieve this goal. The County’s stated goal in it’s 2012 Environmental Sustainability Plan is to “Achieve carbon neutrality and become more resilient to the potential effects of climate change.” The County adopted this goal before the County and other parts of Colorado experienced a once-in-a-century flood in September 2013, which were seen as a potential symptom of climate change. The City of Boulder’s years of consideration provide an example of a thoughtful, deliberative approach to making long-term climate commitments. The City discussed three climate commitment goals in a council study session on July 30, 2013, following four shorter study sessions in 2013. They are summarized below: ● Realizing that aggressive climate action efforts must span City departments, Boulder has an integrated approach at the top level of administration and policy-making (city manager and general plan level). Boulder also found it important to develop a short-term goal in addition to its long term goal, as this would solidify early actions rather than approaching “analysis paralysis” in determining the ordering of actions towards the long- term goal. As a key part of its efforts to build climate change information into decision- making, Boulder strives to create a more robust and dynamic data management and performance system for monitoring progress. ● Key points of the climate commitment are: ○ Seven Core Principles: be strategic, yet opportunistic; take calculated risks; avoid analysis paralysis; partner with other agencies, nonprofits, and businesses; demonstrate ethical leadership; focus on system change; and harness the economic benefits of climate leadership. ○ Six Pillars of Action: “ramp up renewables”, “better buildings” (efficiency and resilience), “travel wise” (sustainable transportation), “waste not” (materials & resource recovery), and “every drop” (conserve water) ○ Five Elements: goal setting, defining targets, strategy development, monitoring and reporting, and community & partner engagement. Hermosa Beach’s Climate Commitment: Page 19 Three Goals The City of Boulder explored 3 community-wide goals for carbon neutrality, from least to most aggressive: 1. An 80% reduction in emissions by 2050 (ultimately selected) 2. Carbon neutral by 2050 3. Carbon neutral by 2030 (determined to be too aggressive) Staff ultimately decided to recommend the Council consider the first two goals, as the third option would require immediate, drastic reductions (25% per year). The Council ultimately decided on Option 1: an 80% reduction in community-wide emissions by 2020. While some council members sought the stronger goal, the Council ultimately decided that they would revisit the goal in a few years. A comment from Councilmember Macon Cowles captured the sentiment of the majority: “I don’t look at this as an endpoint but as an aggressive goal...that we can revisit again in a couple of years... With this goal (option one), I think that we can do this. But the times are uncertain....Let’s make sure we can do this and that we do do this.” (3:42:03 in video). City of Boulder’s financial resources for climate action In 2006, Boulder’s voters passed a Climate Action Plan tax as a surcharge on electric utility bills. Voters extended the measure in 2012. Boulder is served by an investor-owned utility, Xcel Energy. The tax, similar to California’s Utility Users Tax, provides the City with an opportunity to collect revenues based on electricity usage. Per-kWh rates are $0.0049 for residential, $0.0009 for commercial, and $0.0003 for industrial customers. The tax generates around $1.8 million per year and funds personnel, energy audits, rebates and incentives, and public education programs. Next Steps The July 30th council discussion provided direction for staff, but did not formalize the City’s climate commitment. As of September 2014, Boulder has not yet adopted a target via resolution or ordinance. The City of Boulder and Hermosa Beach are both working with the Brendle Group on climate action strategy. The Brendle Group conducted much of the background research for the City’s climate commitment study. South Miami, Florida In 2009, the City adopted a resolution and work plan committing to carbon neutrality by 2030. The resolution applies only to municipal operations. Hermosa Beach’s Climate Commitment: Page 20 Cambridge, Maryland Cambridge has a “getting to zero” task force scoping options to become a “net zero community.” This term is not defined, but the task force is focused on reducing carbon emissions from building operations. Cities Outside of the United States British Columbia, Canada British Columbia is globally unique due to its low-per capita emissions, pervasive local government climate commitments, and high price of carbon. The province has high utilization of emissions-free energy, since BC Hydro gets more than 90% of its power from hydroelectricity and other clean energy sources. Many British Columbia Municipalities have signed on to the British Columbia Climate Action Charter and have made a commitment to carbon neutral operations by 2012. British Columbia’s revenue-neutral carbon tax reached its full phase-in value of $30 per metric ton during 2012. In measuring municipal carbon neutrality goals, British Columbia considers core services, whether provided directly or contracted. It also considers fuel and energy used for vehicles, facilities, machinery, and equipment (whether or not they are owned or leased). Excluded are non-core services such as airports, janitorial services, staff commuting and travel, and construction emissions. Offsets are used to neutralize gross greenhouse gas emissions. Their use - and controversy - are covered in the discussion of offsets later in this chapter. Aarhus, Denmark Aarhus is the central city of a region of about 1,250,000 people. In 2008, the City Council adopted a goal for the community to be CO2-neutral by 2030. The implementation plan does not include a discussion of offsets. Copenhagen, Denmark Copenhagen has a comprehensive plan to achieve community carbon neutrality by 2025. The City plans to implement aggressive energy efficiency measures, and will offset any remaining emissions via surplus renewable energy generation. Malmö, Sweden Across the Sound from Copenhagen, Malmö is a city with a population of about 300,000. In 2009, the City set a community-wide goal to be “climate neutral” by 2020 (by using offsets) and run on 100% renewable energy by 2030. The City plans to reduce gross emissions 40% below 1990 levels by 2020. Melbourne, Australia In 2002, the City adopted a goal of carbon neutral municipal operations by 2020. In 2013, Melbourne verified its carbon neutral municipal operations status through an independent audit. The City used offsets to achieve this goal: investments in a Indonesian clean energy plant. The Hermosa Beach’s Climate Commitment: Page 21 City hopes that its central business district and surrounding areas will be carbon neutral by 2020. Climate Commitments by Entities Other Than Local Governments As carbon neutral commitments are relatively uncommon among local governments, climate commitments from other entities -- specifically universities, but also corporations -- are relevant to Hermosa Beach’s decision-making. More similarities exist between local government and universities than with corporations. Similarities between local governments and higher educational institutions include: close ties between an individual’s identity and the institution and place, 24-hour communities with residential life, and the role of competing missions and priorities in considering climate commitments and action. Colleges and Universities The American College and University President’s Climate Commitment (ACUPCC) is a national climate commitment registry and information-sharing network designed to enhance the credibility and success of college and university climate goals. As many colleges and universities are on the leading edge of climate action, the ACUPCC effort is the most mature climate commitment effort in the U.S. The effort’s commitment requirements and support structure can provide an example for municipalities. Signatories agree to: (1) complete an emissions inventory; (2) set a target date and interim milestones to become climate neutral; (3) immediately implement short-term actions to reduce GHGs; (4) integrate sustainability into the curriculum; and (5) submit the action plan, inventory, and progress reports to the network. ACUPCC provides membership-based guidance and technical support, much as ICLEI provides for local governments. Annual dues vary from $750 to $4,000 for a basic membership based on the institution’s size. As of September 2014, ACUPCC has 684 signatories, 73 of which are in California. Hermosa Beach’s Climate Commitment: Page 22 Southern California Signatories of the American College and University President’s Climate Commitment: Anaheim University Antioch Los Angeles CSU Pomona CSU Fullerton CSU Long Beach CSU Northridge Chaffey College Claremont McKenna College East Los Angeles College Harvey Mudd College Los Angeles City College Los Angeles Harbor College Los Angeles Mission College Los Angeles Pierce College Los Angeles Southwest College Los Angeles Trade-Technical College Los Angeles Valley College Loyola Marymount University Pasadena City College Pitzer College Pomona College Santa Monica College UC Irvine UC Los Angeles UC Riverside University of La Verne University of Redlands West Los Angeles College West Valley College Defining Carbon Neutrality for Colleges and Universities The ACUPCC defines carbon neutrality as “having no net greenhouse gas (GHG) emissions, to be achieved by eliminating net GHG emissions, or by minimizing GHG emissions as much as possible, and using carbon offsets or other measures to mitigate the remaining emissions.” At a minimum, institutions must report scope 1 (direct) emissions produced through campus activities; scope 2 (indirect-energy) emissions from purchased energy; and scope 3 (indirect) emissions from student, faculty, & staff commuting and institution-funded air travel. ACUPCC recommends (but does not require) that universities evaluate upstream (scope 3) emissions in purchased goods and services. ACUPCC requires use of an accounting method consistent with the Greenhouse Gas Protocol of the World Business Council on Sustainable Development and World Resources Institute. Both The Climate Registry’s General Reporting Protocol and its derivative for municipalities, the Local Government Operation Protocol, are consistent. The ACUPCC has provided a commonly-accepted standard for college and university climate commitments. Because carbon neutral commitments are relatively rare for U.S. local governments, no equivalent commonly-accepted standard exists. This signals a leadership opportunity for Hermosa Beach and other cities considering carbon neutrality goals in the coming years. Future Year for College and University Climate Commitments The most common horizon year for college and university carbon neutrality goals is 2050. A few universities have set - and achieved - neutrality goals with horizon years prior to 2014. A discussion of their efforts and use of offsets follows in this chapter. Hermosa Beach’s Climate Commitment: Page 23 A Closer Look at University of California’s Climate Commitment The University of California hopes to be the first research university system to achieve carbon neutrality by 2025. Although the goal has been discussed publicly by the Regents and President Janet Napolitano, it has not been formally adopted as a UC Policy. Existing climate goals are measured against emissions scopes 1, 2, and select scope 3 (student, staff, and faculty commutes and university-funded air travel). In 2011, the Regents discussed a carbon neutrality commitment, stating that while reductions in gross emissions were preferred, offsets would be required. In order to keep funds within the UC system, the Regents discussed developing a UC offset fund. Corporate Climate Goals In 2014, Ceres, a non-profit organization dedicated to sustainable investment and business, released a report of corporate greenhouse gas goals for Fortune 500 companies using information from the CDP (formerly Carbon Disclosure Project). A total of 53 Fortune 100 companies reported target data to the CDP. Hermosa Beach’s Climate Commitment: Page 24 Notable Climate Goals of Fortune 500 Companies Fortune 500 Company (rank) Sector Gross Emissions Goal (before offsets) Wal Mart Stores (1) Retail 30% reduction in GHG-intensity per square foot from 2010 levels by 2020. General Electric (8) Industrials / Financials 25% reduction in scope 1 & 2 emissions from 2004 levels by 2015. JP Morgan Chase (18) Financials 40% reduction in scope 1 & 2 emissions from 2005 levels by 2020. Wells Fargo & Company (25) Financials 35% reduction in scope 1, 2, & 3 emissions from 2008 levels by 2020. Microsoft (35) Information Technology Carbon neutral by 2013. Uses an internal carbon fee to allocate resources. Goldman Sachs (68) Financials Carbon neutral for offices and data centers by 2020. Nike (126) Apparel Carbon neutral facilities by 2015. Excelon (129) Utility eliminate 17.5 million metric tonnes of greenhouse gas emissions per year by 2020 Kohls (148) Retail Carbon neutrality goal, 2009 through 2015. Mattel (395) based in South Bay Consumer Reduce emissions per unit of revenue 50% from 2008 levels by 2020. Many companies have backed off carbon neutrality claims that they made in the mid 2000s. Yahoo, Nike, Pepsi, and Dell are examples. Dell achieved carbon neutral status in 2008, but backed off after a Wall Street Journal article criticized their lack of transparency and exception of supply-chain emissions. The shoeware and apparel company Timberland set a goal in 2005 to be carbon neutral by 2010. By 2010, they had reduced 38% of emissions and offset the remaining 62%. Timberland continues to report annual emissions, though it estimates that 96% of life-cycle emissions associated with its products are outside of corporate control. The company continues to have a goal of a 50% reduction in 2006 levels by 2015. VF corporation bought Timberland in 2011. The change in ownership highlights that decision-maker priorities can change over time. Defining Climate Goals for Hermosa Beach The validity of climate action and renewable energy claims is complicated by California’s Cap- and-Trade and Renewable Portfolio Standard programs. The climate action and renewable Hermosa Beach’s Climate Commitment: Page 25 energy goals presented in this section are not mutually exclusive: the concurrent pursuit of multiple goals is possible, and some goals are inclusive within others. It’s possible for the City to pursue multiple goals, and achieve some goals along the way towards others. Summary of Possible Goals for Greenhouse Gas Emissions Goal What it means for municipal operations What it means for the community Zero Emissions Zero gross scope 1, 2, and select scope 3 emissions attributable to municipal operations, before accounting for offsets and RECs. Zero gross greenhouse gas emissions from emissions- generating activities or emissions sources attributable to the community, before accounting for offsets and RECs. Carbon Neutral A zero balance of net emissions on a municipal greenhouse gas inventory after accounting for offsets and RECs. A zero balance of net emissions on a municipal greenhouse gas inventory after accounting for offsets and RECs. Carbon Negative A real, additional, and verifiable reduction in California (and global) greenhouse gas emissions equivalent to a some base year emissions (e.g. Hermosa Beach’s 2005 or 2012 municipal inventory). A real, additional, and verifiable reduction in California (and global) greenhouse gas emissions equivalent to a community baseline. Hermosa Beach’s Climate Commitment: Page 26 Possible Goals for Greenhouse Gas Emissions Reductions Zero Emissions Zero Emissions means zero gross emissions, even before accounting for adjustments that appear as informational items on a greenhouse gas inventory, such as use of offsets and Renewable Energy Certificates. Zero Emissions is the strictest definition of carbon neutrality and the most difficult to achieve. Because Hermosa Beach is in California (which has a cap- and-trade program), achieving Zero Emissions would not lead to real, verifiable reductions in global greenhouse gas emissions (see Carbon Negative section). Zero Emissions requires 100% participation of: ● Facilities and fleet that exclusively operate on zero-emissions electricity or renewable biofuels that emit non-anthropogenic greenhouse gas emissions. Zero emissions renewable electricity could be produced on-site or off-site. Hermosa Beach’s Climate Commitment: Page 27 ● Employees that either walk, bike, or take electric or biofuel-powered vehicles for commutes. ● Contracted service providers that exclusively use electricity or biofuels, either biodiesel or renewable natural gas. ● Use of landfills and wastewater treatment facilities that employee state-of-the-art greenhouse gas mitigation techniques. Carbon Neutral Carbon Neutral status results when a greenhouse gas inventory has a net zero balance after subtracting informational items such as offsets and Renewable Energy Certificates from gross emissions. Carbon Neutral status is possible with less than 100% participation of the activities outlined under Zero Emissions, plus the retirement of greenhouse gas allowances and, in certain cases, Renewable Energy Certificates. Hermosa Beach can achieve Carbon Neutral status by retiring California-eligible greenhouse gas emissions allowances in an amount equal to its gross emissions inventory. Hermosa Beach can retire qualified renewable energy used for municipal operations through the California Air Resources Board’s Voluntary Renewable Energy Program. Hermosa Beach can also purchase and retire California-eligible offsets through direct participation in California’s carbon market or through services offered by carbon balancing firms. Hermosa Beach can also purchase and retire greenhouse gas allowances that are not California-eligible. While non-California allowance retirement can also lead to a reduction in global greenhouse gas emissions, it will not reduce emissions in California and therefore would not meet potential future guidance from the California Air Resources Board. If the City chooses to pursue this route, Hermosa Beach should seek out high-quality offsets that are measurable, real, additional, and verifiable: typically those that are admissible to mandatory greenhouse gas reduction programs with high offset performance standards. In some cases, voluntary allowances may meet this high performance standard, such as those certified by the Climate Action Reserve, Gold Standard, and Verified Carbon Standard. Carbon Negative A new term to describe municipal climate action goals is needed for cities subject to a cap-and- trade program. The absolute cap on emissions in such a program means that emissions reductions attributable to activities in Hermosa Beach would be replaced by equivalent emissions from other sources outside of Hermosa Beach, but within the jurisdiction of the cap- and-trade program. Therefore, the overall level of greenhouse gas emissions in California (and globally) remains the same regardless of Hermosa Beach’s actions. Cap-and-trade programs allow for guaranteed reductions in program-wide greenhouse gas emissions, but negate emissions reductions from individual entity or community action. Hermosa Beach’s Climate Commitment: Page 28 Carbon Negative status means that Hermosa Beach achieves a real, additional, and verifiable reduction (or “dent”) in California and global greenhouse gas emissions. If Hermosa Beach were not located within a cap-and-trade program, achieving Zero Emissions or Carbon Neutral status would lead to a real, additional, measurable, and verifiable reduction in global greenhouse gas emissions equivalent to the City’s business-as-usual baseline. Hermosa Beach and other entities and communities can achieve Carbon Negative status by retiring greenhouse gas emissions allowances. The retirement of any amount of allowances greater than the City’s gross greenhouse gas emissions inventory allows the City to make Carbon Negative claims. However, as the City’s gross emissions decrease, the “dent” will decrease over time. Thus, the business-as-usual baseline is recommended for offset purchase and retirement targets, as this approximates the “dent” Hermosa Beach would make in global greenhouse gas emissions if it pursued aggressive climate action outside of California’s cap- and-trade program. Summary of Possible Goals for Use of Renewable Energy Goal What it means for municipal operations What it means for the community Powered by Renewable Energy The municipality can validly claim that operations are powered by renewable energy, using Green-e RECs to support the claim. The community can validly claim that it is powered by renewable energy. Powered by California Renewable Energy The municipal can validly claim that operations are powered by renewable energy delivered to California, using direct purchases, on-site generation, and California- eligible RECs to support the claim. The community can validly claim that operations are powered by renewable energy delivered to California, using direct purchases, on-site generation, and California- eligible RECs to support the claim. Powered by Renewable Energy Using Renewable Energy Certificates certified under the Green-e program, Hermosa Beach can make claims that municipal operations are powered by renewable energy. Renewable Energy Certificates represent the environmental attributes of renewable power, and their monetary value has aided in financing additional renewable energy generation in the United States. While valid under commonly-accepted energy accounting principles, such claims may be challenged because there is no credibility that the renewable energy was delivered to California. For instance, the certificate could represent renewable energy generated at a wind farm in West Texas or North Dakota with no connection to the Southern California electricity grid. Hermosa Beach’s Climate Commitment: Page 29 Whether Hermosa Beach can take credit for an associated reduction in greenhouse gas emissions depends on a number of factors. Under the Local Government Operations Protocol, Hermosa Beach can take emissions credit (as an informational item) for net greenhouse gas reductions in scope 2 (electricity) emissions only if the certificates come from electricity generation not delivered to California. This is somewhat counterintuitive and is due to California’s cap-and-trade program. Full details are covered in the Section on Electricity. Because California-eligible RECs are desirable for compliance with California’s mandatory Renewable Portfolio Standard, less-expensive, voluntary Green-e RECs available for purchase are not California-eligible. Within California, greenhouse gas claims made from use of non-California RECs may ultimately be seen as weak and considered the result of an accounting maneuver. There is not yet a commonly-accepted standard for the adjusting community-wide emissions inventories for the purchase of Renewable Energy Certificates. This scenario could be applicable under a Community Choice Aggregation program. Powered by California Renewable Energy California’s Renewable Portfolio Standard requires 33% of statewide electricity consumption to come from qualified renewable energy sources by 2020. Because of this mandate, generation from qualified sources is at a price premium compared to non-qualified sources. Because of California’s cap-and-trade program, Hermosa Beach must take the extra step of retiring allowances through the California Air Resources Board’s Voluntary Renewable Energy Program in order to claim emissions-related benefits. Despite being more expensive and requiring an extra step to claim greenhouse gas benefits, California Renewable Energy is likely to be perceived as the gold standard for renewable energy claims in California. Hermosa Beach could purchase California Renewable Energy from Southern California Edison’s Green Rate Option, from a future Community Choice Aggregation program, possibly from direct access provider (through a lottery), or from on-site generation. A Community Choice Aggregation program could offer, and Southern California Edison’s Green Rate Option will offer, California Renewable Energy. Recommendation for Hermosa Beach To be seen as a leader in municipal climate action, Hermosa Beach would need to commit to neutralizing emissions from municipal operations within the next 10 years. While a goal of 2025 Hermosa Beach’s Climate Commitment: Page 30 would still help Hermosa Beach be seen as a leader, the City should match goals set by the City of Austin and County of Boulder and commit to a 2020 goal. Committing to the same goal as other leading local governments would unambiguously establish Hermosa Beach as a climate action leader. While many British Columbia municipalities have already achieved carbon neutral status for 2010, many have backed off the use of offsets to neutralize greenhouse gas emissions. Hermosa Beach has an opportunity to be achieve “first-to” status for municipal operations in the United States by committing to neutralize as early as 2015. Hermosa Beach can seek the more aggressive goals of “Carbon Negative” status and “Powered by 100% California Renewable Energy”. However, this level of climate commitment from the City is currently unnecessary for the City to be seen as a national leader. The City should re-evaluate its climate and renewable energy goals in the future if it finds itself undifferentiated in a growing pool of cities with simple “Carbon Neutral” goals, which are currently rare. ➤ ➣ ➢ If Hermosa Beach seeks to be seen as a “leader” it should set 2020 as its goal for carbon neutral municipal operations. If Hermosa Beach seeks “first-to” status, it should commit to neutralizing emissions as early as 2015. Electricity: Page 31 Hermosa Beach Municipal Carbon Neutral Plan Electricity Introduction Municipal electricity use accounts for 43.4% of total scope 1, 2, & selected scope 3 greenhouse gas emissions reported in the City’s 2007 operations inventory. This section of the Municipal Carbon Neutral Plan focuses on the procurement of emissions-free renewable electricity in order to make carbon neutrality claims and implement Program E5 of the City’s Sustainability Plan: Municipal Renewable Energy Generating. Efficiency efforts remain important, nonetheless, and the City should continue to pursue actions outlined in the Energy Study Report and the Energy Efficiency Climate Action Plan. The Hermosa Beach Carbon Neutral Electricity Procurement Plan explored on-site zero emissions generation, Southern California Edison’s Green Rate Option, and Community Choice Aggregation (CCA) for community electricity. In this section, we also discuss a Power Purchase Agreement, a municipal lease, Direct Access programs, and the use of Renewable Energy Certificates (RECs) as options. We recommend a combination of on-site generating, RECs, and pursuit of a CCA for achieving the City’s carbon neutral goals. On-site Electricity Generation Production Incentives for Owned Generation California Solar Initiative The California Solar Initiative began in 2007 to provide additional incentives for solar generation in California. When the program began in 2007, non-residential entities were eligible for a $2.40/watt incentive for installation and a $0.39/kWh incentive for energy production. The program utilizes a tiered schedule where incentives decline as more solar projects are installed. In Southern California Edison territory, the California Solar Initiative incentive for non-residential customers, including local governments, is currently $0.20 per watt of installed capacity (step 10 is the final step for the incentive). As of July 2014, approximately 72 MW of installed capacity remains available in the program. Go Solar California maintains up-to-date information on the Electricity: Page 32 status of the program. The incentive for residential customers in Southern California Edison Territory has been exhausted. The Local Government Renewable Energy Self-Generation Bill Credit Transfer The Local Government Renewable Energy Self-Generation Bill Credit Transfer allows local governments with on-site energy generation to transfer excess bill credits between accounts. This would allow Hermosa Beach to generate excess solar power at one facility and transfer any credit to other accounts. According to CPUC Guidance, the program applies only to local government-owned systems and would not apply to a power purchase agreement. Southern California Edison does not require transfer of the Renewable Energy Certificates (RECs) produced by the generating facility, which would transfer the renewable benefits of the energy to another party. Hermosa Beach could retain these RECs to claim use of renewable energy and associated emissions benefits (if allowances are voluntarily retired) if it has no other agreement to transfer the RECs to another party. Southern California Edison can offer up to 124.6 MW total under their bill credit transfer program. As of June 16, 2014 107.72 MW remains available. SCE charges a $500 set up fee and $30 monthly billing fee per generating account. Other Options for Procurement of On-Site Generation Entering into a Power Purchase Agreement or lease agreement can spread the costs of solar installation over several years, reducing the need for upfront payments. Unlike local governments, private owners of solar generating equipment can also utilize investment tax credits to reduce system cost. Power Purchase Agreement Under a Power Purchase Agreement, a third party owns and installs the equipment needed to generate on-site solar power, and Hermosa Beach signs a contract to purchase all power delivered by the unit at a pre-specified price per MWh. A Power Purchase Agreement can be a compelling option to pay for solar over time, and the City can negotiate the option to purchase the equipment at a substantially reduced rate at the end of the contract term. The U.S. National Renewable Energy Laboratory has published a Power Purchase Agreement Checklist for Local Government. In addition, a presentation from the Massachusetts Department of Energy Resources outlines the pros and cons. Among the cons are that the City would receive two electricity bills and that transaction costs for establishing the agreement may be high. Another con is that because the system would be privately owned, the city cannot participate in the Self-Generating BIll Credit Transfer, which would have allowed the city to overproduce at one site and use that energy at a site with a higher demand. Electricity: Page 33 Solar Lease A third party owns and installs the equipment needed to generate on-site solar electricity, and Hermosa Beach signs a contract to lease this equipment at a pre-specified price. Some agreements have an option to purchase the equipment at a substantially reduced rate at the end of the lease term. One option unique to local governments is the California Lease Finance Program (CaLease). However, this program has a $500,000 minimum financing amount. Another option is the Southern California Regional Energy Center Public Agency Master Lease, which offers a minimum loan of $250,000, but allows multiple projects to be bundled under a single loan. Greenhouse Gas Reduction Credit for On-site Renewable Electricity Generating California’s Renewable Portfolio Standard (RPS) requires utilities to procure a specified quantity of renewable electricity. The current mandate requires 33% of energy to come from renewable sources by 2020. While the use of renewable energy helps the state meet its greenhouse gas cap, additional generation or use of renewable, all else held equal, does not reduce the cap. Any reductions in greenhouse gas emissions that come from meeting or exceeding the RPS requirement will lower an electricity utility’s compliance obligation - the allowances they must surrender each year to comply with the cap. Excess procurement will not affect the overall greenhouse gas emissions cap for California, but rather free up additional space under the cap for other sources to emit greenhouse gasses. In effect, greenhouse gas reductions that come from exceeding RPS or implementing greenhouse gas reduction measures would decrease the cost of a compliance unit. The notable exception is presented below. Because of California’s Cap-and-Trade program, the greenhouse gas reduction benefits of renewable energy are separate from other environmental properties. As such, The National Green-e standard has special procedures for creating RECs from voluntary renewable energy generated in California. Voluntary renewable energy is electricity that is procured in excess of an entity’s compliance obligation under the State’s Renewable Portfolio Standard. This includes electricity rooftop solar projects on Hermosa Beach municipal facilities, whether owned by the City or procured through a lease or Power Purchase Agreement. Southern California Edison would not obtain RPS credit for voluntary renewable energy generated within its service territory. California’s Voluntary Renewable Electricity Program allows for retirement of greenhouse gas allowances for renewable energy. Each year from 2015 to 2020, up to 0.25% of allowances under California’s Cap-and-Trade program will be retired through the program. Allowances are retired on a first-come, first-served basis. Hermosa Beach cannot own and sell credits produced under the Voluntary Renewable Electricity Program. Electricity: Page 34 Claiming Emissions Reductions Under The Climate Registry’s rule, retiring allowances is not necessary for Hermosa Beach to claim greenhouse gas reductions for on-site renewable energy generation. However, Hermosa Beach’s participation in the program is necessary for it to claim that its use of renewable energy reduced greenhouse gas emissions in California. If allowances remain in the Voluntary Renewable Energy Reserve Account after the California Air Resources Board serves all greenhouse gas allowance retirement requests, then these allowances may be auctioned. This has two implications for producing real, additional reductions to greenhouse gas emissions in California: 1. If the Reserve Account is undersubscribed, meaning that there are fewer requests for retirements than allowances available in the account, then Hermosa Beach’s participation produces real, additional reductions in statewide greenhouse gas emissions. This is because the City’s participation in VREP prevents another entity from purchasing the allowance via auction. Hermosa Beach could then claim zero-emissions electricity under the ARB’s rules. 2. If the Reserve Account would be exhausted regardless of Hermosa Beach’s participation, then Hermosa Beach’s successful retirement of allowances does allow Hermosa Beach to take credit for zero-emissions electricity under the ARB’s rules, but does not produce real, additional reductions in statewide greenhouse gas emissions. Retiring allowances, though not required for Hermosa Beach to claim carbon neutrality under The Climate Registry rules, makes the City’s neutrality claim more robust. The City must enact and sustain greenhouse gas reduction activities that allow it to retire allowances in order to make valid Carbon Negative or Climate Positive claims. Qualified Renewable Energy Sources Section 95841.1 of the California Cap-and-Trade Regulation identifies general requirements to retire greenhouse gas allowances under the program: 1. The generator must be new and not have served load prior to July 1, 2005. 2. The generator of the renewable energy or RECs must be certified as RPS-eligible by the California Energy Commission or meet the design and installation programs of the Guidelines for California’s Solar Electric Incentive Programs in place at the time the system received an approved utility incentive claim. The California Energy Commission maintains a list of generators that meet RPS-eligibility requirements. 3. Voluntary renewable electricity must be directly delivered to California (PCC-1 and PCC- 2). 4. The REC must be generated in the same year that Hermosa Beach requests the retirement of greenhouse gas allowances through the ARB. For example, 2014 vintage RECs can only be retired as 2014 vintage greenhouse gas allowances. Electricity: Page 35 5. The REC must be tracked by and retired with the Western Region Renewable Generation Information System (WREGIS) before submitting an application to the ARB for allowance retirement. 6. The ARB determines the greenhouse gas reduction that comes from a given unit of power consumption. How to Apply The annual application deadline for requesting the retirement of a REC(s) is July 1 of the year after the unit of renewable energy was generated. July 1, 2014 was the first deadline for parties to request retirement of allowances. As of September 2014, the California Air Resources Board reports zero retirements from the program’s account. If Hermosa Beach generates on-site renewable energy in the future, it can apply to the program. In order to reduce the City’s application burden, one application for multiple systems with nameplate capacities of 200 kW or less may be aggregated and submitted together. Criteria for Siting Solar Photovoltaic Systems Generating zero-emissions renewable electricity at locations recognizable as city facilities is an attractive option to demonstrate the city’s climate actions while reducing gross greenhouse gas emissions. The following criteria will help the City determine appropriate locations for on-site solar photovoltaic systems: ● If rooftop-mounted, the building and roof have the structural integrity to support a solar photovoltaic system. ● The host facility won’t undergo significant changes that affect the roof and photovoltaic system during the financing contract, or, if purchased, the assumed 30-year life of the solar system. ● The host facility is part of an electricity service account that has sufficient usage to size a cost-effective solar photovoltaic system. In general, larger systems have a lower cost per watt-hour of electricity, since fixed costs are defrayed over additional units of electricity. Also, in certain financing scenarios the energy must be used on-site as a bill transfer credit is not allowed under a municipal lease arrangement or power purchase agreement. ● Ideally, the solar photovoltaic system would be visible from publicly-accessible areas, allowing the the photovoltaic panels to be a visible part of the city’s public education and outreach efforts. Southern California Edison’s Green Rate Option The Green Rate, a high-renewables content energy subscription program, will be available to ratepayers within SCE’s territory beginning January 2015. This program enables customers to Electricity: Page 36 participate in off-site renewable energy generation through SCE by subscribing to 50% or 100% renewable resource content for a determined price premium. We estimate the Green Rate Charge to be a 6.77 cent/kWh premium over the City’s estimated average generating charge of 7.53 cents/kWh. With a subscription to this new program, the City of Hermosa Beach could meet their entire energy load with one hundred percent renewable energy, however this method will be far more costly than other alternatives. Also under SB 43, the founding legislation for this program, SCE is only required to offer the Green Rate until January 1, 2019. No provisions are currently established to continue the program beyond this deadline. According to a report compiled by GSE Solutions, the City’s average annual energy usage is 1,717,582 kWh. Detailed, itemized bills provided by the City covered 1,339,598 kWh of usage, and we used the rates on those bills to estimate the annual premium for the Green Rate option. The table below shows a comparison of the current annual total paid by the City for electricity with a standard renewables content and the projected annual price should Hermosa Beach subscribe to 100% renewable energy on the Green Rate. Green Rate vs. Annual Total Annual Electricity Use (kWh) Estimated Annual Green Rate Premium Current Annual Charge Total Projected Annual Charges GSE Solutions Report 1,717,582 $116,318.09 $300,961.00 $417,279.09 Provided SCE Bills 1,339,598 $90,720.26 $264,672.61 $355,392.87 Direct Access Program Direct Access is an electricity procurement option in California that allows certain customers to purchase their electricity directly from Electric Service Providers. Electric Service Providers are able to offer a greater variety of retail options to electricity customers, offering more competitive pricing or greater renewable energy attributes than is offered by SCE’s bundled product. Direct Access first became an option in California in 1998, but was suspended in September 2001. Electricity customers with existing Direct Access contracts could continue. Through 2010, 7,764 GWh of annual customer load remained with the Direct Access program. Direct Access is an extremely limited option for Hermosa Beach. New direct access connections are offered only via an annual lottery, so there is little certainty that Hermosa Beach would be able to choose this option. Electricity: Page 37 Furthermore, Hermosa Beach’s annual electricity demand may be insufficient to obtain a competitive rate quote from an Electric Service Provider. Additionally, as many Electric Service Providers use unbundled RECs to offer green power, there would be no greenhouse gas reductions benefit over separately purchasing and retiring RECs. Hermosa Beach’s annual electricity demand in 2010 was under 2 GWh. Even a municipality with over ten times the annual electricity demand (Santa Monica) found it could not obtain competitive rates from prospective Electric Service Providers for Direct Access service. The staff report at the time alleged that the City did not receive a competitive rate because the City’s 28.95 GWh in annual demand was “too small to offer significant price discounts or flexible terms over a long-term contract.” In 2009, SB 695 re-opened Direct Access to new non-residential customers in 2010. Four phase-in periods were offered via first-come, first-served applications to allocate an additional 3,946 GWh in annual load for new Direct Access customers. In each period, there was more demand for the Direct Access than there was load available, and many potential customers were turned away. Southern California Edison’s overall Direct Access program cap is 11,710 GWh per year, about 13.5% of the utility’s 2012 load of 86,558 GWh. Direct Access Lottery A post phase-in enrollment process allows aspiring new direct access customers to join an annual waitlist. Waitlist applications are accepted during an annual phase-in enrollment period, the second full week of June, and new Direct Access customers are assigned via a lottery if and when existing direct access customers end their contract. If the City wished to participate in the Direct Access lottery, it would first choose an approved Electric Service Provider. Before the second week in June, Hermosa Beach’s selected Electric Service Provider would complete and submit a Customer Information Service Request (CISR) form to obtain the City’s energy usage and billing histories from Southern California Edison. The form requires the signature of the Hermosa Beach City Manager or another person authorized to bind the City to a financial contract. Southern California Edison must receive and approve the CISR in advance of the June enrollment period. During the second week of June, Hermosa Beach would submit a Six-Month Advance Notice Form to switch service from Southern California Edison to its chosen Electric Service Provider. Southern California Edison would then assign Hermosa Beach’s application a random waitlist number. Each month, Southern California Edison will review available Direct Access and randomly select numbers from the waitlist and notify Hermosa Beach if load is available. If selected, Hermosa Electricity: Page 38 Beach would be allowed to switch to its preselected Electric Service Provider beginning January 1 of the following calendar year. The chosen Electric Service Provider must submit a Direct Access Service Request form in order to complete the transition. Each waitlist is for one calendar year. Hermosa Beach would need to submit a new application each June if it wished to remain on the waitlist. Customers subscribing to a Direct Access program may be automatically enrolled in a Community Choice Aggregation program, unless they opt out.. The state maintains a list of registered Electric Service Providers, 21 of whom have agreements with Southern California Edison. Two providers are notable for Hermosa Beach’s Carbon Neutrality efforts. 1. Three Phases Renewables is a Manhattan Beach-based company that focuses on 100% renewable energy. 2. The City of Santa Monica has a Direct Access contract with Commerce Energy to provide 100% of municipal energy demand with 100% renewable power. However, due to a lapse in service, Commerce only supplies 59% of the City’s energy demand. Community Choice Aggregation AB 117, passed in 2002, established the legislative precedent for forming a Community Choice Aggregation (CCA). This bill enables California cities, groups of cities, or counties to supply electricity to customers within their jurisdiction. Establishment of a CCA allows the community to specifically allocate resources for electricity procurement, while the Investor Owned Utility (IOU) retains ownership of all transmission and delivery systems. Once a city or community forms a CCA, they gain autonomy over their energy sources, and are thus free to pursue specific initiatives like carbon neutral electrical generation. Community Choice Aggregators comply with California’s RPS, but they can procure renewable energy above and beyond this requirement. The City of Hermosa Beach could utilize this procurement method in one of three ways to reach their overall goal of Carbon Neutrality. First, the City may launch its own effort to form a CCA as a single city. This method could prove cost-intensive as none of the fees or surcharges associated with the formation of this entity would be shared. Second, the City could pursue a partnership with surrounding cities, communities, or counties with similar, progressive climate goals and establish a CCA in which startup costs would be split. Finally, the City of Hermosa Beach my opt to join an already emerging or pre-existing CCA. Electricity: Page 39 CCAs have garnered significant success in California since the formation and growth of Marin Clean Energy (MCE) beginning May 2010. Sonoma Clean Power soon followed this success and will provide service by the end of the 2014 calendar year. These successes in the North Bay have given rise to other efforts to form CCAs in California. Listed below is a synopsis of actions taken by California communities toward CCA formation. Lancaster Choice Energy Lancaster Choice Energy plans to be the next operational CCA in California. This entity plans to begin accepting Municipal enrollment in May 2015, Commercial/Industrial enrollment in November 2015, and Residential enrollment in November 2016. Lancaster Choice Energy has reached agreement with SCE as an approved Community Choice Aggregator Service and and has already received accreditation on their Service Provider Application. San Diego Energy District The San Diego Energy District is in its beginning stages to become a CCA serving the City and County of San Diego. A Technical Feasibility Study has recently been authorized for the region. Clean Power S.F. Clean Power S.F. is planned to serve residential electricity customers in the City of San Francisco. Thus far, the efforts in the area to form this service have reached just short of residential service, which was expected at the end of 2013 and is currently accepting pre- enrollment. East Bay Community Choice Energy The County of Alameda has endeavored to create a CCA serving its residential electricity load excluding the City of Alameda. The Alameda County Board of Supervisors voted to launch a feasibility study in June 2014. Electricity: Page 40 Summary of Current CCA Planning & Pre-operational Efforts in California CCA Current Stage Lancaster Choice Energy Preoperational: Community Choice Aggregator Service Agreement with Southern California Edison has been approved and Service Provider Application has been approved. Service Begins: ● Municipal enrollment May 2015 ● Commercial/Industrial enrollment in November 2015 ● Residential enrollment by November 2016 San Francisco Preoperational (delayed): Implementation Plan certified by CPUC and registered as a CCA. For residential customers only. Was expected for late-2013. Pre-enrollment is open. East Bay Community Choice Energy Feasibility: After an initial study, Alameda County Board of Supervisors voted to launch a Feasibility Study in June 2014. San Diego Energy District Feasibility: Technical Feasibility Study authorized by City of San Diego. Contra Costa County Under Consideration: Public information presentations underway Hermosa Beach Under Consideration: The City Council adopted a resolution to join with other cities for a feasibility study. Humboldt County & Arcata Under Consideration: Student-authored feasibility study released 2011 & 2013 from UC Davis. San Luis Obispo County Under Consideration: The County’s EnergyWise Plan suggests evaluation of a CCA. Santa Barbara Under Consideration: County’s emissions reduction strategy includes ‘evaluate CAA formation’ in Staff Report for Climate Action Plan, August 2014. Yolo County, City of Davis Under Consideration: Yolo Climate Action Plan requires the County to determine ‘feasibility of CCA Issue’ brought up on City Council Agenda in August 2012. Electricity: Page 41 Renewable Energy Certificates Renewable Energy Certificates (RECs) can be part of a long-term or transitional strategy to incorporate renewable energy into Hermosa Beach’s electricity mix. Because California both requires utilities to procure a certain amount of renewable energy and caps greenhouse gas emissions, the rules surrounding the use of RECs for Carbon Neutrality claims is somewhat complicated. RECs do not directly translate into greenhouse gas offsets because the replacement power is not fully accounted for. However, special rules apply to convert California RECs into offsets, and commonly-accepted greenhouse gas accounting rules allow Hermosa Beach to use certain RECs to reduce gross emissions. Accounting for Renewable Energy Purchases in the Emissions Inventory The multi-partner, sector-specific Local Government Operations Protocol and The Climate Registry’s General Reporting Protocol provide greenhouse gas accounting and reporting guidance for cities. Section 6.2.4 of the Local Government Operations Protocol outlines guidance for green power and renewable energy certificate purchases. In summary, the guidance suggests that local governments report “green power” or REC purchases as supplemental information in their inventory report; the purchases should not be deducted from scope 2 emissions. The reasoning behind this recommendation is that deducting this electricity use would result in double counting of the greenhouse gas benefit from renewable energy because the renewable energy is already accounted for in the electricity emissions factor. In the 2010 update, the partners that publish the protocol wrote: “The partner organizations will continue to monitor and track the evolution of green power programs and the REC market. We hope that a broadly used, credible tracking, and retirement processes will soon be in place and that we will be able to provide better guidance to account for the GHG reductions associated with these purchases in future versions of this Protocol.” It is Kaizenergy’s opinion that a 2013 update to the Climate Registry’s General Reporting Protocol provides the guidance needed for local governments to adjust scope 2 electricity consumption and emissions for REC purchases. The Local Government Operations Protocol provides sector-specific guidance for implementation of the General Reporting Protocol. The 2013 update also provides for the use of program-specific utility emissions factors for entities that subscribe to a utility’s green power program, such as Southern California Edison’s Green Rate Option. Electricity: Page 42 The 2013 update to the General Reporting Protocol also provides a method to adjust for the ownership and retirement of unbundled RECs that meet the Green-e standard. This includes RECs from solar electric, such as concentrated solar thermal, wind, geothermal, certified low- impact or EcoLogo hydropower, pipeline or irrigation canal turbine hydropower, and biomass (non-chemically treated woody waste, agricultural crops or waste). Adjusting Hermosa Beach’s emissions inventory for REC purchases is simple: the City follows the same methodology as in its 2005 and 2007 municipal emissions inventories, adjusting for the emissions factor of renewable energy. Emissions are calculated by multiplying the quantity, in Megawatt-hours, of qualified, current-year RECs retired on Hermosa Beach’s behalf by the emissions factor of the renewable energy source. Some renewable energy generation projects create anthropogenic greenhouse gas emissions, such as additional organic material decomposition behind a hydroelectric dam. Greenhouse gas emissions from any electricity purchases not covered by retiring RECs will be calculated as usual: Megawatt-hours times the emissions factor of the source (e.g. Southern California Edison’s utility-specific emissions factor). Nationally, the use of RECs for greenhouse gas accounting is subject to a number of rules: ● The REC must be separate from offsets. For example, offsets produced by a livestock project that captures and combusts biogenic methane must not include the carbon offsets produced by the renewable energy generation. ● RECs must be of near-similar vintage to the inventory year they will be used to offset electricity purchases. REC accounting standards allow some leeway: RECs can be produced up to six months before or three months after the period covered by the inventory (typically a calendar year). ● To ensure that RECs lead to the creation of new renewable energy generation, they must come from facilities that began operations fewer than 15 years before the inventory year. The California policy environment creates two additional requirements for RECs: ● RECs must include all renewable and environmental attributes associated with the production of renewable energy. In California, this means that the greenhouse gas benefits of renewable energy production must be retired through the Air Resources Board’s Voluntary Renewable Electricity Program ● RECs must be surplus to regulatory requirements. That is, they must be produced above and beyond what’s needed to comply with California’s Renewable Portfolio Standard. According to The Climate Registry, RECs bearing the Green-e Energy and EcoLogo tags will meet the national and California requirements. RECs from energy not delivered to California do not require allowance retirement in order to be Green-e eligible. Electricity: Page 43 Green-e Renewable Energy Certificates Requirements for California’s Cap and Trade System Green-e standards require the full greenhouse gas reduction benefits be included with the REC. This creates special procedures for renewable energy delivered to areas where greenhouse gas emissions are capped, such as California. Green-e standards require RECs created by energy generated in or delivered to California (PCC 1 and PCC2) to have their associated greenhouse gas benefit retired through allowances, procured either through the Voluntary Renewable Energy Program or purchased through other means. California Renewable Energy Certificates California Law defines RECs as "a certificate of proof, issued through the accounting system established by the Energy Commission… that one unit of electricity was generated and delivered by an eligible renewable energy resource.” This includes “all renewable and environmental attributes associated with the production of electricity from the eligible renewable energy resource, except for an emissions reduction credit issued pursuant to [California’s Cap- and-Trade Program] and any credits or payments associated with the reduction of solid waste and treatment benefits created by the utilization of biomass or biogas fuels.” In the table below, each renewable energy classification is presented with procurement options and whether Hermosa Beach could make valid Carbon Neutrality claims under the Air Resources Board (ARB) accounting regulations or The Climate Registry’s (TCR) accounting guidance. Electricity: Page 44 Categories of California Renewable Energy Renewable Energy Classification Description Cost Premium ($/MWh over grid power) Procurement Options Carbon Neutrality Claims* PCC 1 Renewable electricity generated in or near California, with arrangements to deliver the power to California. $10-$30 DA, CCA ARB, TCR (with allowance retirement) PCC 2 Renewable electricity generated outside of California, bundled with environmental attributes, but without arrangements to deliver the power to California. $5-$25 DA, CCA ?, TCR (with allowance retirement) PCC 3 The unbundled (separate from electricity) environmental attributes of renewable energy generated outside of California. $1-$10 REC, DA, CCA TCR (if Green-e certified) Green-e Renewable Energy Certificate The unbundled environmental attributes of renewable energy, generated outside of California. $1-$5 REC, CCA TCR California Green-e REC A Green-e REC from a qualifying PCC 1 or 2 facility with retired CA-eligible CO2 allowance. $5-$30 REC, CCA ARB, TCR *for zero-emissions renewable generation. Not all renewable generation is zero non-biogenic emissions (e.g. biomass processes that require electricity). Cost estimates are for 2013 from Table 6 of Palo Alto’s Electricity Supply Portfolio Carbon Neutral Plan. Marin Clean Energy use of Renewable Energy Certificates Many CCA Programs, utility green power purchase programs, and Direct Access providers make use of RECs in order to offer “green” power. Marin Clean Energy uses a mix of California RPS energy and Green-e RECs for its product. According to their 2013 Integrated Resources Plan: Electricity: Page 45 “MEA is largely resourced for the next several years, having contracted for most of its projected needs for bundled renewable energy through 2017, non-renewable energy through 2017 and capacity through 2015. However, MEA has a short term need for bundled renewable energy in 2014 (PCC1) and a longer term need beginning in 2017 (PCC1 and PCC2). MEA also has a need for capacity purchases to meet resource adequacy obligations beginning in 2015. ... The majority of MEA’s voluntary renewable energy purchases (those in excess of RPS- eligible purchases) are under contract through the end of 2013. MEA has a need for renewable energy certificates in 2014 and beyond to support RPS compliance (PCC3) and voluntary renewable energy targets (Green-e). MEA also has a need for carbon neutral energy in 2014 and beyond to support voluntary GHG emissions targets. In 2013, MCE offered 60% renewable or zero emissions energy. Twenty-seven percent of its total load came from RPS-eligible generation. The balance is met with Green-e certified REC purchases.” The graphic below highlights Marin Clean Energy’s plan to use bundled and bundled RECs in order to offer its renewable energy programs. Electricity: Page 46 Marin Clean Energy Renewable and Non-Renewable Energy, 2013 to 2022 Recommendations First and foremost, the City should continue and expand upon existing energy efficiency programs. As the GSE Solutions report indicates, the City has opportunities to improve building energy efficiency by 40% or more. The City should now include the cost to neutralize emissions from electricity (approximately 0.3 cents additional per kWh) when evaluating whether to pursue electricity efficiency and retrofit projects. To take a highly-visible climate action step, Hermosa Beach should take steps to install solar photovoltaic systems on municipal property. The City should continue to explore the options of a Power Purchase Agreement and Solar Lease. The City should also request the retirement of greenhouse gas emissions allowances through the state’s Voluntary Renewable Electricity Program in order to claim unambiguous emissions reductions. RECs are a commonly-accepted element of a green or carbon neutral portfolio, and should be an element of Hermosa Beach’s municipal Carbon Neutrality efforts. Some entities employ RECs as a short term strategy while they wait for new generating projects to be built. Hermosa Beach can retire Green-e RECs to make greenhouse gas reduction claims under The Climate Registry’s General Reporting Protocol. Electricity: Page 47 Over the long term, Hermosa Beach should establish a CCA program and become one of program’s first customers. This would allow for a unified approach to community and municipal greenhouse gas emissions reductions, with community members participating in the same program as the municipality. A CCA program can offer a 100% renewable, emissions-free energy option for the municipality, households, and firms. According to Southern California Edison rate schedule OBF-2, on-bill financing programs for energy efficiency retrofits will continue to be available under a CCA program. Even with on-site solar generation and a CCA program, Hermosa Beach will likely continue to purchase streetlight services from Southern California Edison, particularly for streetlights on wood poles. The City can shift these accounts to Edison’s Green Rate option, or purchase Green-e RECs equal the amount of electricity used by SCE-owned streetlights. Municipal Fleet Recommendations - Page 48 Hermosa Beach Municipal Carbon Neutral Plan Municipal Fleet Introduction The Clean Fleet Policy and Action Plan, created in 2013, specifies a long-term goal of net-zero greenhouse gas emissions for the municipal fleet and alternative fuel used by 100% of contracted city service vehicles. The Plan also sets an interim goal to determine the feasibility of 50% emissions reduction for the City fleet and 20% emissions reduction for contractor service vehicles. These goals demonstrate the City’s strong commitment to reducing the carbon footprint of its municipal operations. The City’s policies to “maximize the use of alternative fuel and low emission vehicles used to supply city services,” “reduce vehicle emissions through efficient fleet management and operations,” and “facilitate infrastructure to support alternative fuel vehicles” are in line with current best practices for California Local Governments, as identified by the Institute for Local Government and the International Council for Local Environmental Initiatives (ICLEI). Currently, the municipal fleet is comprised of CNG, diesel, gasoline, and propane fueled vehicles. According to Energy Efficiency Climate Action Plan checklist, the City utilizes vehicles with fuel ranges from 11-44 mpg gasoline, 9-12 mpg diesel, 13-30 mpg CNG, and 30 mpg propane, all of which have a varying emissions intensities. Though over 20% of the vehicle fleet is comprised of alternative fuel vehicles, making Hermosa Beach ahead of, or in line with many neighboring cities (Manhattan Beach has 13%, for instance), it is behind some area cities. For example, Santa Monica’s non-emergency fleet is comprised of 81% alternative fuel vehicles. Some national cities also have more aggressive goals. Indianapolis, for instance, is the first city in the U.S. to pledge to convert its entire municipal non-police fleet to electric or plug-in hybrid electric vehicles by 2025. Municipal Fleet Recommendations - Page 49 Hermosa Beach’s City Fleet by Fuel Type Fuel Type Number of Vehicles (In Use) Models CNG 6 Camry, Interceptor, F-150, F-250 Diesel 8 Leader, Spartan, Fire Truck, Equipment Gasoline 57 Tahoe, Escape hybrid, Crown Victoria, Durango, F- 150, F-250, F-350, F-450, Interceptor, Wrangler, Explorer, Utility truck, Impala, Taurus, Propane 1 Interceptor Source: Hermosa Beach Energy Efficiency and Climate Action Plan Checklist Related Sustainability Plan Goals The City’s Sustainability Plan details three goals for the City’s fleet: ● T10: Adopt a clean fuel/ultra low emission vehicle buying policy for all City vehicles and devise a long-term plan for replacement, identifying several options for low emissions vehicles that includes a cost-benefit analysis for all fleet vehicle types. ● T11: Evaluate CNG filling station for municipal vehicles. ● T12: Provide EV charging stations for City vehicles. Recommendations for Light-Duty Vehicle Fleet Hermosa Beach’s 2013 City Fleet Policy and Master Plan is aligned with current regional best practices and policies. The City can continue to pursue their goal of Carbon Neutral municipal operations by continuing to adopt the most current trends in green fleet procurement and management. As the technology, performance, cost, financing options, and availability of alternative fuel vehicles are quickly evolving, the fleet policy should be responsive to these trends. The City of Hermosa Beach should review and revise the policy on a regular basis to ensure the City is acquiring the lowest emission vehicles that meet its needs. These recommendations are meant to provide guidance for future fleet procurement and management decisions. The recommendations are based upon the successful practices of other government agencies and best practices identified by respected resources. To remain consistent with the City Fleet Policy’s guideline, which states, “Review available green vehicle options including: electric vehicles, hybrids, CNGs, hydrogen, biodiesels, and any other emission reducing vehicles,” the City of Hermosa Beach should continue to consider the latest and lowest-emissions alternative fuel technology when replacing fleet vehicles. Zero- Municipal Fleet Recommendations - Page 50 emissions vehicles are now becoming staples of alternative fueled vehicle fleets, in addition to conventional hybrid and natural gas vehicles. These zero-emissions vehicles have environmental and operating advantages over other alternative fuel vehicles. Plug-in hybrid electric vehicles, fuel-cell electric vehicles, and battery-electric vehicles are now available in most vehicle classes. To keep up with the fast-changing California market for alternative fuel vehicles through comparison of price, performance, and environmental qualities of specific vehicles, Hermosa Beach should consult the California Air Resource Board’s Drive Clean Buying Guide and the guidance provided in Zero-Emission Vehicles in California: Community Readiness Guidebook created by the State of California Governor’s Office of Planning and Research. California’s Low Carbon Fuel Standard The Low Carbon Fuel Standard (LCFS) is a California regulation adopted by the Air Resources Board (ARB) that requires petroleum suppliers to reduce the life-cycle carbon intensity of transportation fuels sold in the state. The regulation provides additional opportunities for Hermosa Beach to reduce gross greenhouse gas emissions and additionally neutralize net emissions from the transportation sector. The regulation establishes a declining schedule for the average adjusted carbon intensity, in grams of CO2/MegaJoule (g/MJ), of fuel sold in the state. In 2014, the required adjusted carbon intensity is 94.41 g/MJ. To reduce the greenhouse gas intensity of gasoline sold in California 10% by 2020, the average adjusted carbon intensity of fuels sold must decrease to 86.27 g/MJ. Producers, refiners, blenders, and distributors of transportation fuels must acquire and surrender LCFS credits, denominated in metric tonnes of CO2-equivalent, to demonstrate compliance with the regulation. Hermosa Beach does not generate LCFS credits when using electricity or natural gas as vehicle fuels, as these credits are retained by the respective utilities. However, Hermosa Beach’s use of low-carbon fuels reduces the City’s gross greenhouse gas emissions. Adjusted carbon intensity values compensate for differences in the energy economy of a vehicle. According to the ARB, an electric-powered vehicle travels 3.0 times further on a unit of energy than a gasoline-powered vehicle. Municipal Fleet Recommendations - Page 51 Adjusted Carbon Intensity of California Vehicle Fuels Fuel Type Adjusted Carbon Intensity (grams CO2e/MJ California Gasoline (CARBOB) 95.86 California Reformulated Gasoline (CaRFG) 95.85 Midwestern Corn Ethanol 99.40 California Low-CI Ethanol 80.70 California-Sourced Compressed Natural Gas 75.22 California-Sourced Landfill Gas 12.51 Cellulosic Ethanol 20.40 Electricity (California average electricity mix) 41.37 Electricity (California marginal electricity mix) 34.90 Electricity (Zero Emissions Generating) 0.00 Hydrogen 33.09 Source: ARB Low Carbon Fuel Standard Staff Report Volume 1 Table IV-1 Electricity, landfill gas, and hydrogen are attractive options for reducing life-cycle emissions from transportation. Electricity is an especially attractive option, as the carbon intensity is a function of the mix of sources used to produce the electricity. For zero-emissions renewable energy, the carbon intensity value is zero. According to the U.S. Department of Energy’s Alternative Fuels Data Center, electric vehicle infrastructure is most prevalent near Hermosa Beach, with 3 stations and 7 chargers, including 2 DC fast chargers, listed within the city. Three compressed natural gas (CNG) fueling stations are available in Torrance and near the Los Angeles Airport. Two of Southern California’s 9 hydrogen stations are located in the South Bay. Three biodiesel (B20+) and ethanol (E85) facilities are located in the Harbor Gateway corridor. Municipal Fleet Recommendations - Page 52 Alternative Fueling Stations near Hermosa Beach Source: U.S. Department of Energy Hermosa Beach should continue to prioritize plug-in electric vehicle purchases where they are practical. The convenience and future expansion potential of electric vehicle supply infrastructure and the low carbon intensity of electricity for vehicles makes plug-in electric vehicles an ideal choice for reducing gross emissions. However, as identified in the City’s Clean Fleet Policy, some fleets, particularly public safety, have limited or no alternative fuel options that meet their requirements. Public Safety Vehicles Where electric, natural gas, or hydrogen-fueled vehicles are not practical, Hermosa Beach could look to acquire Flex-Fuel vehicles, which can run on fuel blends of up to 85% ethanol (“E85”). Municipal Fleet Recommendations - Page 53 Ethanol has been criticized due to its high energy requirement to refine blends from certain feedstocks, and the indirect greenhouse gas emissions that result from additional land required to farm fuel crops. The California Low Carbon Fuel Standard takes a life-cycle perspective on environmental impacts in order to mitigate potential upstream environmental degradation due to use of ethanols and other fuels. American automobile manufacturers offer a number of E85-capable Police Pursuit Vehicles, including the Chevrolet Impala, Dodge Charger, and Ford Police Interceptor Utility. The Hermosa Beach City Council recently authorized the purchase of four police vehicles. The 2014 Ford Police Interceptor Utility vehicle offers both a standard E85-capable 3.7-L V6 model and an upgraded 3.5-L V6 EcoBoost model that Hermosa Beach selected. The EcoBoost model offers higher performance, but is not E85-capable. The three 2015 Ford Fusion Hybrid vehicles the City authorized offer improved fuel economy but are not E85 capable. Cellulosic Ethanol has a carbon intensity of 20.40, but is not widely available for use in California. The more commonly available California Low-CI Ethanol has a carbon intensity of 80.70. As of September 2014, 220 flex-fuel capable models are available in the U.S. for general use. Alternatively, the City could look to purchase and retire greenhouse gas emissions credits produced under the Low Carbon Fuel Standard. Transportation-specific offset options and procedures are discussed later in this section. Financing Options and Considerations As consistent with the City Fleet Policy guideline stating “Research available grants, dealer incentives, and organization incentives” within the City’s purchasing, maintenance and environmental considerations, the City of Hermosa Beach should continue to consider all available financing options when purchasing or leasing (or considering the purchase or lease of) an alternative fuel vehicle. A review of best practices identified the following financing options for consideration: ● Municipal Lease Financing: Although local governments do not benefit from tax credits offered for the purchase of zero emission vehicles, many lenders offer municipal lease financing options. Municipal lease financing programs allow municipalities to capture a portion of the $7,500 tax credit that they would not capture in a direct purchase. The Nissan Municipal Lease Financing program and the Ford Municipal Financing program are two examples in which auto dealers provide financing options to local government agencies. Riverside County; the City of Loveland, Colorado; the City of Houston, Texas; and the City of Olympia, Washington have all utilized municipal lease financing programs to acquire electric vehicles for their municipal fleet. Municipal Fleet Recommendations - Page 54 ● State Procurement Contracts: Local governments are eligible to purchase vehicles using the California Department of General Services’ (DGS) state procurement contracts. Although many local government agencies prefer procuring fleet vehicles from local dealers, using the negotiated prices for alternative fuel vehicles listed with the state procurement contracts can serve as a baseline price for comparison purposes. ● Consider Total Cost of Ownership: The City should consider how capital and operating expenditures are allocated when making fleet procurement decisions. Since fuel costs will be lower in alternative fuel vehicles, the City may find that future operating savings justify higher initial procurement costs for alternative fuel vehicles. ● Include Co-Benefits in Cost Analysis: Hermosa Beach should explicitly assess other co-benefits and values that arise from the use of alternative vehicles, such as environmental health and the marketing of low emission vehicles to the community when comparing costs of alternative fuel vehicles to those of conventional vehicles. Potential Partnerships and Resources Instead of managing its municipal fleet internally, the City of Hermosa Beach could utilize local fleet management service companies to determine the best way to green their municipal fleet while maintaining fleet quality and cost-effectiveness. ● Vision Fleet Capital: Vision Fleet Capital strives to implement clean vehicles within fleets, cutting total cost of ownership, reliance on foreign oil, and enhancing service levels. Vision Fleet Capital also helps finance and manage fleets by offering low-cost financing, strategic operational advice, telematics tools, and asset management. Based locally in Venice Beach, California, Vision Fleet Capital could be a potential partner for Hermosa Beach to help the City electrify their vehicle fleet in the most cost-effective manner. Fleet Management Regulations The City Fleet Policy states that the City aims to “Reduce vehicle emissions through efficient fleet management and operations.” Best practices for efficient fleet management from the Institute for Local Government can assist Hermosa Beach in implementing this policy: ● Use Global Positioning Systems (GPS) and integrated software to control fleet vehicles, reduce misuse and increase efficiency through trip planning and location information. ● Provide fuel saving tips to drivers of fleet vehicles. These can include prohibiting idling, rapid acceleration, etc. ● Install battery systems for vehicles with onboard equipment to reduce truck idling when equipment is in use. ● Use technology options, such as requests via mobile device, for field personnel to prevent unnecessary trips back to the office. Municipal Fleet Recommendations - Page 55 Carsharing Instead of replacing old or under-utilized vehicles, the City of Hermosa Beach can also consider using carsharing to meet its fleet needs. Carsharing is a model of car rental where people rent cars by the hour or fraction of an hour. Local governments throughout the U.S. have used carsharing to lower fleet costs, reduce carbon emissions, and support sustainable transportation in their communities. Municipalities that have utilized car sharing to supplement their fleet include Berkeley, San Francisco, Austin, New York City, Seattle, and Washington DC. Local governmental support for carsharing services usually involves either the direct contracting of service and/or provision of parking spaces. These municipalities experienced many benefits using carsharing within their operations, including lower fleet replacement, maintenance, fuel, insurance and staffing costs; newer, cleaner, and lower emission vehicles; more efficient vehicle allocation; increased vehicle access for employees; more available parking; and better data on vehicle use and mileage. As each municipality’s program varied in scope, the following provides more detail on the experiences of a few municipalities who have utilized carsharing. ● The City of Berkeley: The first city to replace municipal fleet vehicles with carsharing, Berkeley has had considerable success reducing vehicle emissions, costs, and inefficient fleet use through an innovative partnership with City Carshare, the San Francisco Bay Area’s carsharing service. Berkeley’s partnership with City Carshare not only uses carsharing to replace municipal fleet vehicles, but also includes carsharing in the planning and development process and supports carsharing for citizens and businesses. Berkeley also contracted City Carshare to develop a specialized vehicle reservation software that dedicates vehicles for City employee use during normal work hours, and allows any member of City Carshare to use the vehicles on evenings or weekends. In the first year of the program, 4-5 carshare vehicles replaced 10-15 fleet vehicles. The use of carsharing has resulted in an annual financial savings of about $8,000 per year, most of which results from not having to use the City’s vehicle replacement funds to replace fleet vehicles. These savings do not include air quality, parking, or public health benefits. ● The City and County of San Francisco: As the City and County of San Francisco retires its older vehicles, City Carshare’s fleet provides vehicles for City employee use so the City does not have to purchase new fleet vehicles. This partnership reduces San Francisco’s vehicle fleet size, lowers purchase and maintenance costs, and reduces carbon emissions. ● Washington DC: In 2008, Washington DC replaced 360 vehicles with a shared fleet of 71 passenger vehicles operated by Zipcar technology through the “FastFleet” program. FastFleet is Zipcar’s fleet management model that helps fleet managers right-size current fleets, enables self-service reservations and keyless access, develops analytics on driver and vehicle history, leverages software and support services, and transitions fleets to energy-efficient hybrid and electric vehicles where sensible. In Washington DC, employees use an intuitive web-based reservation system, phone, or mobile device to Municipal Fleet Recommendations - Page 56 select and reserve vehicles and a wallet size access card to unlock the reserved car. FastFleet varies from Zipcar’s conventional carsharing model in that it does not supply the vehicles. Instead, the City’s existing vehicles are equipped with FastFleet’s in- vehicle technology. After the first year of the pilot program, Washington DC projected a savings of greater than $6 million over five years. ● The City of Portland: Flexcar (now Zipcar) partnered with the City of Portland to provide fleet management services. In the pilot, Flexcar managed 12 out of 25 motor pool vehicles. Employees signed up for Flexar individually, and then each department was charged for vehicle use. This partnership saved Portland approximately 25% in the motor pool’s annual operating, maintenance, and fuel costs. After the pilot, Portland contracted all 25 motor pool vehicles to Flexcar, and Flexcar’s tracking technology helped Portland identify underutilized cars. ● The City of Austin: The City of Austin, Texas entered a revenue-neutral barter agreement with the carsharing organization Car2Go. Municipal employees could use vehicles for free during a six-month pilot phase, allowing Car2Go to gather consumer testing data and receive dedicated parking spaces avoiding parking fees. This partnership was innovative in that the City did not directly subsidize Car2Go, but the parking benefits were valued at about $85,000. After the successful pilot, Austin extended the partnership and numerous Texas state agencies have signed up for the Car2Go program. Potential Carsharing Partnerships for Hermosa Beach A few different organizations that offer carsharing services in L.A. County may serve as potential partners for Hermosa Beach. Each carsharing service listed below has experience working with a municipality and varies in its fleet composition, services offered, and other program components. ● Car2Go: In June 2014, Car2Go launched its pay-by-the-minute carsharing service in several South Bay Cities of LA County, including Hermosa Beach. Car2Go members use a smartphone application to find a vehicle, drive it, and then are able to park it in any public parking space identified as 2-hour parking or longer. This model differs from conventional round-trip services such as those provided by Zipcar. Hermosa Beach could contact Car2Go about the possibility of extending carsharing services for municipal fleet use, similar to Car2Go’s arrangement with the City of Austin, Texas. ● Zipcar: Now owned by Avis and operating in over 20 cities across North America, Zipcar is the world’s largest carsharing service and is an alternative to traditional car rental and ownership. Members use a Zipcard to unlock their car, pay a $6 per month membership fee and a driving rate of $8-10 per hour. Zipcar is a round-trip service, meaning members must return vehicles to the same parking space from which they obtained it. Beginning in 2009, the City of Los Angeles partnered with Zipcar to dedicate 40 on- Municipal Fleet Recommendations - Page 57 street parking spots near USC and UCLA campuses to Zipcar. Washington DC partnered with Zipcar to utilize Zipcar’s FastFleet program to help them more efficiently manage their municipal fleet. Hermosa Beach could partner with Zipcar either through the provision of parking spaces or by using Zipcar’s FastFleet as a tool to manage Hermosa Beach’s municipal fleet. Recommendations for Other Vehicles To achieve Carbon Neutrality for municipal operations, the City of Hermosa Beach must consider ambitious and innovative strategies. A review of the programs implemented by other municipalities identified the following strategies for consideration for Hermosa Beach: Neighborhood Electric Vehicles (NEVs) Hermosa Beach should also consider utilizing Neighborhood Electric Vehicles (NEVs) within its vehicle fleet. Falling under the U.S. classification for low-speed vehicles, NEVs are battery electric vehicles have a maximum speed of 25 mph and are legally limited to roads with speed limits of 45 mph or less. Although NEVs are not included in vehicle sales forecasts and passenger fleet projects, these short-range, low-speed vehicles designed for local use could become a key component of the electric vehicle mix, especially in mature suburban areas like the South Bay that will likely not attract transit investments in the near future. Beginning in 2004, the South Bay Cities Council of Governments (SBCCOG) began to research a land use and transportation strategy that would reduce greenhouse gas emissions, pollution, and gasoline use without focusing on transit investments or increased residential density. This led to the adoption of the Sustainable South Bay Strategy (SSBS) in 2010, which proposes that cities create compact destinations in neighborhood centers to encourage walking, cycling, and the use of NEVs for travel between these centers. As part of this strategy, the SBCCOG launched a NEV Demonstration Project which loaned a fleet of NEVs to South Bay households for an 18-month period. This project was highly successful, finding that of those who participated, NEV mode share averaged 46% of the roundtrips. The average round-trip travel distance ranged from 2-5 miles. Due to Hermosa Beach’s compact size, NEVs could also be an effective component of travel for municipal employees, whose average work trip or personal errand is likely only a few miles. Global Electric Motorcars (GEMs), a type of Neighborhood Electric Vehicle by Polaris, are small vehicles which serve as an alternative to golf carts. GEMs have served municipal fleets as utility, parking and security, and even landscaping and construction vehicles. Municipalities who have employed NEVs within their fleet include the City of Palm Springs, the City of Cypress, and the City of Santa Monica. Municipal Fleet Recommendations - Page 58 Bicycle Fleet The Institute for Local Government’s Sustainability Best Practices Framework recommends establishing a “bike barn” to allow employees to borrow a bicycle for use during the workday. Providing bikes to employees reduces vehicle trips made during the day for business and personal errands, therefore reducing emissions. Municipalities all over California have adopted employee bike share programs, including Long Beach, Santa Monica, Cupertino, San Jose, and San Francisco. Municipal bike fleet programs typically provide bicycles, secure bicycle storage, and showers and lockers. They usually require employees to complete a bicycle safety training program to participate. Traveling by bike especially makes sense in the City of Hermosa Beach due to its compact size. Although most cities provide regular bicycles, Hermosa Beach can also consider adding electric bicycles to its fleet program. Electric bicycles make it easier to travel on hilly terrain but still emit zero tailpipe emissions. An electric bike can achieve over 2,000 mpg-equivalent, making them a highly energy and cost-efficient option for Hermosa Beach. Hermosa Beach could be one of the very first cities to utilize electric bikes within their bike fleet. Purchasing regular or electric- assist bicycles also provides Hermosa Beach with an opportunity to support local businesses. See the following for a list of several local bike shops: ● Hermosa Cyclery, Inc: Located on the Strand at 20 13th Street in Hermosa Beach, Hermosa Cyclery specializes in strand cruisers that are easy to ride around the city and is regarded as a trusted bicycle service center. ● The Old Bike Shop: Located at 430 Pier Ave. in Hermosa Beach, the Old Bike Shop is an owner-operated bike shop that specializes in custom-built high end bikes. ● Beach Cities Cycle: This bike shop is located at 219 Pacific Coast Hwy in Hermosa Beach. ● Motion Bicycle Establishment: Motion Bicycle Establishment sells, rents, services, and repairs all types of bikes and is located at 914 Aviation Blvd in Hermosa Beach. ● Electric Bikes LA: Located at 433 Main Street in El Segundo, Electric Bikes LA is the first bicycle store in the region dedicated to the sale and repair of electric and folding bikes. Offsetting Emissions from Vehicles Implementation of California’s Low Carbon Fuel Standard (LCFS) is leading to the availability of low greenhouse gas transportation fuels in California. However, costs to transport these fuels from their production location to Hermosa Beach can be high. Additionally, many vehicles are not designed to use low-carbon fuels. Municipal Fleet Recommendations - Page 59 The LCFS credits generated under the program are tradeable. LCFS credits trade for $24 to $85 per credit, which, like allowances and offsets, are denominated in units of metric tonnes of carbon dioxide equivalent (CO2-e). Compared with the $11.50 cost of California allowances, LCFS credits are an expensive means of offsetting emissions. However, in the future their use could allow for sector-specific neutrality claims. Instead of offsetting transportation emissions with forest or livestock projects, retiring LCFS credits will allow Hermosa Beach to claim that it is subsidizing low carbon fuels consumed by others on Hermosa Beach’s behalf. Whether entities without compliance obligations like Hermosa Beach can acquire and voluntary retire LCFS credits for climate action goals has not been tested as of this writing. Additionally, no greenhouse gas accounting method currently exists to adjust fuel purchases for LCFS credits. If a commonly accepted method to account for LCFS credit emerges, one specific LCFS credit opportunity may aid the City’s climate action outreach and education campaign. Digester gas is not currently a common transportation fuel, but the Climate Trust believes LCFS could change that. Many livestock farms in California are looking to capture methane in order to generate ARB offset credits. If the biogas is then consumed as transportation fuel in California, LCFS credits can be generated above and beyond these offsets, which are for avoided methane emissions. If Hermosa Beach decides to establish a direct relationship with a livestock project for purposes of acquiring greenhouse gas offsets, the City may be able to negotiate receiving any LCFS credits produced by the project. The Low Carbon Fuel Standard is not to be confused with Federal renewable fuel regulations, which are based on the quantity of renewable stocks blended into transportation fuel, not the resulting change in greenhouse gas emissions. Federal regulations require fuel suppliers to blend renewable fuels into gasoline and diesel. In a manner similar to the Renewable Portfolio Standard, each refiner or importer of fuel must meet a Renewable Volume Obligation by surrendering a series of Renewable Identification Numbers to the U.S. EPA. The Renewable Identification Numbers can be separated and traded. When renewable fuel with a Renewable Identification Number is produced in or imported to California, that fuel may also generate LCFS credits for California’s program, which is a separate regulation. Employee Commutes - Page 60 Hermosa Beach Municipal Carbon Neutral Plan Employee Commutes Introduction The City’s Sustainability Plan calls for a 20% reduction in greenhouse gas emissions from employee commutes relative to 2005 levels by 2020, which were 348 metric tonnes of CO2- equivalent2. The 2012 draft inventory shows 218 metric tonnes, a 37.4% reduction in greenhouse gas emissions versus 2005. However, it is important to note that the number of full- time equivalent City employees decreased 33.8% during this period. In pursuit of attaining the greenhouse gas reduction goal for employee commutes, the City’s Sustainability Plan recommends revising Hermosa Beach’s existing rideshare program to better incentivize employees to substitute more environmentally conscious alternatives to single occupant vehicle (SOV) trips for commuting. Launched in 1990 to comply with the South Coast Air Quality Management District’s Regulation XV, the City’s existing rideshare program provides employees who use alternative transportation modes 3 out of 4 days per week with $30 per month. Despite the incentive in place, the program had no participants as of July 2013. Just 11% of employees biked, walked, used transit, or a combination of these modes at least once a week. An employee commute survey conducted in 2013 on 108 out of 142 employees found that about 31% of employees were interested in participating in a rideshare program, and 50% of employees would be influenced by tax savings or other monetary incentives. Using data gathered from the 2013 City of Hermosa Beach Employee Commute Survey, information regarding other cities’ employee commute reduction programs, and best practices in transportation demand management, Kaizenergy has outlined a strategy and plan the City of Hermosa Beach could use to overhaul its employee commute reduction program thus increasing participation and reducing resultant municipal carbon emissions. Hermosa’s Employee Commute Reduction Challenge Traditional commuter rideshare programs rely on matching employees with similar schedules, origins, and destinations. Creating successful carpool or vanpool matches is mostly a numbers 2 The Energy Efficiency & Climate Action Plan Draft Inventory, Forecasting and Target-Setting Report shows employee commutes at 348 metric tonnes in 2005. However, the City’s previous inventory reports employee commutes at 399 metric tonnes for 2005. The more recent document is presented to show change over time. Employee Commutes - Page 61 game. Successful traditional rideshare matches rely on a large pool of people who are eligible to match, a subset of whom are interested in ridesharing. Strategies to match more carpools or vanpools include increasing the size of the pool of potential ride-sharers and/or improving and increasing incentives to motivate more people to share rides. The City of Hermosa Beach’s current employee commute reduction challenges are twofold. First, Hermosa Beach is a relatively small employer, with only 142 employees across multiple sites. This limits the potential for rideshare matching. Second, the City’s 2013 Employee Commute Survey indicated that, due to the structure of existing incentives, their effectiveness is limited. As seen below, many potential carpool matches live in or near the City. While matching employees who live nearby into carpools will reduce vehicle trips and the need for on-site car parking, these consolidated short-distance trips will not cause substantial reduction in greenhouse gas emissions from employee commutes. However, successful matches could provide an example of the program’s benefits for other employees who live farther away. Hermosa Beach could also incentivize employees who live nearby to commute using neighborhood electric vehicles or electric-assist bicycles if these vehicles are added to the City’s fleet. Employee Commutes - Page 62 Map of Zip Codes with 2 or more employees Legend: Number of employees per zip code: 1 to 3 4 to 5 6 to 9 10 to 20 Top Zip Codes Zip Code Place Number of Employees Distance from Hermosa Beach (miles) 90278 North Redondo Beach 20 2.0 90277 South Redondo Beach 14 2.3 90254 Hermosa Beach 9 0 90260 Lawndale 6 4.7 90275 Rancho Palos Verdes 6 13.3 Employee Commutes - Page 63 Heatmap of All Employees Responding to 2013 Commute Survey Best Practices in Local Government Commute Trip Reduction Programs To reduce their municipal carbon footprint and to comply with regional regulatory agency trip reduction requirements, many municipalities have begun implementing employee commute reduction programs. Reviewing best practices in local government transportation demand management programs as well as the practices of neighboring cities and other successful local programs can help Hermosa Beach identify most effective methods to decarbonize its employee commutes. Statewide Best Practices The Institute for Local Government identifies several best practices for municipalities developing programs to reduce employee commutes via SOV. These best practices focus on using effective incentives and acquiring the necessary infrastructure to encourage employees to bike, walk, take public transit, or carpool to work. Hermosa Beach’s existing program is in line with the incentive best practices identified by Institute for Local Governments, but the City could enhance the attractiveness of these incentives and ensure the City provides the necessary Employee Commutes - Page 64 infrastructure for employees to feel comfortable walking or biking to work. The best practices described by the Institute for Local Government are summarized below3: Create an Incentive Program The Institute for Local Government states that a municipality should “offer agency employees incentives to use alternatives to single-occupant commuting.” Incentives could include parking cash-out, flexible schedules, public transit incentives, bike share and rideshare services and subsidies, transit subsidies, and telecommuting. Rideshare programs should incorporate a “Guaranteed Ride Home” program and utilize smartphone technology. Provide Infrastructure As mentioned in the employee fleet recommendations, the Institute for Local Government suggests municipalities “establish a ‘bike barn’ to enable agency employees to borrow a bicycle to use for local meetings.” The bikes purchased for the bike barn could also be rented to employees for commute purposes. The Institute for Local Government also suggests municipalities “construct bicycle stations for employees that include bicycle storage, showers, and bicycle repair space” and provide locker and shower facilities for employees who bike or walk to work. Review of Other Programs in Nearby Cities The City of Hermosa Beach and neighboring South Bay cities face a unique set of challenges in motivating employees to cut SOV commutes: they are already mature, built-out suburbs without the robust public transit service found elsewhere in L.A. County. Nonetheless, we found that adjacent cities have ascertained more effective commuter incentive programs. The following discussion describes employee commute reduction strategies employed in the South Bay cities that neighbor Hermosa Beach as well as the successful approach taken by the City of Santa Monica, a municipality recognized statewide for its environmental leadership. Manhattan Beach The City of Manhattan Beach offers an incentive of $60 per month to employees who carpool, bike, walk, take public transit, or use a combination of these modes to get to work. The City currently has about 12 employees who participate (6 carpool, 2 bike, 2 walk, 1 public transit, and 1 combination of modes). The program costs the City about $8,500 per year. Information about the program is posted on the City’s employee “intranet” with all necessary instructions and forms. The City does not currently have a bike fleet or share program. In Manhattan Beach, only one staff member administers the program. 3 http://www.ca-ilg.org/sustainability-best-practice-area/efficient-transportation#agency-employee- programs Employee Commutes - Page 65 Redondo Beach The City of Redondo Beach launched its “Employee Rideshare Program” in 2008. Employees who carpool, walk, bike, use public transit, vanpool, or drive alternative fuel vehicles earn incentive points on a daily basis that can be traded in for Sears gift certificates. Redondo Beach offers guaranteed return trip services, ridematching services, free CNG fueling, and an annual prize drawing for all employees who participate. Torrance The City of Torrance launched its “Catch a Ride” program to comply with the South Coast Air Quality Management District’s (SCAQMD) rule 2202. Rule 2202 requires employers with 250 or more employees to reduce mobile source emissions generated from employee commutes. In the Catch a Ride program, employees who carpool, walk, bike, use public transit, or vanpool earn points on a daily basis that can be traded in for time off, gas vouchers, gift cards, and discounts on public transit. Program participants are eligible for emergency rides home, preferential parking, free car washes, and ridematching services. Santa Monica The City of Santa Monica reduced emissions from employee commutes through its Rideshare Club. The Rideshare Club consist of three sub-categories, the Commute Club, the Transit Club, and the Vanpool Subsidy Club. The Commute Club provides incentive points to employees who bike, carpool, drive an electric scooter, walk, ride the bus, and more. Participants can drive as part of their commute or mix these options. A carpool consists of two or more people (they do not need to be coworkers at the City, but children without driver’s licenses do not count) who ride together at least 51% of round trip travel. Employees earn incentive points for each day they rideshare, and they exchange these points quarterly for a bonus on their paychecks. Commute Club participants must earn a minimum of 4 incentive points per month and a maximum of 40 points per month. Transit Club provides riders of mass transit fare reimbursement for travel costs to and from work. Mass transit includes bus, light rail, and train. To qualify, employees must use transit for at least 15 roundtrips per month. They are provided up to $84 for bus and $100 for rail. The Vanpool Subsidy Club provides employees who participate in a vanpool with up to $100 per month. To provide alternative mode commuters with mobility options at work, the City allows staff to borrow a bike from its “Bikes At Work” fleet to run errands, exercise, or attend meetings. Recommendations To reduce gross greenhouse gas emissions attributed to employee commutes, the City of Hermosa Beach should revise its Employee Commute Reduction Program (ECRP) to better Employee Commutes - Page 66 incentivize employees to adopt alternative modes of commute and to generate lasting program participation. This section provides a brief description of the strategies the City could employ. 1. Appoint an Employee Transportation Coordinator The City should institutionalize its commuter program by designating a staff member to serve as the citywide Employee Transportation Coordinator (ETC). This staff person’s work plan would include launching a revamped program and tracking the success of the program through annual surveys. Typically, ETCs are staff members in human resources, but Hermosa Beach might find it is more successful in recruiting staff who are already involved in promoting other sustainability-related initiatives. At an employer of Hermosa Beach’s size, the ETC role would not be a full-time position. This person would also serve as the go-to peer to answer questions, administer incentives, and disseminate informational materials to educate and inform fellow staff members about their options. Finally, this role would include investigating resources the City could access from Metro’s Commute Services, in order to further strengthen the program. 2. Form Partnerships In concert with the newly-appointed ETC, Hermosa Beach should form partnerships with nearby employers to increase the likelihood of a carpool or vanpool match. The options are limited, but they include: ● The Hermosa Beach Chamber of Commerce’s 300 members, who represent firms that employ many private sector workers in Hermosa Beach. ● The Hermosa Beach City School District. School District offices are a short walk from Hermosa Beach City Hall, on the campus of Hermosa Valley School. However, as 55% of commute survey respondents work a 4/10 schedule, from 7AM to 6PM Monday through Thursday, and school district employees may have different work schedules than City employees. Hermosa Beach could also promote online ridematching through services already provided by Metro (www.ridematch.info). Unfortunately, no existing vanpool routes terminate in Hermosa Beach; many terminate in El Segundo. 3. Restructure Incentives A common theme among successful local employee commute reduction programs is the provision of incentives to participants. These programs typically provide a monetary incentive to employees who participate a certain number of times per month, or employees earn incentive points on a daily basis that can be traded in for monetary incentives or other prizes. Of the 64 employees who answered the question, “What is the minimum monthly cash reward that would entice you to carpool, bike, walk, or take Employee Commutes - Page 67 public transit to and from work at least 50% of the time?” in the 2013 Employee Commute Survey, 42% answered $30-50, and 37.5% answered greater than $50. Based on these results and the programs of neighboring cities, here are some future considerations: ● Create a tiered incentive system: Although as of July 2013 no employees were participating in the City’s rideshare program, about 11% were biking, carpooling, walking or taking transit to work at least one day a week. This gap in participation could reflect the program’s stringent requirement, enforcing 3 days participation each week to qualify for incentives. To encourage more employee participation, the City could create a tiered incentive system in which participants utilizing the program more receive a larger incentive. For instance, employees who participate 5 days per month receive $20, and those who participate 10 days per month receive $50. ● Create a “points based” incentive system: Like the Cities of Redondo Beach, Torrance, and Santa Monica, Hermosa Beach could create a system based upon incentive points that are earned on a daily basis. This system also encourages employees to participate who are not ready for the existing program’s stringent requirement of 3 days per week. At the end of the month or the quarter, employees can trade in their incentive points for cash or prizes. ● Incorporate alternative fuel vehicle commuters: Some municipalities, like Manhattan Beach, offer incentives to employees who commute in 100% alternative fuel vehicles (100% electric, CNG, LNG, hydrogen fuel cell). Hermosa Beach could even look to subsidize alternative fuel vehicle purchases and leases as a component of planned compensation increases. If the employee saves money on vehicle operation costs, the alternative fuel vehicle incentive could put additional money in the employee’s pocket above and beyond the City’s contribution. The CIty of Hermosa Beach may also consider providing direct subsidies or a pre-tax set-aside for workers who use transit and vanpool. ● Direct subsidies: Employers can provide up to $230 per month tax-free to employees who use transit or vanpools. The employer therefore pays the benefit and receives equivalent deduction from business income taxes. The employer pays directly for vanpool expenses or purchases transit passes for employees. ● Set aside pre-tax dollars: Employees are allowed to set aside up to $230 per month of their pretax income to pay for transit or vanpools. Employees save on payroll and income taxes since it is not reported as a taxable salary. The amount set aside is a benefit and therefore reduces employer payroll costs. Employee Commutes - Page 68 ● Partially subsidize costs: The employer subsidizes a portion of vanpool or transit costs in addition to salary, and allows employees to pay the rest. Finally, if it is eligible to do so, Hermosa Beach should submit a Rideshare Service Agreement with Metro’s Commute Services division in order to make its employees eligible for Metro Rewards. Metro Rewards is an incentive program available at no cost to participating employers. In 2014, the Metro Rewards program provided workers who commuted using an environmentally-friendly mode with a coupon discount book to purveyors of goods and services throughout Los Angeles County worth $1,000 in immediate savings. The eligibility threshold is much lower: Employees must rideshare at least 8 work days a month during three consecutive months. 4. Add Bike Accommodations To support bicycle commuting and the use of bicycles for mid-day trips, the City of Hermosa Beach should investigate: ● Ensuring there is adequate and safe bicycle parking at all work sites. ● Including building showers and lockers with bicycle commuters in facility renovation plans. ● Launching a bike barn at City Hall and the City Yard to allow for use of shared bicycles, including electric-assist bicycles. ● Initiating a Take Home Bike Program, which allows nearby employees to take home bicycles or neighborhood electric vehicles for use in commutes. 5. Determine a Telecommuting Policy Instituting a telecommuting policy could help the City significantly lower vehicle emissions attributed to employee commuting, especially if initiated as an option for long- distance commuters. This would be both effective in reducing emissions and attractive to employees with significant commutes. Thirty-four percent of employees surveyed expressed interest in this option in the 2013 Employee Commute Survey. These employees indicated their ability to use such a policy 3 to 4 times a month; however 46% stated their work would not be compatible with telecommuting, and 17% were not interested. Several cities had success. A few strategies the City of Hermosa Beach should include when determining a telecommuting policy are listed below: ● Establish an eligibility list of suitable job categories, employment status, and prior performance ratings for telecommuting. ● Create a performance agreement for those employees eligible to telecommute, specifying a minimum for office-based hours, accessibility during regular work hours, methods of communication with supervisor, and necessary requirements Employee Commutes - Page 69 for alternative worksites including computer specification and special equipment, desk size and configuration. Other Emissions: Page 70 Hermosa Beach Municipal Carbon Neutral Plan Other Emissions Natural Gas Hermosa Beach uses natural gas for both building energy and some vehicles in the City’s fleet. Increasing the energy efficiency of the City’s natural gas vehicles and equipment is key to gross emissions reductions. However, even with efficiency improvements, the 2013 Hermosa Beach Carbon Neutral Scoping Plan found that gross reductions in natural gas emissions are limited by the fuel’s inherent greenhouse gas intensity. This is in contrast to gross greenhouse gas emissions from electricity, which can be eliminated through use of renewable generation. Efforts to reduce greenhouse gas emissions have generated interest in low-carbon sources of natural gas. The section on the City’s vehicle fleet details an option for transferable credits when renewable natural gas is used as a transportation fuel. Biogas Transfer Credits may be a future option for other uses of natural gas. Biogas Transfer Credits Biogas Transfer Credits are a concept to separate the renewable qualities and emissions benefits from physical biogas, in a manner similar to RECs and LCFS credits. Biogas (or biomethane) is natural gas that is produced from the breakdown of organic material in the absence of oxygen. Biogas can be produced through anaerobic digestion at facilities that handle green waste, manure, municipal solid waste, and sewage. Biogas must typically be cleaned in order to improved quality, but can then be compressed into Biogas CNG or liquefied into Biogas LNG. Biogas combustion is considered a biogenic source of greenhouse gas emissions, and is not included in gross emissions totals in greenhouse gas inventories. Historically, most biogas used for energy in California has been combusted on-site or nearby a landfill, dairy, or sewage treatment plant. A new law may bring new opportunities for pipeline biogas use in California. In 2014, the California Public Utilities Commission adopted regulations to implement AB 1900 (2012) enabling biogas injections into natural gas pipelines. The implementing regulations pertain to safety requirements and recordkeeping for biogas injections, including a facility’s annual biomethane production rate. The law does not establish Biogas Transfer Credits in California, but future laws or regulations could do so. If Biogas Transfer Credits (or conceptually similar units with a different name) become available in the U.S. or California, Hermosa Beach could look to acquire credits to offset its natural gas Other Emissions: Page 71 consumption. For Hermosa Beach to take credit in its inventory, greenhouse gas accounting guidance would need to incorporate a method to adjust for the credits. Contract Vehicles Hermosa Beach contracts its street cleaning, landscaping, and refuse & recycling services. The City has already included stipulations that some of these contractors use cleaner, natural gas vehicles. The City’s street cleaning provider and refuse/recycling service use natural gas vehicles. The City’s Clean Fleet Policy and Action Plan establishes several goals for contracted vehicles: ● Interim: ○ Determine feasibility of 50% emissions reduction for City fleet and 20% emissions reduction for contractor service vehicles (implemented with new contracts, or with amendments when feasible). ● Long-term: ○ Net zero greenhouse gas emissions for City fleet. ○ Alternative fuel used for 100% of contracted City service vehicles. This is a lesser goal in that it is not a net carbon neutral goal. In the future, Hermosa Beach can specify contract terms that require the service provider to neutralize greenhouse gas emissions from the services they perform on behalf of Hermosa Beach. Alternatively Hermosa Beach could require that the contracted service provider disclose the volume and carbon intensity of fuels and amount of electricity used to service the contract, and Hermosa Beach can then take additional steps to offset those emissions. Solid Waste The City’s 2007 inventory reported 167 metric tonnes from waste in landfills. Hermosa Beach does not have operational or financial control over a landfill. However, emissions from waste sent to landfills are considered to be Scope 3 emissions under the Air Resources Board’s Local Government Operations Protocol. The City should include these emissions within its offset program. The City’s 2007 inventory reported 85 metric tonnes from all contract service vehicles. Because Hermosa Beach can exercise operational control over its waste service provider, compressed natural gas combustion emissions from Athens Services’ collection of waste and transfer to landfills would be considered Scope 3 transportation emissions from contracted services. Hermosa Beach should either offset these vehicle emissions on its own, or engage Athens Other Emissions: Page 72 Services with a contract amendment to offset these emissions or reduce gross emissions through biogas use. Water According to the 2007 Municipal Inventory, Hermosa Beach has operational control over limited sprinkler and irrigation systems and lift stations. These emissions, derived from electricity, may be addressed through electricity procurement strategies. Hermosa Beach may wish to consider upstream emissions related to water treatment and distribution. In the 2013 Hermosa Beach Carbon Neutral Scoping Plan, West Basin Water District’s emissions factors for imported and recycled water were found to be 0.00414 and 0.00388 kgCO2e/gallon, respectively. Hermosa Beach could elect to track and offset upstream emissions from water use, but it is not necessary for the City to claim carbon neutral status under the Local Government Operations Protocol. Use of Greenhouse Gas Offsets: Page 73 Hermosa Beach Municipal Carbon Neutral Plan Use of Greenhouse Gas Offsets The Role of Offsets in Climate Commitments Greenhouse gas offsets, typically denominated in metric tonnes of carbon dioxide equivalent (CO2-e), represent avoided greenhouse gas emissions produced from a monetary investment in a specific project. Offset projects range from those that capture and destroy methane and other potent greenhouse gases to those that sequester emissions in soil, plants, and trees. All aggressive (80% reduction or more) entity and community climate commitments referenced in this document either explicitly permit offsets or are silent on their use in achieving their goal. Some commitments include separate goals for gross reductions - those achieved without the use of offsets - in addition to a goal for net emissions. Commitments from organizations that plan to use offsets differ in the types of offsets that they will use. Some local governments and entities prefer to use offsets that are in some way connected to the city or entity. For instance, Austin Texas has its own boutique offset program, and the University of California plans to develop its own as well. Others have prescribed standards for the types of offsets they will pursue. Offsets range in quality: the ability to demonstrate that the offset is real, measurable, verifiable, additional, and permanent. Offsets of lower quality and those that are not connected to a particular sector or geography are typically cheaper. Various registries and protocols have been established to guarantee offset quality. Defining Offsets Real The offset has produced an actual reduction in GHG emissions, rather than shifting emissions to some other source. Measurable The offset can be quantified, typically in metric tonnes of CO2-equivalent. Verifiable An outside auditor can determine the existence of a single offset unit, which is then tracked using an offset registry. Additional The offset was produced as a result of its value. The offset would not have occurred in the absence of an offset payment. Permanent The offset cannot be reversed. If there is risk of reversal (e.g. the risk that forestry carbon stocks will be destroyed by wildfire), the offset protocol typically requires some portion of offsets be set aside. Use of Greenhouse Gas Offsets: Page 74 Cities and Offsets Guidance on the Use of Offsets Accounting guidance for local governments doesn’t allow cities to replace gross emissions with offsets. Instead, local governments report their use of offsets – and resulting net emissions – as an informational item. Local Government Operations Protocol (section 13.1.2.5) “Carbon offsets retired/generated and sold. Local governments should account for and report all carbon offsets which they purchase and retire. These offsets may not be deducted from Scope 1 or Scope 2 emissions due to the fact that a complete accounting framework which accurately and credibly tracks the ownership and retirement of these credits has not yet been established. Local governments should also report any offsets that they both generate and sell as part of a climate mitigation project.” U.S. Community Protocol for Accounting and Reporting of Greenhouse Gas Emissions “The ICLEI community protocol requires the community to report gross GHG emissions without the impact of carbon offset projects, stocks, sinks, sequestration projects, purchases of carbon credits, or renewable energy certificates. The community may optionally, and separately, report the emissions reductions associated with any of the above activities.” City Standards for Offset Quality Few cities have specified the level of quality, types of projects, and project locations that they expect from offsets used to meet climate commitments. British Columbia does have requirements for offsets used to meet that province’s goal for carbon neutral municipalities for 2012 and beyond. Offsets must be generated in British Columbia and meet the requirements set by the Pacific Carbon Trust, a boutique offset program established as a joint venture of the provincial government and a League of Cities equivalent. Many local governments achieved carbon neutral municipal operations in 2012 or earlier, but the entire province is now readjusting its Carbon Neutral pursuits as a result of an offset scandal. The local offset registry, the Pacific Carbon Trust, has been absorbed by the provincial government after a scandal caused attempts to repeal the requirement that local governments neutralize their emissions. Local government were purchasing offsets at a cost of more than double the amount of their wholesale cost, and some of the offsets the Trust purchased and sold to local governments were ineligible under the provincial rules. Use of Greenhouse Gas Offsets: Page 75 British Columbia’s experience highlights the potential trade-off of establishing a new, boutique offset program. Establishing the Trust allowed British Columbia greater control over the locations and types of offset projects that would be funded. However, costs of the boutique offset program may be higher than under an established, multisectoral offset program program, and as with any new entity, oversight is important to ensure that actions are within the public interest. One alternative to establishing a boutique offset program is to invest in a narrow range of projects offered by an existing offset registry. Hermosa Beach could, for example, seek out forestry projects in the Western United States. Municipal Utilities Several municipal utilities make use of both offsets and renewable energy certificates (RECs) in order to make climate-related claims. Palo Alto Utilities uses RECs that are eligible under California’s Renewable Portfolio Standard. The Sacramento Municipal Utilities District invests in its own projects as well as RECs eligible in California. Outside of California, Austin Energy makes direct contracts with wind generators. Seattle Power & Light uses offsets from the Climate Action Reserve and other third-party organizations. Universities and Colleges The few colleges that have already achieved carbon neutral status have chosen to be transparent about their use of offsets and the projects in which they invest. As educational institutions, these entities can incorporate a discussion of climate commitments and the use of offsets within their curriculum. That offsets are required to meet Carbon Neutrality commitments can highlight the vast challenge in decarbonizing organizations and places. The College of the Atlantic in Maine claims to be the first Carbon Neutral educational institution. It chose to use offsets from specific projects from two carbon project developers: the Carbon Fund and the Climate Trust. These developers invested in a traffic signal optimization project in Portland, OR and a truck stop electrification project in Oregon and Washington. These two projects are verified to the Oregon Standard, an offset standard created by the state legislature. Colby College, also in Maine, first invested on-campus: in a biomass project and energy retrofits. For the remaining emissions, Colby purchased and retired carbon offsets from three projects: two landfills in Maine and Connecticut and one farm in Michigan. The offsets are registered with the Climate Action Reserve and meet the Reserve’s verification requirements. However, the offsets are not eligible for conversion to California Compliance Offsets because they were not verified to the more stringent California standard. Green Mountain College, another Carbon Neutral educational institution, invested in a farm methane project in Vermont. Use of Greenhouse Gas Offsets: Page 76 Corporations Microsoft is one of the few companies which details its use of offsets. Microsoft looks to use offsets that are credible, verifiable, and additional. Through the Gold Standard and Verified Carbon Standard offset registries, Microsoft has invested in reforestation in Kenya, home fuel switching in Mongolia, wind farms in China, and alternatives to deforestation in Brazil. Consumers TerraPass is a consumer service that retires offsets from the Verified Carbon Standard and Climate Action Reserve on behalf of consumers. One project registered on the Climate Action Reserve, the Arcata Community Forest, expanded an existing forest to protect adjacent land from logging. Offset Programs Available to Hermosa Beach Both California Compliance Offsets and voluntary offsets are available to Hermosa Beach. California Compliance Offsets California Compliance Offsets are admissible to the state’s Cap-and-Trade program. They are issued by the Air Resources Board. In certain cases, California Compliance Offsets can be converted from offsets generated by the Climate Action Reserve, Verified Carbon Standard, and American Carbon Registry. California Cap-and-Trade California’s Climate Change Scoping Plan outlines the state’s strategy for reducing greenhouse gas emissions to 1990 levels by 2020, as required by AB 32 (2006). The Scoping Plan relies heavily on a cap on greenhouse gas emissions that come from electricity, natural gas, transportation fuels, and certain other industries like cement production. Entities in these sectors must acquire and surrender an amount of emissions allowances equivalent to their greenhouse gas emissions. Greenhouse gas emissions from other sectors, like agriculture and landfills, are uncapped and will likely remain uncapped due to monitoring and verification challenges in enforcing compliance. Emissions reductions projects from uncapped sectors can produce compliance offsets. California Greenhouse Gas Allowances The California Air Resources Board issues both California Greenhouse Gas Allowances and ARB Offset Credits, which together serve as compliance instruments for sources subject to state’s Cap-and-Trade program. Up to 8% of the total compliance obligations for a year can be met using ARB Offset Credits. The Air Resources Board issues ARB Offset Credits for projects that meet certain criteria contained in an approved offset protocol. Registry Offsets from projects meeting the same criteria but registered with the American Carbon Registry, Climate Action Reserve, or Verified Carbon Standard can be converted to ARB Offset Credits. Use of Greenhouse Gas Offsets: Page 77 California Greenhouse Gas Allowances and ARB Offset Credits are both denominated in metric tonnes of CO2-equivalent, and are identical aside from the ARB Offset Credits being limited to 8% of the overall compliance obligation. Hermosa Beach can acquire and retire either California Greenhouse Gas Allowances or ARB Offset Credits to offset its greenhouse gas emissions within California’s Cap-and-Trade program. Allowances are available in vintages corresponding to the three established compliance periods, 2013-14, 2015-17, 2018-20. When retiring allowances to offset the City’s emissions from municipal operations, the City should retire offsets of the same vintage as the year to be offset. For example, if the City wishes to offset its 2015 emissions, it should retire 2017 vintage offsets. Acquiring California Allowances to Offset Hermosa Beach’s Emissions Hermosa Beach is not a covered entity and does not have a compliance obligation under California’s Cap-and-Trade Program. Hermosa Beach does indirectly participate in California’s Cap-and-Trade system. Southern California Edison, Southern California Gas, and transportation fuels distributors who sell products and services to Hermosa Beach and their contractors do have a compliance obligation, and these entities must surrender allowances to the Air Resources Board for each compliance period. Hermosa Beach has several options to retire California Greenhouse Gas Emissions Allowances. The City can register on the California Air Resources Board’s Compliance Instrument Tracking System Service (CITSS) to purchase allowances at auction and transfer compliance instruments to the Retirement Account. The City can register as a Voluntary Associated Entity pursuant to California Code of Regulations Section 95814. Under this scenario, the City could acquire allowances: ● Directly from the Air Resources Board at quarterly auctions. The City must register as an auction participant after establishing a CITSS Account and submitting a bid guarantee prior to each auction. ● From a third party via an exchange. The Intercontinental Exchange and CME Group offer futures contracts for California Carbon Allowances (CCA). Futures contracts provide for delivery of a tangible or intangible asset at a future date. For instance, between now and December 24, 2015, Hermosa Beach could purchase and retire 2017 Vintage California Carbon Allowances to be delivered to Hermosa Beach’s CITSS account at the end of December 2015. ● From a third party via an over-the-counter transaction. The third party must maintain a CITSS Account and the transaction must be registered on CITSS to guarantee legitimacy. Use of Greenhouse Gas Offsets: Page 78 Hermosa Beach can also work with a registered Voluntarily Associated Entity to purchase and retire offsets on behalf of the City. A Voluntarily Associated Entity would conduct transactions on Hermosa Beach’s behalf. Several brokers hold CITSS accounts and provide carbon offsetting (or “balancing”) services on behalf of third parties, like Hermosa Beach. These include: ● 3Degrees - offers Carbon Balancing Services ● Element Markets - developer and supplier of GHG credits, including California ● Evolution Markets - Kyoto, EU-ETS, RGGI, & California Hermosa Beach should expect to pay a slight price premium or service fee when working with an exchange or Voluntary Associated Entity to purchase and retire allowances. For instance, contracts for 2014 allowances delivered at the end of September 2014 traded for $12.00 on the Intercontinental Exchange, while allowances from the August 2014 Air Resources Board auction settled at $11.50. Retiring California Allowances to Offset Hermosa Beach’s Emissions Retiring California Compliance Instruments is simple. Hermosa Beach, a broker, or a third party can access CITSS and process a transfer from the General Account to the Retirement Account. Instruments transferred to a compliance account will result in real offsets to Hermosa Beach’s emissions. Analysis of California Allowance Prices California allowances are of the highest quality, as they are used for compliance in a legally- binding Cap-and-Trade program. As such, California allowances are more expensive than offsets for voluntary programs. The California Air Resources Board has sold allowances at auction since the fall of 2012. Allowance prices peaked at $14.00 in May of 2013. The settlement price at 2014 auctions (as of August) has concentrated between $11.48 and $11.50. Use of Greenhouse Gas Offsets: Page 79 California Air Resources Board Allowance Auction Prices In the 2010 Economic Analysis, the Air Resources Board projected a 7% annual price increase from 2012 through 2020, which is roughly what a company could earn on invested capital. The reasoning behind that is because entities with a compliance obligation can hold onto allowances for a future compliance period, and allowances are subject to a rate of return similar to what allowance holders can achieve from asset classes of a similar risk. If allowance holders expected allowances to appreciate at a higher rate (say 10%), they would buy and bank allowances in pursuit of a extraordinary profit opportunity. This would bid up the price of allowances to a price level where the extraordinary profit opportunity vanishes (back to 7%). The 2010 Economic Analysis projected an allowance price of $25 per metric tonne in 2020. At a 7% annual price increase, expected 2014 values would be $16.66 per tonne, $5.16 higher than the latest auction. Because of this price discrepancy, an updated analysis is needed to forecast allowance prices through 2020. The analysis below projects a 5.8% (low-case), 7% (mid-case), or 11% (high case) annual increase in allowance prices after 2014. Use of Greenhouse Gas Offsets: Page 80 Projected California Air Resources Board Allowance Prices Cost Projection Annual % Increase 2014 2015 2016 2017 2018 2019 2020 Low 5.8% $11.50 $12.17 $12.87 $13.62 $14.41 $15.24 $16.13 Middle 7.0% $11.50 $12.31 $13.17 $14.09 $15.07 $16.13 $17.26 High 11.0% $11.50 $12.77 $14.17 $15.73 $17.46 $19.38 $21.51 Analysis by Kaizenergy The California State Legislature must amend state law for the state’s Cap-and-Trade program to continue beyond 2020. Two factors point towards continuation of the Cap-and-Trade program. First, the legislature and public’s support for addressing climate change through carbon pricing remains strong. Second, allowing the program to end would mean a significant loss of revenue from allowance sales. With future Cap-and-Trade auction revenues already committed to the California High Speed Rail project, abandoning carbon pricing would leave the project partially- finished or in search of another multi-billion dollar source of funds. Voluntary Offset Registries Voluntary greenhouse gas emissions offsets have been available for two decades. Most climate commitments have used voluntary offsets to validate emissions reductions claims. Outside of California, Quebec, and a handful of other places subject to Cap-and-Trade programs, voluntary offsets are the standard instruments of making carbon claims. Voluntary offsets are available at a fraction of the price of compliance offsets. A 2013 study of voluntary offsets found an average price of $4.90 per metric tonne of CO2-equivalent, 42% of the California ARB allowance price. A system of registries and independent verifiers are responsible for assuring the quality of voluntary offsets. Registries determine policy related to offset production through protocols, work with the offset project developer to verify the project, issue offset units based on the metric tonnes of reductions produced, and track the transfer offset units between parties. Some projects on these registries can also be certified to produce California Compliance Offsets, if the projects meet certain protocol and verification requirements Use of Greenhouse Gas Offsets: Page 81 Voluntary Offset Registries Offset Registry Share of Global Market Convertible to ARB Offsets? Notes Verified Carbon Standard 47% Some projects 70 U.S.-based projects (of 1,200+). VCS has the most methodologies of any offset registry. The Gold Standard 15% No Focuses on offsets produced outside of the United States, primarily in developing countries. Climate Action Reserve 5% Some projects California-based organization (Los Angeles) focused on offsets produced in the U.S. (360 projects), Mexico (8 projects), and Canada. 51 projects are in California. American Carbon Registry 1% Some 95 U.S.-based projects (of 105). Staff trained on ARB protocols. Market shares based on 2013 data in Forest Trends State of the Voluntary Carbon Markets 2014 Voluntary Offset Project Types Offset projects must adhere to an approved protocol or methodology. While the California Air Resources Board has approved protocols for five project types, the various voluntary registries have approved dozens of protocols and methodologies. The table below presents the range of offset projects, which are classified by their Kyoto Protocol greenhouse gas emissions sector. Use of Greenhouse Gas Offsets: Page 82 Types of Offset Projects, by Emissions Sector Sectoral Scope Registries with approved method/protocol Types of projects 1 - Energy Generation ACR, VCS, TGS Cogeneration facilities, fuel use in cooking stoves 2 - Energy Distribution ACR Recycling of transformer oil 3 - Energy Demand ACR, VCS Building weatherization, campus energy efficiency 4 - Manufacturing Industries None None yet 5 - Chemical Industries VCS Chemical production processes 6 - Construction None yet 7 - Transport ACR, VCS Vehicle fuel switching, truck stop electrification 8 - Mining/Mineral Production ARB, CAR Coal mine methane 9 - Metal Production None None 10 - Fugitive Emissions from Fuels None None 11 - Fugitive Emissions from Gases CAR, VCS Destruction of ozone depleting substances, leak detection 12 - Solvents Use None None 13 - Waste Handling and Disposal CAR, VCS Landfill methane capture, organic waste composting 14 - Agriculture, Forestry, Land Use ACR, ARB, CAR, VCS, TGS Rice cultivation, forestry, urban forest, prevention of deforestation, fertilizer management, soil management, 15 - Livestock and Manure Management ARB, CAR Manure management, grazing management ACR = American Carbon Registry, ARB = California Air Resources Board, CAR = Climate Action Reserve, TGS = The Gold Standard, VCS = Verified Carbon Standard, Use of Greenhouse Gas Offsets: Page 83 Recommendations on Use of Offsets Offsets are an important part of an aggressive climate commitment, as demonstrated by other cities, corporations, and colleges that have claimed or plan to achieve Carbon Neutrality status. Offsets put a price signal on carbon emissions. By purchasing offsets, Hermosa Beach acknowledges the real environmental cost of greenhouse gases emissions from municipal operations. Offsets also signal that the City is looking for other ways to reduce its emissions as any investments to reduce gross emissions will, in turn, reduce future offset expenditures. As such, the sustained use of offsets can be seen as a commitment device for achieving gross emissions reductions: the City cannot simply ignore the cost of its gross greenhouse gas emissions. As a climate commitment device, offset retirements are not limited to a certain percentage of a City’s emissions ㅡ the City pledges to neutralize gross emissions at any level. However, offsets are not a free pass to emit; they are only effectively utilized as part of a larger climate action strategy. Hermosa Beach stakeholders may have a negative perception of the City’s use of offsets, especially if they feel the City’s efforts to reduce gross emissions are inadequate. Use of offsets alone will not accomplish the City’s other objectives or lead to the desired co-benefits from the City’s climate action efforts. Transparency is exceedingly important in climate action, especially when offsets are used. Hermosa Beach should establish a performance monitoring program that includes regular reporting of the City’s climate action efforts, along with publishing greenhouse gas emissions inventories. Offsets utilized within a public education and outreach campaign that focuses on the City’s efforts to reduce its gross greenhouse gas emissions from municipal operations. The offsets should tell a story that people can connect to when understanding the City’s climate actions and considering their own. The experience of existing cities and entities, particularly the three educational institutions, highlights the possibility to connect offsets with a community as part of a public education program about a city’s climate action efforts. By investing in certain projects – projects whose stories resonate with residents – Hermosa Beach can communicate the climate action challenges that it is seeking while connecting the community with specific projects they can also invest in to offset their own emissions. While a wide range of offset project types exist, Hermosa Beach may find some more suitable than others if the City wishes to include its own offset retirements as part of a public education and outreach program. The public may feel more of a connection with offsets generated within the United States, especially those from projects in California. Use of Greenhouse Gas Offsets: Page 84 Should Hermosa Beach Use Compliance or Voluntary Offsets? Hermosa Beach must decide whether to use the cheaper voluntary emissions offsets or the more expensive California Compliance Offsets. The annual price of offsets to cover the City’s 2007 municipal inventory in all cost projection scenarios is less than 0.1% of the City’s general fund budget. Range of Annual Costs to Offset 1,552 Metric Tonnes of CO2-e Scenario Offset Price per Metric Tonne Annual Cost to Offset 1,552 MT ARB - Current $11.50 (August 2014 auction price) $17,848 ARB - Future High $21.51 (high-case projection for 2020) $33,383 Voluntary - Current $5.00 $7,760 Voluntary - Future High $7.50 $11,640 Under this range of prices, the City will find that many of its opportunities to reduce gross greenhouse gas emissions are not cost competitive with offsets or allowances. For example, for $99.84, the City could retire the more expensive ARB-eligible allowances (at $11.50/metric tonne) to offset the tailpipe greenhouse gas emissions of a 2002 Ford Expedition traveling 60 miles round trip, 4 days per week, 48 weeks per year. The annual cost of ARB-eligible offsets to neutralize for a Prius traveling 15 miles per day is approximately $7.74. Incidentally, the Expedition driver would save $2,051.30 per year in fuel costs (at $4.00/gallon) by switching to a Prius. This example illustrates both how inexpensive greenhouse gas emissions are, even within California’s Cap-and-Trade system, and also the need for strategic climate action policies that are well-integrated within the City’s existing municipal operations. It also illustrates that use of offsets can be the most cost-effective option to achieve a given level of reductions. The price of allowances will increase in the future as California’s cap on emissions decreases and early actions are exhausted, but even a seven-fold increase in allowance price would only yield a $60 per-month incentive for the Ford Expedition driver to switch to a carpool. The City has found this level of incentive too low for many employees. Use of Greenhouse Gas Offsets: Page 85 Advantages and Disadvantages of ARB and Voluntary Offsets Advantages Disadvantages Voluntary ● Are 50% cheaper than California Compliance Offsets. ● Offers a greater variety of projects. ● Most projects are located outside of California. ● Voluntary offsets can be perceived to be lower quality than compliance offsets. California Compliance ● California offsets are perceived as the highest quality offsets. ● There exists a strong connection between Hermosa Beach and statewide actions: these offsets can help the City explain statewide actions including cap and trade program. ● Their use creates additional emissions reductions within California; effectively reducing the cap. ● Their use shows Hermosa Beach is willing to put a higher price on greenhouse gas emissions. ● California offsets are more expensive; and these additional expenditures could be used to reduce gross emissions. ● It may be more difficult for consumers to acquire and retire offsets if households and businesses within Hermosa Beach want to invest in the same offset project as the City. ➤ ➣ ➢ Hermosa Beach should primarily rely on California Compliance Offsets to validate its emissions claims. Although California Offsets are slightly more expensive, their higher perceived quality and the connection they provide to statewide climate actions will make Hermosa Beach’s climate commitment more robust. Selecting Among ARB-Approved California Compliance Offsets Up to 10% of allowances in California’s Cap-and-Trade system can come from offsets. While, purchasing and retiring California Emissions Allowances has the same effect on emissions as purchasing and retiring California Compliance Offsets, Emissions Allowances have a number of limitations that make them less ideal for Hermosa Beach. For instance, it is difficult to explain within a public education campaign, that, as a result of Hermosa Beach’s offset purchases, a petroleum refinery or a natural gas power plant had to pay a slightly higher price to comply with California’s greenhouse gas regulations. Emissions allowances are intangible, and the only distinguishing characteristic is their ARB-assigned serial number. Use of Greenhouse Gas Offsets: Page 86 Offsets have a story: a project location, emissions removal process, and organization associated with their production. As of September 2014, Hermosa Beach can choose from projects among the five ARB-approved offset protocols. Offsets from each type of project are functionally equivalent in mitigating climate change as they are denominated in metric tonnes of CO2-equivalent. However, each individual project can tell a different story. In choosing among project types, Hermosa Beach should consider how stakeholders can relate to the project’s location, the type of project, and the organization that produces the offset and receives payment. In addition, attractive photographs of the project itself would aid in any public education and outreach efforts the city conducts. U.S. Forest Projects The link between trees and carbon dioxide emissions is well-established in middle school biology classes. Trees are tangible, beautiful, and provide a range of ecosystem services besides converting carbon dioxide into oxygen. Projects certified under the U.S. Forest Protocol provide for the preservation of large, contiguous forest lands in the United States, including some locations in California. These forests will provide for attractive photographs, and the sites could even be visited by Hermosa Beach stakeholders. The offsets are produced by non-profit conservation organizations or private landowners. Use of Greenhouse Gas Offsets: Page 87 U.S. Forest Project Harvego Bear River Preserve Project / Photo by Placer Land Trust Urban Forest Offsets Urban forests, including street trees, parks, and wildlands within city limits, are highly sought- after amenities that provide shade, mitigate the urban heat island effect, and give character to streets and parks. Under current Air Resources Board guidance, planned tree planting and maintenance activities within the urban forest and qualify for offsets. Few projects have used this approach thus far, but a possible protocol update could expand the volume of offsets that come from urban forest projects. The Climate Action Reserve approved two Urban Forest protocols in June 2014. The Urban Forest Management Protocol offers a programmatic approach to the updated Urban Tree Planting protocol. The California Air Resources Board previously adopted the Climate Action Reserve’s Urban Forest Protocol and will need to adopt the Urban Forest Management protocol Use of Greenhouse Gas Offsets: Page 88 for the programmatic approach to create California Compliance Offsets. The Reserve hopes that these new protocols facilitate implementation of more urban forest projects. Municipalities and counties can aggregate projects within an urban area boundary, as established by the U.S. Census Bureau. Projects must be a minimum of 50 acres. Projects are issued credits that are for renewable 25-year periods. Projects are subject to monitoring, reporting, and verification for 100 years to ensure permanent removal of greenhouse gases from the atmosphere. Carbon offsets are generated annually based on the difference in standing live carbon stocks in trees that results from an urban forest management plan (versus the area’s baseline). The City of Santa Monica’s Urban Forest Protocol Project was the first submitted to the Climate Action Reserve. The 1,000 new trees planted under the City’s Urban Forest Master Plan are estimated to produce 5,000 metric tonnes in CO2 reductions over 100 years, or an average of roughly 50 metric tons per year. The fact that this is roughly 4% of Hermosa Beach’s emissions from municipal operations illustrates the sheer number of trees needed to offset emissions. To date, the Santa Monica project hasn’t produced any offsets. Boulder estimates that its urban forest of approximately 330,000 trees sequesters 2,000 tons of CO2 annually. Because the annual amount of emissions sequestered from an urban forest in a 1.4 square mile city would be low relative to the municipality’s emissions from operations, Hermosa Beach may wish to express interest in participating in any potential future South Bay Cities Council of Governments-wide or county-wide urban forest management protocol effort. A larger effort could be more efficient for cities that wish to participate. Livestock Projects The ARB’s livestock projects involve biogas control systems to manage manure on cattle and pig farms. Manure is processed into biogas in a digester, then typically combusted to produce electricity and heat. Livestock projects provide a connection to the familiar topics of farms and food, though this could be perceived as negative as many of the livestock projects are sited at concentrated animal feeding operations. Offsets are typically produced by companies that specialize in biogas control systems and complying with the offset protocols. Use of Greenhouse Gas Offsets: Page 89 Livestock Project New Hope Dairy Livestock Biogas Digester Project in Galt, CA / Photo American Biogas Council Ozone Depleting Substances Some substances which deplete the ozone layer also have a high global warming potential, as measured in carbon dioxide equivalent. Ozone depleting substances that also have a high global warming potential are used as refrigerants, solvents, and fire suppressants. Destroying these substances provides both ozone protection and greenhouse gas reduction. Chemical companies typically produce greenhouse gas offsets from the destruction of ozone depleting substances, and photos of the project locations appear to be a chemical plant. Mine Methane Capture In a mine methane project, methane is combusted and used to make energy. The ARB recently approved the Mine Methane Capture Protocol. The Climate Action Reserve has existing projects registered in Alabama, Colorado, West Virginia, and Wyoming. Coal mine methane projects may be challenging to explain in a public education and outreach campaign that highlights Hermosa Beach’s actions and use of offsets. The projects may evoke a negative association with dirty coal mining and burning coal in power plants, both environmentally harmful activities. In addition, payments to the mining companies or Use of Greenhouse Gas Offsets: Page 90 energy/environmental service companies that produce the offsets are unlikely to be viewed as positively compared with payments to forest conservation non-profits. Photos of projects depend on mine location; the project in Colorado is on a scenic mountainside. Mine Methane Capture Project Vessels Coal Gas project in Colorado / photo by Vessels Coal Gas ➤ ➣ ➢ Hermosa Beach should prioritize U.S. Forest and Urban Forest offset projects, but may consider other projects within an offset portfolio. Other important considerations are whether Hermosa Beach stakeholders can invest in the same project as the City and how the specific project would fit within the City’s outreach and education efforts. Performance Monitoring & Transparency: Page 91 Hermosa Beach Municipal Carbon Neutral Plan Performance Monitoring, Transparency, and Outreach Performance Monitoring In committing to neutralize greenhouse gas emissions from municipal operations, the City of Hermosa Beach is assuming responsibility for its own emissions. It will track and neutralize its contributions to global emissions. Thus, greenhouse gas emissions are now seen as a liability to the City, and the City should take steps to continuously account for emissions with processes similar to how the City accounts for cash, indebtedness, and other assets and liabilities. After the City sets a greenhouse gas reduction target for local government operations, Hermosa Beach should conduct an annual greenhouse gas emissions inventory within 9 months of the close of each calendar year. Meeting this timeline necessitates that the City implement systems to track the following at a minimum of a calendar-year resolution: ● Amount (kWh) of electricity used for each service account, by year. If electric vehicle chargers used exclusively for municipal operations are submetered, this electricity may be broken out into vehicle fleet. ● Volume of gasoline, diesel, natural gas, and other fuels loaded into City-owned vehicles and equipment. ● Volume of gasoline, diesel, natural gas, and other fuels attributable to Hermosa Beach from contracted waste, landscaping, and street sweeping services. ● Miles traveled by vehicle type for employee commutes and business travel. ● City pairs and number of City passengers for any business travel flights taken. ● Weight and composition of waste generated by the City’s municipal operations. ● Recharge volume of high-global warming potential gases into vehicle or facility air conditioning units, fire extinguishers, or other equipment. Performance Monitoring Tools Much of this data can be tracked in ICLEI’s Master Data Workbook4, an excel spreadsheet- based tool that can be compiled by multiple individuals or shared on a networked hard drive. 4 ICLEI’s Master Data Workbook is recommended for Hermosa Beach’s purposes over The Climate Registry’s Local Government Operations Protocol Activity Data Entry Workbook, developed by Juan Matute in 2009 Performance Monitoring & Transparency: Page 92 Two web-based tools will assist Hermosa Beach in tracking activity data and conducting an annual emissions inventory. These are described below. ClearPath Tool for Online Greenhouse Gas Performance Monitoring ClearPath is a web-based tool that allows local governments to perform community-scale and government operations GHG inventories in the cloud. Multiple users can collaborate to enter data from different departments, and the data can be exported in the common .csv format for sharing outside of the web-based tool. ClearPath includes modules for forecasting business-as- usual emissions changes (adjusting for state-level actions like renewable electricity and fuel economy standards) and forecasting the effectiveness of various emissions mitigation strategies. ClearPath offers two tracks: a Government Track and a Community-Scale Track. Using the Government Track, a user can create an inventory following the guidelines of the Local Government Operations Protocol. Using ClearPath, a local government can translate its activity data, like fuel or electricity use, into greenhouse gas emissions by using emissions factors. ClearPath contains default emission factors, including some that are California-specific. Users can also add their own emissions factors, for instance a utility-specific value for kg CO2e from electricity. ClearPath allows users to compare between inventory years, tracking progress over time. An inventory module user guide contains additional information about ClearPath’s features. With data tracking, emissions calculation, and forecasting in the same web-based tool, Hermosa Beach can close the loop between climate target setting, performance monitoring, and iterative policymaking. Hermosa Beach has access to ICLEI ClearPath as an ICLEI member and a California Local Government through the Statewide Energy Efficiency Collaborative California (SEEC). SEEC is a collaboration between investor-owned gas and electric utilities, ICLEI, the Institute for Local Government, and the Local Government Commission. The SEEC program website offers live and recorded training materials on ClearPath and other resources. Enterprise Energy Management Information System This summer, an analyst at the South Bay Environmental Service Center began using McKinstry’s Enterprise Energy Management Information System (EEMIS), a web-based tool, to accesses and analyze the Hermosa Beach’s account data from Southern California Edison. This tool will be used to track changes in energy use over time, particularly those that follow efficiency and retrofit projects. The EEMIS tool can report monthly, quarterly, and annual consumption data, streamlined for greenhouse gas reporting and other uses. Hermosa Beach should budget to maintain an account on the McKinstry EEMIS, approximately $900 per year. Additionally, the City should train staff to access the data in order to monitor the Performance Monitoring & Transparency: Page 93 progress of energy retrofit projects, assess the City’s opportunities for power purchase agreements, and produce annual reports for use in greenhouse gas emissions inventories. Municipal Climate Action Indicators Many intermediate indicators will help the City better understand its progress versus annual greenhouse gas emissions totals or subtotals. For instance, a draft 2012 inventory indicates that commute emissions fell by 37.4% between 2005 and 2012. At first, this may seem to indicate that the City achieved its goal of a 20% reduction in 2005 commute emissions by 2020. However, the number of full-time equivalent employees (FTE) decreased 33.8% during the 2005 to 2012 period. Commute greenhouse gas emissions per FTE during that same period decreased by only 5.3%. Indicators like metric tonnes of CO2-e per FTE can give a clearer picture of the City’s climate action performance than can aggregate totals or subtotals. Activity data, such as miles traveled by employees or kWh of electricity used by facility, can also elucidate the City’s climate action position in greater detail. The Local Government Operations Protocol and other guidance for municipal operations recommend several indicators for municipal operations. The following indicators and metrics are applicable to Hermosa Beach’s annual Greenhouse Gas Emissions Inventory: Performance Monitoring & Transparency: Page 94 Indicators and Metrics for Municipal Climate Action Performance Indicator Metrics What it Means Vehicle Miles Traveled (VMT) Fleet GHG/VMT A measure of GHG intensity of each mile traveled by the City’s vehicle fleet. As the City’s fleet procurement policies take effect, this metric will show progress. Number of vehicles (#Vehicles) VMT/#Vehicles The utilization rate for vehicles as the City considers shared-use fleet Equipment Operating Hours (EOH) Equipment GHG/EOH The GHG intensity of equipment operations Number of Pieces of Equipment (#Equipment) EOH/#Equipment GHG intensity per unit of equipment Solid Waste Tonnage Disposed (Waste) Waste GHG/Waste The GHG intensity of the waste the municipal government sends to landfills; varies based on a landfill’s methane control practices Refuse & Recycling Vehicle Service Hours (WasteVehHours) Waste Vehicle GHG/ WasteVehHours Indicates the GHG intensity of the contractor’s refuse and recycling operations Kilo-watt Hours (kWh) Electricity GHG/kWh The GHG intensity of electricity used by Hermosa Beach. As Hermosa Beach begins to blend its energy procurement, the effects will show in this metric. Number of FTE Employees (#Employees) Commute GHG/#Employees The GHG intensity of employee commutes. This metric allows the City to monitor the effectiveness of its commute reduction program Volume of Water Pumped (Water) Water Pumped GHG/Water The GHG intensity of water pumping at the City’s water pumping lift stations. Transparency Transparency is exceedingly important in climate action. Greenhouse gases are invisible, and the activity that leads to their emission is difficult to track. Thus, interested stakeholders must Performance Monitoring & Transparency: Page 95 rely on the City’s recordkeeping of activity data, indicators, and annual emissions in order to assess the City’s climate action progress. Transparency is even more important when instruments such as RECs or offsets are used to neutralize all or a portion of emissions. Most stakeholders cannot verify the off-site RECs or offsets. When claiming offsets in its annual greenhouse gas inventory, Hermosa Beach should list the serial numbers (or ranges) of offsets retired for the year. When using unbundled RECs to claim renewable energy and reduce the scope 2 emissions, the City should follow guidelines in The Climate Registry’s General Reporting Protocol and “disclose additional activity data such as MWh consumed, purchased, generated or sold as supplemental information.“ Hermosa Beach should also disclose the serial numbers of RECs credited to the City’s electricity consumption. Carbonn Cities Climate Registry An emerging global standard for reporting municipal and community climate action provides a venue for Hermosa Beach to register its targets, document its actions, and publish its annual greenhouse gas inventory. The Carbonn Cities Climate Registry is a new partnership of C40, R20, and other global groups focused on sub-national climate action. The Carbonn registry will help local governments to achieve transparency and accountability for their local climate actions. In reporting its targets, inventories, and actions on Carbonn, Hermosa Beach will be on the same platform as other cities seen as national or global climate action leaders. In September 2014, ICLEI USA’s Resilient Cities for America Initiative named Carbonn as their official reporting platform. As of October 2014, 465 cities are reporting to Carbonn, including Manhattan Beach and Hawthorne. The two South Bay cities have reported their greenhouse gas emissions targets, performance, and mitigation actions. Verification & Reporting of Greenhouse Gas Inventories Some entities have a third-party verify their greenhouse gas inventory prior to reporting the results. The process for verifying greenhouse gas emissions inventories is similar to auditing corporate accounting records, and the intention is to enhance the credibility of the results. Because the cost to verify emissions can be substantial, few local governments and other entities contract with a third-party verifier before reporting their emissions. Credible verification can be obtained through an ISO 14064 compliant procedure, such as through The Climate Registry. Hermosa Beach can increase the credibility of its municipal GHG claims by obtaining third-party verification for a greenhouse gas inventory. However, because the cost of verification, Hermosa Performance Monitoring & Transparency: Page 96 Beach should only audit certain inventories (for instance, the first year it sets a carbon neutrality goal). As Hermosa Beach develops new systems to monitor emissions, its annual emissions inventories will become more accurate and precise, reducing the need for third-party verification. Outreach and Education Building external awareness of the city’s climate action programs necessitates an effective public outreach and education plan. Effective implementation can be challenging - especially because most greenhouse gas reduction efforts produce intangible results. Unlike some other air pollutants, greenhouse gases are undetectable by human senses at typical concentrations. Furthermore, greenhouse gas reductions represent the absence of these undetectable gasses. This creates an environmental communications challenge versus tangible efforts like cleaning water in a river or reducing urban smog. The City should lead its climate action messaging with the city’s goal to be a climate action leader: that its municipal actions will show both the community and other cities what can be possible. The City should support this message by detailing specific actions that have been implemented, and those that are planned for the future. Visualizations of alternative fuel vehicles or solar photovoltaic panels on City facilities can be the most salient demonstrations of climate actions. When explaining less salient actions, the City should tie examples to actions that that community members can take. For example: ● When explaining specific energy retrofit actions, include information on the various options for residential and commercial energy retrofits, especially property-assessed financing ● Connect the City’s actions to procure zero-emissions electricity with options available to residents and business owners, especially the emerging option of Community Choice power ● make the City’s employee commute program an example of implementing GHG reductions in transportation sector called for in the City’s General Plan update Tying municipal efforts to community action will also strengthen the perception of the City as a climate action leader. As, greenhouse gas emissions from municipal operations make up only about 1% of community-wide emissions, connecting the City’s municipal actions with other emissions reductions will demonstrate the city’s ability to leverage its position as a climate action leader. Outside resources, such as ICLEI’s education and outreach guidance and reports from the Yale Project on Climate Change Communications, will help the City determine effective messaging for its outreach and education program. Performance Monitoring & Transparency: Page 97 Rather than relying on a limited number of City staff to communicate the City’s climate action program, Hermosa Beach should train municipal employees and community members to be climate action ambassadors. By holding regular information sessions that describe the City’s climate action commitment, existing actions, and future plans, Hermosa Beach can empower City employees and community members to tell the City’s story – and connect it with community-wide actions. This training problem would follow the model popularized by An Inconvenient Truth, the film version of a presentation Al Gore had taught thousands of others to deliver. This model of empowering others to tell climate-related stories has showed great success in connecting individual action with an overwhelming problem. Information sessions specific to municipal employees could first highlight all municipal actions and then highlight efficiency and greenhouse gas emissions reductions opportunities within an employee’s area of responsibility. The training sessions can also highlight how some highly- visible municipal programs (such as the employee commute reduction program and bicycles at work) serve as examples for community-wide actions. The City should publish regularly-updated presentations on the its website, so that ambassadors can obtain and deliver the most up-to-date information, which stakeholders can also access on the Carbonn Cities’ Climate Registry. A version of the climate ambassador information session could also be delivered within the Hermosa Beach Unified School District, combined with materials from California’s Education and the Environment Initiative. Revenues for Climate Action Climate Action leaders are often expected to “put their money where their goals are” in order to fund climate action measures and programs. For instance, Boulder’s Climate Action Plan tax generates about $1.8 million per year for the City. Voters renewed that measure in 2012. One possible source of dedicated, local funds for climate action is Hermosa Beach’s Utility User Tax, which currently generates approximately $2.5 million per year. At current prices for California Emissions Allowances ($11.50), the community’s 134,000 metric tonnes of CO2-e would cost about $1.54 million to offset. This represents an approximately 61% increase above existing rates of 6% on electricity, gas, and water and 5.5% on communications services, bringing the total Total Utility User Tax would be 10%, comparable to Santa Monica’s. Utility User Tax rates in California range from 1% to 11%, except in Arcata, which levies a 45% tax on residential customers with >600% of the baseline. Currently, it appears that Albany is the only California city looking to use the Utility User Tax to fund climate action. Hermosa Beach could try an alternate approach to funding aggressive reductions in community- wide emissions. The City could declare its interest in implementing innovative demonstration projects and programs in order to achieve aggressive reductions in community-wide Performance Monitoring & Transparency: Page 98 greenhouse gas emissions, provided they are available at no additional expense to the City. The City’s national-leading commitment to neutralize emissions from government operations could attract attention from companies looking for such an opportunity. However, as more cities dedicate funding to climate action, Hermosa Beach may lose out on some promising demonstration projects to cities that can dedicate some local funding to assisting these companies. Hermosa Beach will likely find itself in a more competitive position for state and federal grants as a result of its aggressive climate commitment. The state and federal government have a vested interest in the success of leaders, so that they may lead the path for others to follow. If Hermosa Beach maintains a climate leadership position into the future, it will likely find success in attracting government grants and government-sponsored pilot projects. Attachment 4 Municipal Carbon Neutral Plan Options Sector Least Aggressive Recommended Most Aggressive Electricity ● Continue to implement energy efficiency through cost-effective on-bill financing (projects with payback <10 years)1 ● Pursue any cost-effective solar PV project ● Use Green-E RECs to offset electricity purchase ● Use Green-e RECs until CCA begins ● Dedicate $25,000 net costs toward Solar PV through PPA or municipal lease ● Pursue any cost-effective solar PV project ● Dedicate additional $50,000 to retrofit projects with payback >10 years1 ● Dedicate $250,000 toward start-up costs for a community-wide CCA ● Use PCC Bundle 1 RECs until CCA begins ● Dedicate $100,000 net costs toward Solar PV through PPA or municipal lease; ● Pursue any cost-effective solar PV project ● Dedicate additional $236,094 to retrofit projects with payback >10 years1 ● Dedicate $250,000 toward start-up costs for a community-wide CCA Municipal Fleet ● Continue to implement Clean Fleet Policy and Master Plan with no additional funding for implementation ● Continue to implement Clean Fleet Policy and Master Plan; dedicating an additional $250,000 for acceleration/implementation ● Purchase 10 bicycles, 5 electric-assist bicycles, and 2 Neighborhood Electric Vehicles for shared fleet & employee commute use ● Dedicate $50,000 for EV chargers and infrastructure for use by City fleet and employee vehicles2 ● Continue to implement Clean Fleet Policy and Master Plan; dedicating an additional $500,000 for acceleration/implementation ● Purchase 20 bicycles, 10 electric-assist bicycles, and 5 Neighborhood Electric Vehicles for fleet & employee commute use ● Dedicate $150,000 for EV chargers and infrastructure for use by City fleet and employee vehicles 2 Employee Commute ● Assign 0.1 FTE (assistant) as the City’s Employee Transportation Coordinator ● Increase commute reduction incentive from $30 to $50/month2 ● Assign 0.2 FTE (assistant) as the City’s Employee Transportation Coordinator ● Increase commute reduction incentive from $30 to $50/month2 ● Assign 0.25 FTE (assistant) as the City’s Employee Transportation Coordinator ● Increase commute reduction incentive from $30 to $50/month2 ● Offer a $125/month subsidy to employees who purchase or lease zero-emissions vehicles and use them to commute 2 Other ● Dedicate 0.1 FTE analyst to municipal climate action initiatives ● Dedicate 0.25 FTE analyst to municipal climate action initiatives ● Dedicate 0.5 FTE analyst to municipal climate action initiatives Offsets ● Use voluntary offsets in pursuit of a Carbon Neutral Goal ● Use California ARB offsets in pursuit of a Carbon Neutral Goal ● Use California ARB offsets in pursuit of a Carbon Negative/Climate Positive Goal 1 GSE Solutions identified $236,094 in electricity and natural gas efficiency projects w/ payback exceeding 10 years (report) 2 Employee Commute Reduction Strategies Document (6/2/2014) identifies a $30 to $50/month increase in alternative commute incentives, 0.1 FTE for employee commute coordinator, $100,000 to $1,000,000 for EV charging stations, and an example employee electric vehicle subsidy of $125/month, Estimated Cost One-time: $0 Annual: $42,286 One-time: $675,000 Annual: $92,419 One-time: $1,340,594 Annual: $233,422 Pros Most cost-effective option to pursue neutrality Balances cost-effectiveness and need for visible, impactful actions that serve as a first step toward for community-wide actions Carbon Negative/Climate Positive goal seen as most aggressive; complete package serves as a first step toward for community-wide actions Cons Unlikely to be seen as aggressive enough by some stakeholders; isn’t a stepping stone for community-wide action One-time costs (not annual, but phased in during implementation period) are much higher than in “least aggressive case” Most expensive option Prepared by Kaizenergy, October 2014 Memorandum To: Tom Bakaly, City Manager From: Judy Dorsey and Shelby Sommer CC: Shelli Margolin-Mayer, Pamela Townsend, Ken Robertson Date: October 30, 2014 Re: Economic Benefits of Carbon Neutrality Analysis and Recommendations Project Purpose and Overview This memorandum explores options for the City of Hermosa Beach to pursue carbon neutrality and the potential economic benefits and other advantages of a “first-to achieve” position. It is based on review of existing City efforts related to climate planning, as well as research of and benchmarking against other leading communities, both in California and across the world, in terms of aggressive carbon reduction goals. Because of its small size (just over one square mile), Hermosa Beach is in a unique position to pursue carbon neutrality. The community’s entire greenhouse gas (GHG) emissions (estimated at 134,243 metric tons of carbon dioxide equivalent, MTCO2e) are at a scale similar to many other communities’ neighborhoods or districts, so the reductions necessary to achieve carbon neutrality can be realistically achieved or offset through changes in energy use, and the waste and transportation sectors. In addition, there are many exiting initiatives already underway that will naturally evolve emissions downward. For example, .the State of California’s building codes will require net zero construction by 2020, and national vehicle fuel economy standards are increasing. To explore the potential economic and other benefits of carbon neutrality to the City of Hermosa Beach, it was necessary to begin with a definition of carbon neutrality. Five potential definitions or options for carbon neutrality emerged, and are described in detail in Appendix A. In short, they include community- wide, municipal operations, transportation sector, electricity, and Eco-District options. After identifying the options for achieving carbon neutrality, high-level estimates of the first costs, annual savings, and offset costs were developed for each option. The methodology for developing these estimates is summarized in Appendix B. City of Hermosa Beach, Economic Analysis of Carbon Neutrality 2 In addition to exploring the costs, savings, and other benefits of the carbon neutrality options, seven qualitative criteria were identified as important factors in the screening and evaluation of the options. These criteria are defined below. A. Differentiating: The option helps establish a unique identity or brand that helps set Hermosa Beach apart from its peers. B. Credible: The option is meaningful and realistic, and generates traction to build on existing efforts. The option could be realistically achieved within the stated timeline. C. Ambitious: The option is achievable but aggressive in terms of timeline, scale, or other factors. Its magnitude would significantly exceed existing policy frameworks at the regional and state level. D. Attracts Investment: The option will generate interest in and draw resources to the community. E. Drives Innovation: The option will spur new ideas, approaches, and improvements F. Reflects Community Character: The definition taps into and enhances the existing community assets and atmosphere of Hermosa Beach. G. Replicable: The definition is transferrable to other communities and addresses a common barrier or challenge for achieving carbon neutrality. Others will look to Hermosa Beach for guidance and leadership. SUMMARY OF FINDINGS If Hermosa Beach opted to pursue carbon neutrality simply by purchasing GHG offsets equivalent to the community’s total emissions, the estimated cost per year would be approximately $2 million per year, with the total cost of neutrality by 2030 exceeding more than $30 million. By opting for such as strategy, the community would not experience the other economic, environmental or social savings or benefits of reducing local GHG emissions through efforts such as increased energy efficiency, installation of distributed renewable energy sources, or reductions in vehicle miles traveled (VMT) and waste. Instead, Hermosa Beach could invest in itself, employing a suite of local strategies to achieve carbon neutrality and generate other benefits. Using a multi-pronged approach that integrates major reductions in energy use through efficiency improvements, installation and use of distributed solar voltaic for generation, purchase of green energy through Southern California Edison, significant reductions in VMT, and purchase of GHG offsets for some activities, the estimated initial cost of investment into carbon neutrality would range from nearly $2 million to roughly $130 million, depending on the carbon neutrality pathway selected (see the table on the following page for a cost and savings summary of all options). It should be noted that this investment estimate reflects the estimated size of the overall “carbon neutrality program” – one that is based on partnerships and contributions from not just the City of Hermosa Beach, but also developers, residents, businesses, utility providers, transportation agencies, and other organizations. While the initial investment into these activities are much higher than simply purchasing offsets, for all of the carbon neutrality options, the overall net benefits to the community far exceed the costs. For example, as illustrated in the summary table on the following page, the investment of an estimated $130 million into myriad efficiency, vehicle miles traveled reductions, and other improvement projects to achieve community-wide carbon neutrality, could return an annual savings of roughly $36 million. Option 1. Option 2. Option 3. Option 4. Option 5. City of Hermosa Beach, Economic Analysis of Carbon Neutrality 3 Community Municipal Operations Transportation Sector Electric Supply Eco-District Target Year 2030 2020 2030 2025 2025 Emissions Reduction Required (MT CO2e) 134,000 1,728 79,388 29,391 18,760 Estimated Level of Investment to Achieve Goal – One Time* $130M $1.9M $31M $98M $14M Annual Offsets, Green Rate $2.6M/yr $116k/yr $780k/yr $1.8M/yr $250k/yr Estimated Annual Cost Savings from Achieving Goal $36M/yr $450k/yr $24M $12M/yr $1.8M/yr Qualitative Evaluation Criteria A. Differentiating Yes No Yes Somewhat Yes B. Credible Somewhat Yes Yes Yes Yes C. Ambitious Yes No Yes Yes Yes D. Attracts Investment Yes Somewhat Yes Yes Yes E. Drives Innovation Yes Somewhat Yes Yes Yes F. Reflects Community Character Yes Yes Somewhat Somewhat Yes G. Replicable Yes Yes Yes Yes Yes * Level of investment is the estimated size of the program to be financed in partnership with the City of Hermosa Beach, homeowners, business, contractors, developers, utilities, transportation agencies, federal/state agencies, grants, and other organizations and foundations. ** Note: Totals may not sum due to rounding. POTENTIAL BENEFITS OF A “FIRST-TO” POSITION In addition to the cost savings and return on investment opportunities identified for all of the carbon neutrality options identified for Hermosa Beach, aggressive pursuit of a “first-to” position to achieve City of Hermosa Beach, Economic Analysis of Carbon Neutrality 4 carbon neutrality is expected to generate additional benefits and levels of investment interest and activity. While there is a lack of specific published materials demonstrating a proven statistically significant increase in funding available to “first-to” projects, there are some other similar efforts from which assumptions can be developed to estimate the benefits of a “first-to” position for community- wide carbon neutrality for Hermosa Beach. To begin, Brendle Group has supported several projects at the building scales that have achieved “first- to” positions, and these experiences show that “first-to” status can generate about 10 to 20 percent of implementation costs from equipment donations, demonstrations, reduced contractor and supplier fees, and outside grants and rebates. This estimate is supported by several projects in Fort Collins, Colorado, including Brendle Group’s headquarters, a project with Woodward, and Colorado’s first LEED home. At a larger scale, partnerships and cost-sharing opportunities can also support implementation of “first- to” opportunities. For example, with FortZED, there was a 50 percent cost-sharing opportunity with the Department of Energy for implementation of a “first-to” demonstration of peak load management. Pecan Street Inc., a University of Texas at Austin-based initiative focused on research and innovation in water and energy, is also attracting volunteers, sponsorships and investment into smart grid technologies. Likewise, Xcel Energy has partnered with technology providers for the donation of equipment and services in their smart-grid city initiative. If the 10 to 30 percent assumptions materialized for Hermosa Beach, the community could bring in an estimated $12 to $40 million in contributions and in-kind donations to support implementation by virtue of being the “first-to” community in pursuit of carbon neutrality by 2030. More specifically, a portion of the contributions and funding would likely come from rebates, grants, and other financial assistance and resources available to any community adopting and pursuing aggressive carbon neutrality goals. Another portion could come from active solicitation of partners and in-kind contributions in exchange for association with the brand/profile of the endeavor, meaning that the City would need to establish a brand position and lead an active campaign to garner these benefits. RECOMMENDATIONS AND NEXT STEPS The City of Hermosa Beach has an opportunity to credibly pursue carbon neutrality community-wide and to be among the first, if not the first city to attain this goal nationwide. The City’s small size, political climate, and location in a state that is leading the country in renewable energy and climate action planning are all factors that can contribute to its success. That said, because Hermosa Beach is so small compared to other cities, attaining carbon neutrality would be on the order of neighborhood or district scale efforts in other cities. By extension, any economic benefits from investment in carbon neutrality would also be comparable to a district or neighborhood in a larger city. As such, it is recommended that the City adopt and begin to pursue an aggressive goal for carbon neutrality. By taking a no-regrets approach towards carbon reduction, at a minimum the community will benefit from proactive planning and reduced risk from delayed action. The projected economic benefits from a leadership position around any of the carbon neutral options are added benefits, with the potential opportunities surrounding a “first-to” position serving as an extra incentive or implementation driver. City of Hermosa Beach, Economic Analysis of Carbon Neutrality 5 Moving forward, it is recommended that Hermosa Beach begin implementation of its carbon neutrality goal with investment in and pursuit of carbon reduction strategies that improve building efficiency and expand renewable energy generation. The cost savings realized from these initiatives can help offset the investments needed to reduce vehicle miles traveled and waste generated. However, early action is less expensive than later action, and Hermosa Beach should integrate carbon reduction strategies into all upcoming building, transportation, and waste projects and efforts such as building upgrades, corridor improvements, events, and revitalization activities. Hermosa Beach should also work to establish its “carbon neutral” brand, developing and sharing the community’s aspirations and commitment. The City must also determine, dedicate, and sustain adequate resources not only to ongoing implementation, but also ongoing monitoring and communication of its progress. Additional next steps include the alignment of City policies and regulations to support the goals, and the ongoing pursuit of partners to leverage opportunities and maximize community benefits. Benefits of Carbon Neutrality The case for taking action to reduce carbon emissions is well-documented and summarized in a recent report by the Carbon Disclosure Project, Wealthier, Healthier Cities: How Climate Change Action is Giving Us Wealthier, Healthier Cities (2013).1 The report shares the results from review of 110 cities worldwide who are taking action to reduce GHG emissions. Key findings from the report include the following: 1. Climate change action is making cities leaner and richer. One out of every two actions that cities are taking to reduce emissions in their municipal operations is focused on efficiency. Cities report nearly $40 million in savings per year from tackling climate change. 2. Emissions reduction activities by cities are pro-business. 62% of actions that cities are taking to reduce GHG emissions at the city-wide level have the potential to attract new business investment and grow the economy. Furthermore, 91% of cities believe that working to combat climate change will lead to economic opportunities for their cities. Inaction could be costly—98% of cities say that climate change poses physical risks to their cities, including impacts to business. 3. Reducing emissions and adapting to climate change makes for healthier citizens. More than half of reporting cities (55%) are undertaking emissions reduction actions that promote walking and cycling, which directly and indirectly lead to improved public health. And over three-quarters of cities’ reported adaptation actions will protect human health from the negative effects of climate change.2 1 Wealthier, Healthier Cities: How Climate Change Action is Giving Us Wealthier, Healthier Cities. Carbon Disclosure Project (2013). https://www.cdp.net%2FCDPResults%2FCDP-Cities-2013-Global- Report.pdf&ei=3Nw7VLDsGuqK8QHJp4HwBA&usg=AFQjCNFRhbqKFIospvbjxdQ0z1yEcyoVOA&sig2=mntKcjNFC99c 9cxBMG6OfQ&bvm=bv.77161500,d.b2U (Accessed October 13, 2014). 2 Wealthier, Healthier Cities: How Climate Change Action is Giving Us Wealthier, Healthier Cities. Carbon Disclosure Project (2013). City of Hermosa Beach, Economic Analysis of Carbon Neutrality 6 The City of Cleveland Climate Action Plan (CAP, 2013)3 draws similar conclusions, finding that the key benefits of taking climate action include “local job creation and economic development; reduced utility and operational costs for homes, businesses, and government; improved risk management and resilience to the impacts of climate change; healthier, more comfortable homes; improved air quality, public health, and quality of life; improved water quality and habitats; and a more educated and empowered population with the tools to take action at home, at work, and in their community.” The Cleveland CAP identified three major job-generating components related to the plan: 1) demand related to annual household and business utility cost savings; 2) demand related to the construction of infrastructure; and 3) demand related to the plan’s ongoing actions. It recognizes that the potential energy savings is significant, but notes that “the economic case is even greater when considering the multiplier effect from households and businesses having more money to spend elsewhere. For households, additional money translates into greater expenditure on retail goods and services, as well as potentially greater rates of investment and saving, all of which generate demand for jobs in the existing economy.” Rocky Mountain Institute’s (RMI) recent report, Stepping Up: Benefits and Cost of Accelerating Fort Collins’ Energy and Climate Goals (2014)4 also explores the potential opportunities and benefits of more aggressive climate action goals in Fort Collins, Colorado. Like the Wealthier, Healthier Cities report, RMI’s Stepping Up report concludes that the “accelerated scenario represents a fundamentally different paradigm for investment in energy-related assets and infrastructure compared with the business as usual scenario, providing greater local job creation, economic development, stimulus for innovation, and growth for local businesses.” It also highlights the opportunity to “invest in efficiency and renewables now, to reduce outflows of cash for decades to come.” According to the Stepping Up report, an estimated 400-500 jobs and $20 million per year for the period between 2013 and 2030 would result from a shift in investment from distant energy resources (e.g., coal and natural gas) to more local assets (e.g., efficiency, distributed solar, and smart grid). THE COSTS OF INACTION A recent report issued by the Executive Office of the President of the United States, The Cost of Delaying Action to Stem Climate Change,5 recognizes that there is an ongoing debate over whether to act now to mitigate and adapt to climate change, or to delay action until the future, and explores the economic impacts of delaying action. It discusses the negative externalities and economic damages that are 3 City of Cleveland Climate Action Plan (2013). http://www.sustainablecleveland.org/wp- content/uploads/2013/10/Cleveland-Climate-Action-Plan-Final2013-web.pdf (Accessed October 13, 2014). 4 Stepping Up: Benefits and Cost of Accelerating Fort Collins’ Energy and Climate Goals. Rocky Mountain Institute (2014). http://www.rmi.org/cms/Download.aspx?id=10913&file=80FortCollinsReport-WEB_2014- 02.pdf&title=Stepping+Up%3a+Benefits+and+Cost+of+Accelerating+Fort+Collins%27+Energy+and+Climate+Goals (Accessed October 13, 2014). 5 The Cost of Delaying Action to Stem Climate Change. Executive Office of the President of the United States (2014). http://www.whitehouse.gov%2Fsites%2Fdefault%2Ffiles%2Fdocs%2Fthe_cost_of_delaying_action_to_stem_clima te_change.pdf&ei=AN47VKfxNOa48gGPuYG4DQ&usg=AFQjCNFgnTGAGCi9c- oBx3GMMIpf6eVCFA&sig2=pSPDdJeNP1gBPRhyN-q74w&bvm=bv.77161500,d.b2U (Accessed October 13, 2014). City of Hermosa Beach, Economic Analysis of Carbon Neutrality 7 generated from the emissions of GHGs such as CO2, including but not limited to the costs to health, costs from sea level rise, and damage from increasingly severe storms, droughts, and wildfires. The Cost of Delaying Action to Stem Climate Change report concludes that “although delaying action can reduce costs in the short run, on net, delaying action to limit the effects of climate change is costly,“ and also that “climate policy can be thought of as ‘climate insurance’ taken out against the most severe and irreversible potential consequences of climate change.” In short, if a delay in action leads to higher CO2 emissions, it creates a ripple effect of economic damages from a changing climate, and means that future actions to reduce emissions will likely be more costly. Moreover, action now to reduce the chances of “climate catastrophes” is wise because the severity of consequences and impacts from climate change are still unclear. While the report examines the economic costs of delayed action, it also notes that the “total costs of climate change include much that does not trade in the market and to which it is difficult to assign a monetary value, such as the loss of habitat preservation, decreased value of ecosystem goods and services, and mass extinctions.” The Risky Business Project recently released a report that serves as a climate risk assessment for the United States.6 It finds that the US economy is beginning to experience the effects of climate change, and these impacts will continue to grow. It identifies the following major climate risks that will impact the national economy and natural and human systems:  Large scale losses of costal property and infrastructure.  Extreme heat across the nation, threatening labor productivity, human health, and energy systems.  Shifting agricultural patterns and crop yields. The Risky Business report also details the risks by region – California is included in the assessment of the Southwest region. The report states that, “On our current path, by the end of the century, the average Southwest resident will likely experience an additional 33 to 70 days of extreme heat due to climate change, or one or two additional months of days over 95 degrees Fahrenheit each year.” The report also notes that “87% of all Californians live in coastal counties, and 80% of the state’s Gross Domestic Product (GDP) is derived from those counties.” It notes that along the coastline of Los Angeles, if current trends continue, sea level will likely rise by 1.5 to 3.0 feet by 2100. The report concludes that “if we continue on our current path, many regions of the U.S. face the prospect of serious economic effects from climate change. However, if we choose a different path—if we act aggressively to both adapt to the changing climate and to mitigate future impacts by reducing carbon emissions—we can significantly reduce our exposure to the worst economic risks from climate change, and also demonstrate global leadership on climate.” 6 Risky Business: The Economic Risks of Climate Change in the United States. Risky Business Project (2014). http://riskybusiness.org/pdf (Accessed October 13, 2014). City of Hermosa Beach, Economic Analysis of Carbon Neutrality 8 HERMOSA BEACH OPPORTUNITIES Perhaps the greatest opportunity for GHG emissions reductions and significant cost savings is in the buildings sector. Comprehensive investment by the City, homeowners, businesses, developers, utilities, and others to increase building efficiency to reduce electricity and natural gas demand, paired with efforts to install and use distributed solar energy generation could yield more than $14 million annually in savings. Not only would this multi-pronged, local investment approach lead to direct cost benefits, but the direct investment into efficiency upgrades and renewable energy integration would also lead to other direct and indirect economic benefits. Efficiency is local in nature, and investment into efficiency upgrades creates opportunities for local employment and creates revenue for local suppliers and service providers. In addition, the cleanest energy resource is the one that is not used at all, meaning that the more that Hermosa Beach can reduce its energy demand, the less it needs to invest in energy supply. Likewise, investment in local renewable energy generation would support local economic development opportunities and potential. Widespread distribution of solar photovoltaic systems across the community could also add visibility and credibility to Hermosa Beach’s carbon neutrality commitment by showing that it is making a significant effort to generate its own clean energy. Other benefits to Hermosa Beach from investing in local strategies to achieve carbon neutrality would include more efficient and comfortable buildings, improved climate change resiliency, engaged and empowered local residents, and expanded opportunities for businesses and investment. In terms of the transportation sector, there are major opportunities to reduce overall vehicle miles traveled (VMT) by Hermosa Beach residents and employees. However, due to Hermosa Beach’s location within a greater metropolitan region and resulting commuting patterns, it is likely that a significant portion of the community’s transportations will need to be offset (at least in the near-term) in order to achieve carbon neutral status. Ongoing investment into transportation demand management, transit, and bicycling and pedestrian infrastructure can help reduce VMT, and can also support the creation of local jobs and enhanced community character. However, it is important to note that the costs of investment into the transportation sector will largely be borne by the public sector, with most of the cost savings associated with those investments primarily benefitting commuters and community residents. In addition to overall VMT reductions, continued adoption and integration of more fuel- efficient vehicles and alternative fuel vehicles at the household, business, and municipal levels will also help drive down annual transportation emissions. Other communities have started to realize the benefits of local investment into carbon reduction efforts, and help provide some insight into potential opportunities that could emerge if Hermosa Beach aggressively pursues a leadership position. For example, FortZED, in Fort Collins, Colorado, is the nation’s first major urban zero-energy district. The initiative integrates partners from local government, academia, and industry in collective pursuit of transforming the downtown area and Colorado State University main campus into a net Zero Energy District through conservation, efficiency, renewable sources, and smart technologies. FortZED includes more than 7,000 residential and commercial customers, representing approximately 10 percent to 15 percent of the Fort Collins Utilities’ distribution system, and over 200,000 megawatt hours per year (MWh/year) in energy usage. For comparison, the City of Hermosa Beach is approximately 57 City of Hermosa Beach, Economic Analysis of Carbon Neutrality 9 percent larger than the FortZED area in terms of number of customers (estimated at 11,000); however overall estimated energy use in Hermosa Beach is nearly 101,000 MWh/year (based on the 2005 Community GHG Inventory), or roughly half of FortZED’s usage (this is due to the large number of industrial user in the FortZED boundary). FortZED has positioned itself to be a model for a leading and replicable net Zero Energy District, and as such, it has attracted over $6.3 million in federal economic stimulus-related grants from the U.S. Department of Energy, plus an additional $5.1 million from local participants, investors, and utilities. Given its compact scale and relatively low existing energy usage, it is likely that Hermosa Beach’s carbon neutrality efforts would drive similar levels of innovation and investment in the community, which coupled with potential annual cost savings from improved building efficiency, reduced VMT, and reduced waste expenses, could generate further ripples of direct and indirect economic benefits across the local economy. City of Hermosa Beach, Economic Analysis of Carbon Neutrality 10 Appendix A: Options for Carbon Neutrality This appendix describes each of five potential options for Carbon Neutrality in terms of a “first to” position and provides seven criteria for comparing the strengths and weaknesses of each option, especially as they relate to and support the City through a “carbon neutral” branding effort. Based on research and benchmarks, most existing community carbon neutral goals are based on mid-century implementation horizons. Because this project is driven by a “first-to” viewpoint, for each option an aggressive target date for achieving neutrality was assumed in order to credibly establish and reap the benefits of a “first-to” position. Assuming a 2015 goal adoption year, this would provide a 5 to 15-year runway to accomplish the various options for carbon neutrality. It is also assumed that each carbon neutrality option would be achieved using consistent and recognized protocols for estimating greenhouse gas (GHG) emissions, and that monitoring of carbon neutral status would need to occur on an annual basis. Local efforts in pursuit of carbon neutrality in Hermosa Beach would also need to be aligned with other state climate and GHG initiatives, including California’s cap and trade and Renewable Portfolio Standard programs. California’s regulatory climate around the topic of carbon neutrality is nuanced, and opportunities exist for communities to achieve carbon neutral status by retiring California-eligible GHG emissions allowances equal to their gross emissions inventories. However, this study does not explore this pathway to carbon neutrality, primarily because such actions do not lead to the greater local economic, environmental, and social opportunities that result from local investment into strategies to actually reduce GHG emissions. Instead, this appendix focuses on five potential carbon neutrality options for Hermosa Beach: 1. Community 2. Municipal Operations 3. Transportation Sector 4. Electric Supply 5. Eco District (e.g., Downtown) The following pages discuss each option, outlining the pathway to neutrality and identifying existing efforts to build on to achieve carbon neutral status. Each option also includes discussion of existing benchmarks and competition in achieving a “first-to” position. Note that for each option, the pathway for achieving carbon neutrality would likely involve a combination of various voluntary and regulatory approaches to reduce emissions. For example, through building codes, the State of California will require net-zero energy construction for all new buildings by 2020. This regulatory approach is just one example of the many voluntary and regulatory strategies that will need to come together to reduce building energy use to achieve carbon neutrality. OPTION 1. COMMUNITY CARBON NEUTRALITY BY 2030 Description/Scope Under this option, Hermosa Beach would eliminate or offset all greenhouse gas emissions by a target date using the International Council for Local Energy Initiatives (ICLEI) U.S. Community Protocol for Accounting and Reporting of Greenhouse Gas Emissions. Hermosa Beach’s existing GHG emissions inventories estimated 138,464 metric tons of carbon dioxide equivalent (MT CO2e) emissions in 2005, 134,253 MT CO2e in 2007, and emissions are projected to increase to 136,944 MT CO2e by 2020. City of Hermosa Beach, Economic Analysis of Carbon Neutrality 11 Under this carbon neutrality goal, net GHG emissions would need to be reduced to zero through a combination of direct mitigation strategies and likely offsets or ‘over production’ of renewable energy to meet the goal. Since several other communities have established 2050 as a target date for community carbon neutrality, an aggressive target date of 2030 is suggested in order for the City of Hermosa Beach to benefit from a “first to” position. Groundwork and Pathway to Neutrality In 2010, the Hermosa Beach City Council established a goal to become a carbon neutral city after adopting the Sierra Club’s Cool Cities Program in 2006. The program included a commitment to reduce GHG emissions to at least 7% below 1990 levels by 2012. While emissions did drop 3.7% from 1990 by 2007, it’s not clear whether the remaining reductions were achieved by 2012. The target date for carbon neutrality in Hermosa Beach was not defined when the goal was established. However, regardless of the target date, this ambitious goal would dramatically shift from incremental reductions to complete elimination of GHG emissions, effectively decarbonizing the economy – from transportation, to buildings, waste, and processes/services. The Hermosa Beach Carbon Neutral Scoping Plan, prepared by students of the UCLA Institute of the Environment and Sustainability in 2013, serves as a resource in understanding options for the City’s pathway to neutrality. It summarizes community and municipal GHG inventories, and provides analysis of emissions conditions by sector including building energy, transportation and land use, water and wastewater, and materials consumption and waste. Through analysis of different scenarios, various models and approaches to reduce GHG emissions are explored. The Carbon Neutral Scoping Plan’s recommended scenario for achieving carbon neutrality in Hermosa Beach is ambitious and identifies long-term measures that may be difficult to implement, but would also lead to the greatest GHG emissions reductions. Implementation of this scenario would entail extensive community participation in and adoption of the following measures:  Enhanced residential, commercial, and industrial building energy upgrades and retrofits  HVAC solar driven adsorption heat pump systems in all residential buildings  Biogas as part of the local natural gas distribution system  Renewable energy procurement by Southern California Edison by 2020  50% of households and commercial/industrial buildings generating 100% of their electricity from photovoltaic  100% of governmental buildings generating 100% of their electricity from photovoltaic  Community Choice Aggregation (CCA) to contract with other utilities with larger renewable supplies and allocate funds to wave power  Households participating in a neighborhood electric vehicle program  Growth in the use of electric, hydrogen fuel cell, and natural gas vehicles  Community carpooling and carshare programs  Improvements to City infrastructure to enhance pedestrian, bicycle, and low speed vehicle access  Neighborhood oriented development to reduce trip length and encourage non-vehicle mode choices  Improved transit service  Efficiency improvements related to fuel standards and vehicle type improvements City of Hermosa Beach, Economic Analysis of Carbon Neutrality 12  Pay-as-you-throw program  Green waste composting program  Ecofriendly guide and reuse retailers (e.g., thrift/consignment shops)  Methane capture technology Even under this aggressive scenario, the Carbon Neutral Scoping Plan recognizes that Hermosa Beach might not be able to completely neutralize its impact on global climate change, and that emissions offsets, while not a first choice plan to achieve carbon neutrality, are likely a necessary addition to the carbon neutral strategy after aggressive pursuit of other implementation measures. For example, even if Hermosa Beach implements all of the measures identified in the most aggressive scenario in the Carbon Neutral Scoping Plan, the community would only realize approximately 90% GHG emission reductions. As such, it is estimated that approximately 10% of the community’s GHG emissions would need to be offset in order for the community to realistically achieve carbon neutrality. Offset expenditures, especially those that might come from the City’s General Fund, would likely be heavily scrutinized, particularly in years when the City’s budget is lean. For that reason, a special funding source for offsets, such as a Utility Users Tax, may make help add credibility to offset purchasing strategies. Benchmarks Several communities have committed to carbon neutrality by 2050 including Davis, California, Fort Collins, Colorado, Seattle, Washington, and Oberlin, Ohio. Only a handful of communities have established goals of achieving carbon neutrality before 2050 including Melbourne, Australia (2020), Copenhagen, Denmark (2025), and Aarhus, Denmark (2030). The various strategies for these first communities to reach carbon neutrality are summarized below.  Melborne’s roadmap to climate neutrality by 2020 focuses on Council operations and leadership (maintaining carbon neutrality), increasing the efficiency of commercial and residential buildings and industry, shifting the energy supply to renewable sources, increasing the percentage of trips using low emissions transportation, and decreased landfill waste per capita.  Copenhagen’s goal to reach carbon neutrality by 2025 hinges primarily on converting the energy supply to less carbon-intensive options including biomass, wind, geothermal, and solar. It also includes district heating and cooling infrastructure, demanding energy efficiency and transportation goals, and net-zero energy construction by 2020.  Aarhus’ pathway to carbon neutrality by 2030 involves significant reduction of energy consumption through improved energy efficiency in buildings, energy efficient transportation and intelligent energy systems, combined with conversion of the remaining consumption to fossil free production. The first phase of the initiatives include efficiency retrofits to municipal properties, connecting homes to a municipal district heating system, and a network of charging locations for electric vehicles. Additional initiatives will include a light-rail transit system, expansion of the bike path network, and switching to wood pellets, straw and domestic waste as fuels at the City power plant. OPTION 2. CARBON NEUTRAL MUNICIPAL OPERATIONS BY 2020 Description/Scope Under this option, the City of Hermosa Beach would lead by example, eliminating greenhouse gas emissions associated with municipal operations by 2020, using the Local Government Operations Protocol (LGOP) as recommended by the California Environmental Protection Agency Air Resources City of Hermosa Beach, Economic Analysis of Carbon Neutrality 13 Board. The community would commit to achieving carbon neutrality by 2020 (an aggressive but realistic goal) and to maintaining that status over time. Total municipal GHG emissions for Hermosa Beach were estimated at 1,508 MT CO2e in 2005, and 1,552 MT CO2e in 2007, or nearly 1% of community-wide emissions. Municipal GHG emissions under a business-as-usual scenario are forecast to reach 1,728 MT CO2e by 2020. Groundwork and Pathway to Neutrality Various efforts to explore Hermosa Beach’s pathway to carbon neutral operations have already been completed or are currently underway. When the City Council declared intent to pursue carbon neutrality in 2010, it was determined that the first area of focus would be municipal facilities and operations. The City’s Sustainability Plan, adopted in 2011, identifies programs and high-level estimates of carbon reduction that might be achieved by providing an approximately 25% reduction of the baseline. Implementation of the Sustainability Plan continues, as do many parallel efforts to plan for and achieve carbon neutrality in municipal facilities, as follows:  Carbon Neutral Roadmap for Municipal Facilities & Operations (2013) – provides a summary of accomplishments, targets and future actions for achieving carbon neutrality in municipal facilities and operations. Various timeframes are outlined for achieving the carbon neutral goal, including the Sustainability Plan target (25% reduction from 2005, by 2020), more aggressive (50% by 2020 for example), or a more accelerated target.  Staff Report: Strategy and Steps to Accelerate Energy Reduction and Cost Savings (2013) – provides recommendations to implement City building, park lighting and street lighting energy reduction projects through Capital Improvement Project (CIP) funds and on-bill financing agreement with Southern California Edison (SCE) and adoption of a Municipal High Efficiency Product Procurement Policy. As summarized in the table below, these projects represent an annual GHG reduction of 337 MT CO2e, or approximately 25% of the municipal GHG emissions.  Employee Commute Reduction Strategies (2014) – summarizes the findings of the 2013 Employee Commute Survey and identifies strategies for an Employer Commuter Program to support the City's carbon neutrality goal. The report does not identify a target date for implementation, nor the preferred program(s).  Clean Fleet Policy and Action Plan (2013) – a Council-adopted policy that establishes targets and a plan to green the City’s fleet vehicles. An interim target of 50% emissions reduction from City 2013 Strategy and Steps to Accelerate Energy Reduction and Cost Savings: Summary of Recommended Projects City of Hermosa Beach, Economic Analysis of Carbon Neutrality 14 fleet and 20% emissions reduction for contractor service vehicles is proposed. Long-term goals of net zero GHG emissions for City fleet vehicles and alternative fuel for 100% of contracted City service vehicles are also identified. Moreover, the Hermosa Beach Carbon Neutral Scoping Plan also provides information in its three scenarios related to achieving carbon neutrality in municipal operations. Some of these efforts have already been initiated to reduce carbon emissions across municipal facilities and operations, such as the 2013 energy audit, lighting retrofits, addition of clean fleet vehicles, and fleet-dedicated electric vehicle stations. Future municipal efforts will be defined in the Hermosa Beach Municipal Carbon Neutral/Climate Action Plan, currently under development as a separate, but related effort. Preliminary objectives identified for the municipal carbon neutral pathway include a focus on actions that can be quickly implemented, visible evidence of renewable energy generation within the community (especially solar photovoltaic), visible alternative fuel vehicle additions to the City fleet, an innovative program that addresses employee commutes, regular evidence of reductions in gross emissions attributable to the City demonstrated through an ongoing monitoring program, valid environmental claims within the state’s complex policy environment, and cost-effective reductions that don’t crowd out expenditures on City services and infrastructure. Benchmarks Like Hermosa Beach, most best-practice communities conduct separate GHG inventories for municipal operations in conjunction with the community GHG inventory and often set analogous goals for municipal operations as for the community. Many communities have established aggressive carbon neutral goals and target dates for municipal operations, and some have already achieved those goals, as follows:  British Columbia: many local governments achieved 100% carbon neutrality for public sector facilities in 2010. Carbon offsets are used to achieve carbon neutrality, and all offsets used must meet stringent eligibility criteria. However, few have maintained this status to due to a changing political climate and offset purchasing issues.  Austin, Texas: committed to make all City fleets, facilities, and operations carbon neutral by 2020. Part of that commitment will involve the purchasing of carbon offsets. The municipal plan also includes the development of departmental climate protection plans and an employee education campaign and program. As of 2012, the City’s municipal carbon footprint decreased from the 2007 baseline of 286,000 MT CO2 to 190,000 MT CO2. Major contributions to this decrease include the fact that the City of Austin became the largest local government in the US to subscribe to 100% renewable energy power to all municipal facilities in 2011, and more than 45 solar photovoltaic installations totaling over 614 kW (AC). OPTION 3. CARBON NEUTRAL EMISSIONS FROM TRANSPORTATION SECTOR BY 2030 Description/Scope Under this option, Hermosa Beach would eliminate or offset all greenhouse gas emissions associated with transportation activities within its current GHG inventory by 2030 (the same time period established for community carbon neutrality). This would be challenging but also a unique approach to carbon neutrality and possibly a significant contribution to the region. City of Hermosa Beach, Economic Analysis of Carbon Neutrality 15 In Hermosa Beach, transportation was responsible for 59% of total annual emissions according to the City’s 2007 community GHG inventory (79,388 MT CO2e). The main sources of transportation GHG emissions are commuting and work trips, as only a small portion of the City’s residents are employed within the community. According to the 2008-2012 American Community Survey 5-year estimates, the average commute time for Hermosa Beach is nearly 30 minutes, and more than 80% of residents drive to work alone. By establishing a pathway to decarbonize the transportation sector, Hermosa Beach would not only be addressing one the largest sources of emissions in the community, but could also generate other regional interest and participation since it is a mobile source not confined to community boundaries. Additionally, a carbon neutral transportation sector is an important element of an overall community carbon neutrality goal. Groundwork and Pathway to Neutrality While it contains recommendations to address and target all sources of emissions, the Hermosa Beach Carbon Neutral Scoping Plan recommends that the City specifically focus on the largest source of the community’s emissions, transportation. As the Carbon Neutral Scoping Plan notes, Hermosa Beach has little or no control over many aspects of the vehicle manufacturing and energy production processes, and so the boundary for GHG accounting for Hermosa Beach’s transportation sector would likely need to be focused around components of vehicle travel and the refueling aspects of energy production processes. Strategies for achieving carbon neutrality would need to focus on reducing fuel consumed per mile traveled, vehicle miles traveled, and fuel carbon intensity. Measures such as a municipal clean fuel or zero emission purchasing policy, alternative fueling stations, carshare programs (such as Car2Go), carpooling and rideshare programs, City fleet vehicle efficiency, neighborhood electric vehicle program, “Complete Streets” planning and improvements, neighborhood oriented development, and parking management strategies would help the community achieve the goal. While many of these efforts are already underway to some degree, widespread community participation would be a critical component in achieving carbon neutrality. The Southern California Area Council of Governments (SCAG) Regional Electric Vehicle Program is one effort to leverage if Hermosa Beach decides to pursue a carbon neutral transportation system. The program is focused on preparing Southern California for an influx of plug-in electric vehicles (PEVs), and provides resources such as a Southern California PEV Readiness Plan, Interactive PEV Atlas, and other links and information to support the growth of PEVs in the region. In addition to changes in vehicle types, physical improvements to existing infrastructure and facilities would be necessary to accommodate and increase the number of trips on other modes, such as pedestrian, bicycle, and transit usage. The Pacific Coast Highway and Aviation Boulevard Street Improvement Plans identify some steps towards that end, but additional improvements would be necessary community-wide. Though electrification of the transportation system would drive up energy use, a renewable source for that energy, such as solar, could help balance out the increased emissions. For example, continued installation of solar photovoltaic systems on community facilities, such as schools, parking structures, and City properties could be used to generate the energy needed to charge fleets of electric vehicles. City of Hermosa Beach, Economic Analysis of Carbon Neutrality 16 As with the community carbon neutrality option, carbon offsets are likely a necessary part of the equation since it will be nearly impossible to reduce all transportation-associated emissions coming into the community given its location within a larger metropolitan area. Even if the City of Hermosa Beach became a car-free community, emissions from other transportation-related sources such as transit and freight would need to be accounted for and potentially offset. Benchmarks As part of its effort to achieve carbon neutrality by 2025, the City of Copenhagen is aiming for 75% of trips to be made by foot, bike, or public transit and is investing heavily into improvements that attract cycling and public transit users. Copenhagen is also aiming to have 85% of smaller fleet vehicles running on electricity, hydrogen, and biofuels, and is exploring hybrid biogas models for the bus fleet. Around the world, a handful of communities (mostly in Europe, such as Helgoland, Germany, Hydra Island, Greece, and Geithoorn, Netherlands) are essentially car-free, or have major sections that prohibit cars. While the reasons for their car-free nature vary, many of these communities are smaller towns or villages in historic, resort, or island settings, and other modes of transportation like walking, bicycling, boat, golf carts, and public transit are the primary options. While such communities are not officially recognized as having carbon neutral transportation systems, they offer valuable lessons and perspectives for communities looking to de-emphasize the role of automobiles in the overall transportation system. OPTION 4. CARBON NEUTRAL ELECTRIC SUPPLY BY 2025 Description/Scope Under this option, Hermosa Beach would eliminate or offset all greenhouse gas emissions associated with electricity use within its GHG emissions inventory. The target date for this goal is 2025 – an ambitious but attainable goal five years ahead of the community and transportation sector targets. Hermosa Beach’s existing electricity consumption is approximately 101,000 Megawatt Hour (MWh) per year. Previous GHG emissions inventories estimated emissions of approximately 30,253 MT CO2e from electricity sources in 2005, and 29,391 MT CO2e in 2007, or approximately 22% of all community emissions. As noted in the Carbon Neutral Scoping Plan, although emissions from electricity have decreased, this does not equate to less electricity consumption. Instead, consumption has increased, but the emissions factor of the electricity provider (Southern California Edison, or SCE), has decreased, meaning that SEC is improving efficiency of energy generation and increasing the use of renewable sources and natural gas in electricity generation. As of 2013, SCE served 21.6% of its retail electricity sales with renewable power. California’s Renewables Portfolio Standard (RPS) currently requires investor-owned utilities to increase procurement from eligible renewable energy resources to 33% by 2020. California’s Greenhouse Gas Cap-and-Trade Program also sets the limit and annual caps for GHG emissions to encourage electricity providers to shift toward clean sources of energy by requiring electricity companies to purchase allowances for the carbon pollution that is associated burning coal or natural gas. City of Hermosa Beach, Economic Analysis of Carbon Neutrality 17 Groundwork and Pathway to Neutrality Because Hermosa Beach is reliant upon an external provider for electricity, achieving a carbon neutral electric supply would need to involve coordination with the provider as well as local efforts to decrease emissions associated with electricity usage. The 2014 UCLA senior practicum report, Assessing Options to Deliver Carbon Neutral Electricity to the City of Hermosa Beach, builds on the work completed in the Carbon Neutral Scoping Plan, and explores avenues for attaining carbon neutral electricity. Recommendations from the report include the following:  Implement Energy Efficiency Programs: renewable energy resources alone are not enough to supply all electricity if current usage trends continue, and increased efficiency is a major step in the pathway to carbon emission reduction. Two programs are already available in Hermosa Beach to help finance energy efficiency improvements – the LA Property Assessed Clean Energy (PACE) program for commercial properties, and the new HERO program for residential properties – so the next step would be to encourage participation in these programs.  Community Choice Aggregation via a Joint Powers Authority: a CCA grants decision-making powers over energy procurement to local authorities, thus by forming a CCA the City of Hermosa Beach could potentially decide to use only carbon neutral electricity. In order to reduce the potential price premium associated with carbon neutral electricity, Hermosa Beach should explore joining with other communities in the area to form a Joint Powers Authority (JPA) in pursuit of a CCA. A larger CCA would have greater electricity demand, which would give it more options and bargaining power with electricity providers, and would also help distribute the fixed costs of forming and running a CCA among multiple communities. One option might be for the City of Hermosa Beach to join Lancaster, CA in its CCA pursuit, but other potential JPA/CCA candidates in closer proximity include Manhattan Beach, Inglewood, Redondo Beach, Palos Verdes Estates, and Rancho Palos Verdes.  Future municipal actions around reducing electricity use and related emissions include pursuing Platinum Level in the SEC Energy Leader Program, considering a net zero carbon standard for new/upgrading municipal facilities, streetlight retrofits, and adopting a renewable energy plan and policies. These initiatives are also discussed in the Staff Report: Strategy and Steps to Accelerate Energy Reduction and Cost Savings (2013). In addition, a conceptual proposal for a solar project was recently provided to the City of Hermosa Beach by PsomasFMG. The proposal is for solar energy installations on carports at two sites in the community: City Hall and the Community Center. The total system size would be 176 kW, with a net purchase price of $740, 843 and annual operations and maintenance costs of approximately $4,893. All of these municipal actions could be implemented by 2020 or earlier, as discussed in the Carbon Neutral Municipal Operations section above.  Green Tariff Shared Renewables Program: while it may be a potential route, the Green Rate program with SCE may not be the best avenue for Hermosa Beach to achieve a carbon neutral electricity system due to price, structure, and legislative issues. Instead, a newly formed Community Choice Aggregation (CCA) could help ensure a lower rate for renewable energy for Hermosa Beach electricity customers.  Electricity Grid Improvements: upgrades to the current electricity grid system, such as infrastructure to support bidirectional power and energy storage units, are necessary in order for Hermosa Beach to support higher levels of distributed generation through renewable energy sources, such as solar. Since SEC owns the transmission infrastructure in Hermosa Beach, it is likely that the City would need to establish a Municipal Utility District (MUD) to gain jurisdiction City of Hermosa Beach, Economic Analysis of Carbon Neutrality 18 of the electricity service and to purchase and upgrade the existing grid infrastructure. This approach could also be tied to Option 5 whereby the MUD is focused on a district within the City. Other recent electricity-related efforts by the City of Hermosa Beach include a 2013 Energy Audit which identified potential energy efficiency improvements, miscellaneous lighting retrofits (completed and in- progress), using an Enterprise Energy Management Information System (EEMIS) to track electricity and other data in real-time, participation and Silver Level achievement in SCE’s Energy Leader Program, and a municipal high-efficiency product procurement policy. Benchmarks While a carbon neutral electric supply is an ambitious goal, the City of Hermosa Beach will not be the first community to achieve it. In 2013, Palo Alto, California became one of the first communities to achieve a carbon neutral electric supply. In the near-term (2013 through 2016) Palo Alto will maintain this status by purchasing short-term renewable resources and renewable energy certificated (RECs) to supplement existing and committed long-term renewable and hydroelectric resources. The City’s Utilities Carbon Neutral Electric Plan also establishes a pathway for more renewable resource development long-term, including three major solar electric power purchase agreements that will support up to 18% of the City’s electric needs via solar photovoltaic electric power beginning in 2017. Lancaster, California is aggressively pursuing net zero power (or even net-positive – meaning more power is generated than consumed), primarily through achievements and advancements in alternative energy. While a target date has not been identified, they are well on their way through efforts that include a solar thermal power plant, an affordable solar energy residential community, an affordable solar financing program, large-scale solar energy projects (to power most municipal facilities, schools, and a stadium), a power purchase agreement (PPA) with US Topco Energy, Inc., and other renewable energy research and implementation projects. These efforts are linked to the community’s overall economic strategy which aims to position Lancaster at the epicenter of the new energy economy. OPTION 5. CARBON NEUTRAL ECO-DISTRICT BY 2025 Description/Scope Under this option, Hermosa Beach would identify a smaller geographic footprint within its current GHG emissions inventory boundary, such as its downtown core, to create an innovation hub for demonstrating a practical pathway to carbon neutrality at a smaller scale. This approach would allow the City to test new innovations at a concentrated scale and in such a way that would be both visible and replicable. This approach could build off national and global trends in district-scale energy and carbon reduction, including the national “EcoDistricts” (www.ecodistricts.org) movement or 2030 district projects (http://2030districts.org/). Such approaches recognize smaller-scale implementation as a key leverage point for social mobilization and grassroots action on a range of sustainability topics, as well as deployment of district-scale and distributed energy. For the purposes of analysis, the Downtown District is used to describe a potential district-scale approach for carbon neutrality for Hermosa Beach. The target date for achieving carbon neutrality in the eco-district would be 2025 – 5 years ahead of the community carbon neutrality target. A GHG emissions inventory has not been completed for the Downtown District. However, the Downtown District does contain a majority of the community’s retail outlets, and a large proportion of City of Hermosa Beach, Economic Analysis of Carbon Neutrality 19 its hotel and office uses. Total GHG emissions for the entire commercial/industrial sector were estimated at 19,923 MT CO2e in 2005, and 19,643 MT CO2e in 2007. Portions of the community’s overall transportation, solid waste, and residential emissions must also be accounted for in the Downtown District. Groundwork and Pathway to Neutrality The Hermosa Beach Downtown District encompasses approximately 18.5 acres of commercially zoned land straddling Pier Avenue between The Strand and Valley Boulevard, and along Hermosa Avenue between 8th and 15th Streets. This area includes most of the City’s retail outlets as well as hotel and office uses. In total, the Downtown District includes 561,849 square feet of retail, with 307,599 of this in the Downtown Core. The 342 outlets in the Downtown District generate over $761,000 in sales tax annually. Based on building square footages and typical energy use patterns, the District’s energy footprint is estimated at 14,000 MWh per year (electricity), 360,000 therms per year (natural gas), and 23 to 29 million gallons per year (water). This represents approximately 14% of the total energy use within the community and 9% of natural gas use. Assuming a blended capacity factor of about 30%, the “power plant size” (or equivalent clean energy generating capacity) that would be required to supply this amount of energy would be between 2-4 MW. The lower end of this range represents the plant size for carbon neutral electricity generation. The higher end of this range adds in Hermosa Beach’s natural gas use to estimate a carbon neutral power plant size. In many cases examples of zero energy or climate neutral districts arise from major new development or re-development projects – and even these projects are finding true climate neutrality (including transportation) difficult. According to Climate Neutral Urban Districts – a European initiative spearheaded by the City of Stockholm – one of the biggest challenges of transforming cities or districts into climate neutral areas is how to effectively address existing urban areas. Factors that must be considered include:  Planning and zoning laws and rules  Institutional capacities  Energy efficiency potential in existing buildings  Renewable energy efficiency in existing buildings  Other site-level opportunities for community solar projects and district heating/cooling (available parcels, ownership)  Opportunities activities such as co-generation Just as it is the case of communities or municipal operations, there is no single path to reaching climate neutrality at a district level. With Hermosa Beach’s desire to encourage further revitalization of Downtown, there is an opportunity to creative incentives (financial, permitting, recognition) for developers to contribute toward a carbon-neutral goal. Specific elements of a district approach to carbon neutrality might include deep energy efficiency and re-commissioning in buildings, building-scale renewable energy generation, district energy projects, behavior change programs, and local/regional/national offset projects. Additionally, development impact fees could help fund infrastructure improvements necessary to support a carbon neutral district (e.g., microgrid, greywater systems, and electric vehicle charging). City of Hermosa Beach, Economic Analysis of Carbon Neutrality 20 Due to the compact scale of Downtown, there are unique opportunities for Hermosa Beach to include the transportation sector in a carbon neutral Downtown District. An aggressive scenario to achieve Downtown carbon neutrality transportation might be to transform it into a car-free zone. Other ways that Hermosa Beach could provide innovation and leadership in this arena would be to improve the pedestrian, bicyclist, and transit user experience and infrastructure in the district, establish creative new approaches for parking and travel demand management, and expand opportunities for alternative fuel vehicles. Because the Downtown District also features events and activities that draw large crowds, Hermosa Beach may also consider these activities as part of the eco-district’s carbon neutrality goals (or under the municipal operations option). For example, the City could purchase carbon offsets to offset the estimated emissions from these activities, possibly though a surcharge or voluntary program for participants. Other approaches might include enhanced alternative transportation options to reduce vehicle miles traveled for participants or additional renewable energy generation (e.g., installation of solar photovoltaic on the parking garage). Benchmarks While there are many district-scale projects underway in the U.S., there are still no examples of true “climate neutral” projects. Even in Europe just a handful of carbon neutral or deep carbon reduction districts have emerged:  FortZED, Fort Collins Colorado: Encompassing downtown Fort Collins and the campus of Colorado State University, this area is striving to become one of the world’s largest net zero energy districts that encompasses an existing downtown. With 7,000 customer accounts in the downtown area (residential and commercial), FortZED is being realized with a mix of strategies including energy efficiency, behavior change, distributed local renewable energy and peak demand response resources, and collaboration on regional utility-scale renewable energy projects. The project is also an integral component of the City’s climate action plan.  Copenhagen, Denmark City Center Adelgade Project: Delivers chilled seawater to downtown district; district cooling reduces carbon emissions by nearly 70 percent compared to conventional air conditioning. Geothermal heat delivers heat directly into a district heating system, and a waste-to-energy plant will provide electricity and heating to 150,000 households.  Malmo, Sweden: The City of Vastra Hammen in Malmo has established itself as the first carbon neutral neighborhood in Europe. Home to 4,000 people, the district uses an aquifer thermal energy storage system to store water during the summer and pump it with wind energy to heat homes in winter.  Portland, Oregon South Waterfront District Energy: While not specifically focused on carbon neutrality, this project is exploring the feasibility of deep carbon reductions in this downtown area of Portland by exploring the following: o Natural gas boilers and electric hillers with waste heat recovery o Natural gas co-generation o Biomass/biogas co- or tri-generation o Anaerobic digestion o Sewer heat recovery  Dockside Green, Victoria, BC: This 15-acre district, 1.3 million square foot mixed-use community in downtown Victoria is carbon neutral due to high building energy performance along with a City of Hermosa Beach, Economic Analysis of Carbon Neutrality 21 biomass gasification plant that converts waste wood into heating gas for hot water and heat, with peak period support from natural gas boilers.  Carbon Neutral Urban Districts in Europe Project: Led by the City of Stockholm, Sweden, this collaboration of a dozen urban carbon neutral districts around Europe (UK, Germany, Sweden, Italy, Spain, Netherlands, Austria, Greece, and Poland) is working to leverage resources, technologies, and lessons learned.  Austin Positive Impact on Climate and Community Program (PICC): This partnership between the City of Austin, Texas and local event organizers such as the Austin City Limits Music Festival, is working to offer carbon offsets to reduce the impact of the community’s large events and festivals and also support local community projects and organizations. Currently 50% of funds raised through the festival will support a local trail project and 50% will be used to purchase carbon offsets through the Texas Climate and Carbon Exchange. Vendors at the festival will designate specialty items for sale to support PICC. City of Hermosa Beach, Economic Analysis of Carbon Neutrality 22 Appendix B: Cost Benefit Analysis Methodology Community-Wide Carbon Neutrality ELECTRICITY: 50% EFFICIENCY  Data Sources: Electricity costs per kWh for residential ($0.17), commercial/industrial ($0.16) and municipal ($0.16); Community GHG Inventory with breakdown of electric energy consumption for residential, commercial and municipal sectors  Assumptions: 10-year payback on efficiency improvements  Calculations: 50% Efficiency Electricity Usage (2007) kWh Est. Current Energy Cost per Year kWh Reduction per Year $ Savings Per Year Efficiency First Cost (assuming 10 year Payback) Residential 49,976,195 $ 8,495,953 24,988,098 $ 4,247,977 $ 42,479,765 Commercial/Industrial 49,836,145 $ 8,139,904 24,918,073 $ 4,069,952 $ 40,699,518 Municipal 1,717,582 $ 270,780 858,791 $ 135,390 $ 1,353,902 Total 101,529,922 $ 16,906,637 50,764,961 $ 8,453,319 $ 84,533,186 ELECTRICITY: 25% DISTRIBUTED RENEWABLES  Data Sources: Efficiency data inputs (see above); Energy Information Administration (EIA) Levelized cost of installed solar ($0.12/kWh)  Assumptions: 25% of average electricity consumption across residential and commercial sectors  Calculations: kWh Reduction per Year $ Savings Per Year 25% Distributed Renewables Cost 12,494,049 $ 2,123,988 $ 1,481,794 12,459,036 $ 2,034,976 $ 1,477,642 429,396 $ 67,695 $ 50,926 25,382,481 $ 4,226,659 $ 3,010,362 ELECTRICITY: 25% UTILITY-PROVIDED RENEWABLE ENERGY  Data Sources: Efficiency data inputs and 25% Renewable data input(see above); Green Rate premium ($0.0677/kWh)  Assumptions: 25% of average electricity consumption across residential and commercial sectors; 15 year cost assumes program continuation past current January 1, 2019 deadline; all kWh reductions are credited to the utility  Calculations: City of Hermosa Beach, Economic Analysis of Carbon Neutrality 23 25% Offsets 25% Shared Renewables Cost (per Year) 25% Shared Renewables Cost (15 Year) $ 845,847 $ 12,687,706.51 $ 843,477 $ 12,652,151.31 $ 29,070 $ 436,051.13 $ 1,718,394 $ 25,775,909 ELECTRICITY: TOTAL  Calculations: Total Cost/Benefit Total First Cost Total Annual Savings Total Offset & Green Rate Cost Estimated Annual Cost Savings $ 43,961,560 $ 6,371,965 $ 845,847.10 $ 5,526,118 $ 42,177,160 $ 6,104,928 $ 843,476.75 $ 5,261,451 $ 1,404,829 $ 203,085 $ 29,070.08 $ 174,015 $ 87,543,549 $ 12,679,978 $ 1,718,394 $ 10,961,584 NATURAL GAS: 50% EFFICIENCY  Data Sources: Natural gas costs per Therm for residential ($0.50), commercial/industrial ($0.50) and municipal ($0.79); Community GHG Inventory with breakdown of natural gas energy consumption for residential, commercial and municipal sectors  Assumptions: 10-year payback on efficiency improvements  Calculations 50% Efficiency Natural Gas Usage (2007) Therms MTCO2e Est. Current Energy Cost per Year Therm Reduction per Year $ Savings Per Year Efficiency First Cost (assuming 10 year Payback) Residential 3,305,627 17,585 $ 1,652,814 1,652,814 $ 826,407 $ 8,264,067.50 Commercial /Industrial 858,647 4,568 $ 429,324 429,324 $ 214,662 $ 2,146,617.50 Municipal 11,977 64 $ 9,515 5,989 $ 4,758 $ 47,575.00 Total 4,176,251 $ 2,091,652 2,088,126 $ 1,045,826 $ 10,458,260 NATURAL GAS: 25% DISTRIBUTED RENEWABLES  Data Sources: Efficiency data inputs (see above); Energy Information Administration (EIA) Levelized cost of installed solar ($0.12/kWh)  Assumptions: 25% of average natural gas consumption across residential and commercial sectors  Calculations: City of Hermosa Beach, Economic Analysis of Carbon Neutrality 24 25% Distributed Renewables Therm Reduction per Year $ Savings Per Year 25% Distributed Renewables Cost 826,407 $ 413,203 $ 98,012 214,662 $ 107,331 $ 25,459 2,994 $ 2,379 $ 355 1,044,063 $ 522,913 $ 123,826 NATURAL GAS: 25% UTILITY-PROVIDED RENEWABLE ENERGY  Data Sources: Efficiency data inputs and 25% Renewable data input(see above); Green Rate premium ($0.0677/kWh)  Assumptions: 25% of average natural gas consumption across residential and commercial sectors; 15 year cost assumes program continuation past current January 1, 2019 deadline; all energy reductions accrue to the utility  Calculations: 25% Offsets 25% Offset Cost (per Year) 25% Offset Cost (15 Year) $ 65,944 $ 989,156.25 $ 17,130 $ 256,950.00 $ 240 $ 3,600.00 $ 83,314 $ 1,249,706 NATURAL GAS: TOTAL  Calculations: Total Cost/Benefit Total First Cost Total Annual Savings Total Offset & Green Rate Cost Estimated Annual Cost Savings $ 8,362,079 $ 1,239,610 $ 65,943.75 $ 1,173,666 $ 2,172,076 $ 321,993 $ 17,130.00 $ 304,863 $ 47,930 $ 7,136 $ 240.00 $ 6,896 $ 10,582,086 $ 1,568,739 $ 83,314 $ 1,485,425 City of Hermosa Beach, Economic Analysis of Carbon Neutrality 25 TRANSPORTATION: 30% IMPROVEMENT  Data Sources: GHG Inventory results (2007-138,727,166 Vehicle Miles Traveled, 995 MT CO2e produced within city limits); CA DOT reimbursement rate ($0.56/mile)  Assumptions: Aggressive 30% reduction in VMT; VMT reduction program implementation ($0.75/mile) to used to capitalize program7  Calculations: 30% Improvement VMT MTCO2e Est. Current Transportation Cost per Year VMT Reduction per Year $ Savings (per Year) 30% Improvement First Cost (assuming 15 year Payback) 138,727,166 995 $ 77,687,213 41,618,150 $ 23,306,164 $ 31,213,612 TRANSPORTATION: FUEL EFFICIENCY  Data Sources: Fuel Mile (VMT) Reduction inputs (see above); Community wide GHG Inventory (18.61 MPG in 2005);  Assumptions: 5% overall reduction in VMT and fuel consumption due to annual replacement of vehicles with more fuel-efficient models; fuel economy savings ($0.22/mile)  Calculations: Adoption of Fuel Efficient Personal Vehicles Fuel Mile Reduction through Improved MPG and Efficient Vehicles $ Savings Per Year 6,936,358 $ 1,517,328 TRANSPORTATION: FUEL OFFSETS  Data Sources: Fuel Efficiency and VMT Reduction inputs (See above); Cost of offsets ($15.00/ MTCO2e)  Assumptions: 65% offsets is remainder needed after 30% reduction in VMTs with additional 5% from fuel efficiency  Calculations: Balance (65%) Offsets 65% Offset Cost (year 1) 65% Offset Cost (15 Year) $ 773,984 $ 11,609,763.75 7 Rocky Mountain Institute, Stepping Up: Benefits and Cost of Accelerating Fort Collins’ Energy and Climate Goals. City of Hermosa Beach, Economic Analysis of Carbon Neutrality 26 TRANSPORTATION: TOTALS  Calculations: Total First Cost Total Annual Savings Total Offset & Green Rate Cost Estimated Annual Cost Savings $ 31,213,612 $ 24,823,492 $9,701 $ 24,813,791 WASTE: OFFSETS  Data Sources: Cost of offsets ($15.00/ MTCO2e), 2007 GHG Inventory for residential, commercial, and municipal sectors (18,490 tons, 3,257 MT CO2e)  Assumptions: 100% offsets for waste contributions of residential, commercial and municipal sectors; no waste actually reduced, benefits accrue to offset provider  Calculations: 100% Offsets Tons MTCO2e 100% Offset Cost (per Year) 100% Offset Cost (15 Year) 18,490 3,257 $ 48,855 $ 732,825 City of Hermosa Beach, Economic Analysis of Carbon Neutrality 27 Option 2. Carbon Neutral Municipal Operations by 2020 ELECTRICITY: 50% EFFICIENCY  Data Sources: Electricity costs per kWh for municipal ($0.16); Community GHG Inventory with breakdown of electric energy consumption for municipal sector  Assumptions: 10-year payback on efficiency improvements  Calculations: 50% Efficiency Electricity Usage (2007) kWh Est. Current Energy Cost per Year kWh Reduction per Year $ Savings Per Year Efficiency First Cost (assuming 10 year Payback) Municipal 1,717,582 $ 270,780 858,791 $ 135,390 $ 1,353,902 ELECTRICITY: 25% DISTRIBUTED RENEWABLES  Data Sources: Efficiency data inputs (see above); Energy Information Administration (EIA) Levelized cost of installed solar ($0.12/kWh)  Assumptions: 25% of average electricity consumption in the municipal sector  Calculations: 25% Distributed Renewables kWh Reduction per Year $ Savings Per Year 25% Distributed Renewables Cost 429,396 $ 67,695 $ 50,926 ELECTRICITY: 25% UTILITY-PROVIDED RENEWABLE ENERGY  Data Sources: Efficiency data inputs and 25% Renewable data input(see above); Green Rate premium8 ($0.0677/kWh)  Assumptions: 25% of average electricity consumption in the municipal sector; 15 year cost assumes program continuation past current January 1, 2019 deadline; all kWh reductions are credited to the utility  Calculations: 25% Shared Renewables (Green Rate) 25% Shared Renewables Cost (per Year) 25% Shared Renewables Cost (15 Year) $ 29,070 $ 436,051.13 8 GSE Solutions Report City of Hermosa Beach, Economic Analysis of Carbon Neutrality 28 ELECTRICITY: TOTAL  Calculations: Total Cost/Benefit Total First Cost Total Annual Savings Total Offset & Green Rate Cost Estimated Annual Cost Savings $ - $ 48,855 $ (48,855) NATURAL GAS: 50% EFFICIENCY  Data Sources: Electricity costs per Therm for municipal sector ($0.79); Community GHG Inventory with breakdown of natural gas energy consumption for municipal sector  Assumptions: 10-year payback on efficiency improvements  Calculations 50% Efficiency Natural Gas Usage (2007) Therms MTCO2e Est. Current Energy Cost per Year Therm Reduction per Year $ Savings Per Year Efficiency First Cost (assuming 10 year Payback) Municipal 11,977 64 $ 9,515 5,989 $ 4,758 $ 47,575 NATURAL GAS: 25% DISTRIBUTED RENEWABLES  Data Sources: Efficiency inputs (see above); Energy Information Administration (EIA) Levelized cost of installed solar ($0.12/kWh)  Assumptions: 25% of average electricity consumption in the municipal sector  Calculations: 25% Distributed Renewables Therm Reduction per Year $ Savings Per Year 25% Distributed Renewables Cost 2,994 $ 2,379 $ 355 NATURAL GAS: 25% OFFSETS  Data Sources: Efficiency inputs and 25% Renewable inputs(see above); SCE Green Rate premium1 ($15.00/MT CO2e)  Assumptions: 25% of average electricity consumption in the municipal sector; 15 year cost assumes program continuation past current January 1, 2019 deadline; all energy reductions accrue to the utility  Calculations: City of Hermosa Beach, Economic Analysis of Carbon Neutrality 29 25% Offsets 25% Offset Cost (per Year) 25% Offset Cost (15 Year) $ 240 $ 3,600 NATURAL GAS: TOTAL  Calculations: Total Cost/Benefit Total First Cost Total Annual Savings Total Offset & Green Rate Cost Estimated Annual Cost Savings $ 47,930 $ 7,136 $ 240 $ 6,896 TRANSPORTATION: 30% IMPROVEMENT  Data Sources: Municipal GHG Inventory (2007), CA DOT reimbursement rate ($0.56/mile)  Assumptions: Aggressive 30% reduction in VMT; Estimated 1,212,767 VMT for City employee commuting and fleet vehicles (820,954 VMT employee commutes; 391,813 fleet and contract vehicles); VMT reduction program implementation ($0.75/mile) to used to capitalize program9  Calculations: 30% Improvement VMT MTCO2e Est. Current Transportation Cost per Year VMT Reduction per Year $ Savings (per Year) 30% Improvement First Cost (assuming 15 year Payback) 1,212,767 8,682 $ 1,673,619 $606,384 $ 339,575 $ 454,788 TRANSPORTATION: FUEL EFFICIENCY  Data Sources: Municipal GHG Inventory (2007)  Assumptions: 5% overall reduction in VMT and fuel consumption due to annual replacement of vehicles more fuel-efficient models; fuel economy savings ($0.22/mile)  Calculations: Adoption of Fuel Efficient Vehicles Fuel Mile Reduction through Improved MPG and Efficient Vehicles $ Savings Per Year 60,638 $ 13,265 9 Rocky Mountain Institute, Stepping Up: Benefits and Cost of Accelerating Fort Collins’ Energy and Climate Goals. City of Hermosa Beach, Economic Analysis of Carbon Neutrality 30 TRANSPORTATION: FUEL OFFSETS  Data Sources: Fuel Efficiency and VMT Reduction inputs (See above); Cost of offsets ($15.00/ MTCO2e)  Assumptions: 65% offsets is remainder needed after 30% reduction in VMTs with additional 5% from fuel efficiency  Calculations: Balance (50%) Offsets 50% Offset Cost (year 1) 50% Offset Cost (15 Year) $ 84,650 $1,269,743 TRANSPORTATION: TOTALS  Calculations: Total First Cost Total Annual Savings Total Offset & Green Rate Cost Estimated Annual Cost Savings $ 454,788 $ 352,839 $ 84,650 $ 268,190 WASTE: OFFSETS  Data Sources: Cost of offsets ($15.00/ MTCO2e), 2007 Municipal GHG Inventory (660 tons, 169 MT CO2e)  Assumptions: 100% offsets for waste contributions of the municipal sector; no waste actually reduced, benefits accrue to offset provider  Calculations: 100% Offsets Tons MTCO2e 100% Offset Cost (per Year) 100% Offset Cost (15 Year) 660 169 $ 2,535 $ 38,025 City of Hermosa Beach, Economic Analysis of Carbon Neutrality 31 Option 3. Carbon Neutral Emissions from Transportation Sector by 2030 TRANSPORTATION: 30% IMPROVEMENT  Data Sources: GHG Inventory results (2007-138,727,166 Vehicle Miles Traveled, 995 MT CO2e produced within city limits); CA DOT reimbursement rate ($0.56/mile)  Assumptions: Aggressive 30% reduction in VMT; VMT reduction program implementation ($0.75/mile) to used to capitalize program10  Calculations: 30% Improvement VMT MTCO2e Est. Current Transportation Cost per Year VMT Reduction per Year $ Savings (per Year) 30% Improvement First Cost (assuming 15 year Payback) 138,727,166 995 $ 77,687,213 41,618,150 $ 23,306,164 $ 31,213,612 TRANSPORTATION: FUEL EFFICIENCY  Data Sources: Fuel Mile (VMT) Reduction inputs (see above); Community wide GHG Inventory (18.61 MPG in 2005);  Assumptions: 5% overall reduction in VMT and fuel consumption due to annual replacement of vehicles with more fuel-efficient models; fuel economy savings ($0.22/mile)  Calculations: Adoption of Fuel Efficient Personal Vehicles Fuel Mile Reduction through Improved MPG and Efficient Vehicles $ Savings Per Year 6,936,358 $ 1,517,328 TRANSPORTATION: FUEL OFFSETS  Data Sources: Fuel Efficiency and VMT Reduction inputs (See above); Cost of offsets ($15.00/ MTCO2e)  Assumptions: 65% offsets is remainder needed after 30% reduction in VMTs with additional 5% from fuel efficiency  Calculations: Balance (65%) Offsets 65% Offset Cost (year 1) 65% Offset Cost (15 Year) $ 773,984 $ 11,609,763.75 10 Rocky Mountain Institute, Stepping Up: Benefits and Cost of Accelerating Fort Collins’ Energy and Climate Goals. City of Hermosa Beach, Economic Analysis of Carbon Neutrality 32 TRANSPORTATION: TOTALS  Calculations: Total First Cost Total Annual Savings Total Offset & Green Rate Cost Estimated Annual Cost Savings $ 31,213,612 $ 24,823,492 $9,701 $ 24,813,791 City of Hermosa Beach, Economic Analysis of Carbon Neutrality 33 Option 4. Carbon Neutral Electric Supply by 2025 ELECTRICITY: 50% EFFICIENCY  Data Sources: Electricity costs per kWh for residential ($0.17), commercial/industrial ($0.16) and municipal ($0.16); Community GHG Inventory with breakdown of electric energy consumption for residential, commercial and municipal sectors  Assumptions: 10-year payback on efficiency improvements  Calculations: 50% Efficiency Electricity Usage (2007) kWh Est. Current Energy Cost per Year kWh Reduction per Year $ Savings Per Year Efficiency First Cost (assuming 10 year Payback) Residential 49,976,195 $ 8,495,953 24,988,098 $ 4,247,977 $ 42,479,765.75 Commercial/Industrial 49,836,145 $ 8,139,904 24,918,073 $ 4,069,952 $ 40,699,518.42 Municipal 1,717,582 $ 270,780 858,791 $ 135,390 $ 1,353,902.30 Total 101,529,922 $ 16,906,637 50,764,961 $ 8,453,319 $ 84,533,186 ELECTRICITY: 25% DISTRIBUTED RENEWABLES  Data Sources: Efficiency data inputs (see above); Energy Information Administration (EIA) Levelized cost of installed solar ($0.12/kWh)  Assumptions: 25% of average electricity consumption across residential and commercial sectors  Calculations: kWh Reduction per Year $ Savings Per Year 25% Distributed Renewables Cost 12,494,049 $ 2,123,988 $ 1,481,794 12,459,036 $ 2,034,976 $ 1,477,642 429,396 $ 67,695 $ 50,926 25,382,481 $ 4,226,659 $ 3,010,362 ELECTRICITY: 25% UTILITY-PROVIDED RENEWABLE ENERGY  Data Sources: Efficiency data inputs and 25% Renewable data input(see above); Green Rate premium ($0.0677/kWh)  Assumptions: 25% of average electricity consumption across residential and commercial sectors; 15 year cost assumes program continuation past current January 1, 2019 deadline; all kWh reductions are credited to the utility  Calculations: City of Hermosa Beach, Economic Analysis of Carbon Neutrality 34 25% Offsets 25% Shared Renewables Cost (per Year) 25% Shared Renewables Cost (15 Year) $ 845,847 $ 12,687,706.51 $ 843,477 $ 12,652,151.31 $ 29,070 $ 436,051.13 $ 1,718,394 $ 25,775,909 ELECTRICITY: TOTAL  Calculations: Total Cost/Benefit Total First Cost Total Annual Savings Total Offset & Green Rate Cost Estimated Annual Cost Savings $ 43,961,560 $ 6,371,965 $ 845,847.10 $ 5,526,118 $ 42,177,160 $ 6,104,928 $ 843,476.75 $ 5,261,451 $ 1,404,829 $ 203,085 $ 29,070.08 $ 174,015 $ 87,543,549 $ 12,679,978 $ 1,718,394 $ 10,961,584 City of Hermosa Beach, Economic Analysis of Carbon Neutrality 35 Option 5. Carbon Neutral Eco-District by 2025 ELECTRICITY: 50% EFFICIENCY  Data Sources: Electricity costs per kWh for the commercial/industrial sector($0.16);; Community GHG Inventory with breakdown of electric energy consumption for commercial sector  Assumptions: 10-year payback on efficiency improvements  Calculations: 50% Efficiency Electricity Usage (2007) kWh Est. Current Energy Cost per Year kWh Reduction per Year $ Savings Per Year Efficiency First Cost (assuming 10 year Payback) Commercial/Industrial 14,000,000 $ 2,286,667 7,000,000 $ 1,143,333 $ 11,433,333.33 ELECTRICITY: 25% DISTRIBUTED RENEWABLES  Data Sources: Efficiency data inputs (see above); Energy Information Administration (EIA) Levelized cost of installed solar ($0.12/kWh)  Assumptions: 25% of average electricity consumption in the commercial/industrial sector  Calculations: 25% Distributed Renewables kWh Reduction per Year $ Savings Per Year 25% Distributed Renewables Cost 3,500,000 $ 571,667 $ 415,100 ELECTRICITY: 25% UTILITY-PROVIDED RENEWABLE ENERGY  Data Sources: Efficiency data inputs and 25% Renewable data input(see above); Green Rate premium11 ($0.0677/kWh)  Assumptions: 25% of average electricity consumption in the commercial/industrial sector; 15 year cost assumes program continuation past current January 1, 2019 deadline; all kWh reductions are credited to the utility  Calculations: 25% Shared Renewables (Green Rate) 25% Shared Renewables Cost (per Year) 25% Shared Renewables Cost (15 Year) $ 234,500 $ 3,517,500 11 GSE Solutions Report City of Hermosa Beach, Economic Analysis of Carbon Neutrality 36 ELECTRICITY: TOTAL  Calculations: Total Cost/Benefit Total First Cost Total Annual Savings Total Offset & Green Rate Cost Estimated Annual Cost Savings $ 11,848,433 $ 1,715,000 $ 234,500 $ 1,480,500 NATURAL GAS: 50% EFFICIENCY  Data Sources: Electricity costs per Therm for commercial/industrial ($0.50); Community GHG Inventory with breakdown of natural gas energy consumption for commercial/industrial sector  Assumptions: 10-year payback on efficiency improvements  Calculations 50% Efficiency Natural Gas Usage (2007) Therms MTCO2e Est. Current Energy Cost per Year Therm Reduction per Year $ Savings Per Year Efficiency First Cost (assuming 10 year Payback) Commercial/Industrial 858,647 1,915 $ 429,324 429,324 $ 214,662 $ 2,146,617.50 NATURAL GAS: 25% DISTRIBUTED RENEWABLES  Data Sources: Efficiency data inputs (see above); Energy Information Administration (EIA) Levelized cost of installed solar ($0.12/kWh)  Assumptions: 25% of average electricity consumption for commercial sector  Calculations: 25% Distributed Renewables Therm Reduction per Year $ Savings Per Year 25% Distributed Renewables Cost 214,662 $ 107,331 $ 25,459 NATURAL GAS: 25% UTILITY-PROVIDED RENEWABLE ENERGY  Data Sources: Efficiency data inputs and 25% Renewable data input(see above); Green Rate premium1 ($0.0677/kWh)  Assumptions: 25% of average electricity consumption for commercial/industrial sector; 15 year cost assumes program continuation past current January 1, 2019 deadline; all energy reductions accrue to the utility  Calculations: 25% Offsets 25% Offset Cost (per Year) 25% Offset Cost (15 Year) $ 7,182 $ 107,730 City of Hermosa Beach, Economic Analysis of Carbon Neutrality 37 NATURAL GAS: TOTAL  Calculations: Total Cost/Benefit Total First Cost Total Annual Savings Total Offset & Green Rate Cost Estimated Annual Cost Savings $ 2,172,076 $ 321,993 $ 7,182 $314,811 TRANSPORTATION: 30% IMPROVEMENT  Data Sources: Municipal GHG Inventory (2007), CA DOT reimbursement rate ($0.56/mile)  Assumptions: 20% of all VMT are trips to/from Downtown District; 15 year simple cost savings are used to capitalize program  Calculations: 30% Improvement VMT MTCO2e Est. Current Transportation Cost per Year VMT Reduction per Year $ Savings (per Year) 30% Improvement First Cost (assuming 15 year Payback) 27,745,433 199 $ 15,537,443 13,872,717 924,847.77 $ 517,915 TRANSPORTATION: FUEL EFFICIENCY  Data Sources: Community GHG Inventory (2007)  Assumptions: 20% of all VMT are trips to/from Downtown District; 20% overall reduction in VMT and fuel consumption due to annual replacement of vehicles with more fuel-efficient models  Calculations: Adoption of Fuel Efficient Vehicles Fuel Mile Reduction through Improved MPG and Efficient Vehicles Fuel Mile Reduction through Improved MPG and Efficient Vehicles (per year) $ Savings Per Year 5,549,087 369,939 $ 80,924 TRANSPORTATION: FUEL OFFSETS  Data Sources: Fuel Efficiency and VMT Reduction inputs (See above); Cost of offsets ($15.00/ MTCO2e)  Assumptions: 50% offsets is remainder needed after 30% reduction in VMTs with additional 20% from fuel efficiency  Calculations: Balance (50%) Offsets 50% Offset Cost (year 1) 50% Offset Cost (15 Year) $ 1,493 $ 22,387 City of Hermosa Beach, Economic Analysis of Carbon Neutrality 38 TRANSPORTATION: TOTALS  Calculations: Total First Cost Total Annual Savings Total Offset & Green Rate Cost Estimated Annual Cost Savings $ 7,768,721 $ 598,839 $ 1,493 $ 597,346 WASTE: OFFSETS  Data Sources: Cost of offsets ($15.00/ MTCO2e); 2007 GHG Inventory of the commercial/industrial sectors (3,698 tons, 651 MT CO2e)  Assumptions: 20% of all community waste from the Downtown District; 100% offsets for waste contributions  Calculations: 100% Offsets Tons MTCO2e 100% Offset Cost (per Year) 100% Offset Cost (15 Year)/Total Cost 3,698 651 $ 9,771 $ 146,565 City of Hermosa Beach, Economic Analysis of Carbon Neutrality 39 Null Alternative. Carbon Neutrality via 100% Offsets OFFSET ONLY  Data Sources: Cost of offsets ($15.00/ MTCO2e), Community Wide GHG Inventory for residential, commercial, and municipal sectors  Assumptions: 100% offsets for emissions; all energy reductions accrue to the utility  Calculations: 100% Offsets MTCO2e 100% Offset Cost (per Year) 100% Offset Cost (15 Year)/ Total Cost Benefit 134,253 $ 2,013,795 $ 30,206,925 1 Attachment 6 City Council Strategic Plan Action Agenda Tracking Strategic Goal # Action Item Status Initial Due Date Revised Due Date 4 MORE LIVABLE, SUSTAINABLE BEACH CITY 4 Municipal Carbon Neutral Action Plan Council Decision: Position Funding for Environmental Programs Coordinator Completed Hire City Position and Explore use of Other Resources Completed Apr-14 Oct-14 Provide Data to SBCCOG Climate Action Plan Consultant Completed May-14 Consultant Hired by SCAG to Prepare Road Map/Targets for Municipal Carbon Neutrality Completed Jun-14 Council Presentation and Acceptance: UCLA Study on Community Choice Aggregation and Other Options for Zero- Emissions Renewable Energy Completed Jun-14 Complete a Comparative Economic Analysis/Report Benefits/Opportunities from 1st Carbon Neutral Municipality vs. Leader in Carbon Neutrality Completed for Council Review 11/5/14 Jun-14 Oct-14 Council Decision: Carbon Neutral Municipal Policy Direction Draft for Council Review 11/5/14 Jun-14 Oct-14 Council Decision: Employee Commute Program: Report for Options, Direction, Incentives Part of Draft Road Map for Council Review 11/5/14 Jun-14 Oct-14 Clean Fleet Energy Policy: Implementation, Update Report* Jul-14 SCE Streetlight Energy Efficiency Program: Update Report* Council Review 11/5/14 Jul-14 Sep-14 Municipal GHG Emissions Inventory: Update Report (SBCCOG) Draft Report- Summary to Council 11/5/14 Sep-14 Oct-14 SCE On-Bill Financing Energy Efficiency Projects Construction Bid Award 10/14/14 Sep-14 Oct-14 Council Decision: Solar Report-Early Actions and Overall Direction Council Review 11/5/14 Oct-14 Council Decision: Final SCAG Report: Setting Target, Action Plan, Funding Dec-14 Council Decision: Net Zero Carbon Policy for City Facilities and Service Delivery Analysis: 1st for Carbon Neutral or Carbon Neutrality, Steps, Costs, Time Frame, Direction Dec-14 Council Decision: Renewable Energy Policy for City Facilities and Service Delivery: Steps/Cost, Time Frame Dec-14 *Interim Actions to Reduce GHG Emissions Local Governments in Action Carson • El Segundo • Gardena • Hawthorne • Hermosa Beach • Inglewood • Lawndale • Lomita • Los Angeles • Manhattan Beach Palos Verdes Estates • Rancho Palos Verdes • Redondo Beach • Rolling Hills • Rolling Hills Estates • Torrance • Los Angeles County www.sbesc.com | 310.371.7222 What’s Been Done Since January 2010 Energy Saving Projects Electric Savings Annual kWh Natural Gas Savings Annual Therms Incentive Cash to General Fund2 Energy Cost Savings Annual3 Annual GHG Emissions Reduction4 Completed  164,186 0 $78,983 $24,460 127 In-Progress  367,088 0 $44,859 $51,524 283 Planned  - - - - - Identified  79,865 0 $13,577 $23,792 62 1. Based on 2010 utility data. 2. One-time utility incentives earned and placed directly into general fund. Values include gas & electric. SCE Direct Install project cost savings included. 3. Annual energy savings based on achieving Title 24 standards. Actual savings could be higher. Values include gas & electric. 4. Tons C02 Emissions. Completed Project Detail  13th Street Parking Structure Lighting Retrofit 10.0% ROI | $69,523 investment | $5,958 annual savings | $9,474 incentive | $2,400 SBESC service value Opportunities for Reducing Operating Costs 5. Facilities in need of an energy audit, based on 2010 data. 6. For electric only facilities, % cost is based on all municipal electric accounts. Otherwise % cost is based on all municipal electric and gas accounts. 7. Includes Utility-owned (LS-1) and City-owned (LS-2/LS-3) street lights. City of Hermosa Beach Energy Savings At A Glance Quarterly Report Q2 2014 Prepared by The South Bay Environmental Services Center July 21, 2014 Total Annual Energy Use – All Municipal Facilities1 Electricity = 1,941,960 kWh | Natural Gas = 4,621 Therms | Cost = $394,619 Priority Facilities5 Annual Energy Expense Electricity Consumption Annual kWh Natural Gas Consumption Annual Therms Fraction of City’s Energy Costs6 Street Lighting7 $158,046 773,707 0 46.0% City Hall $59,882 440,960 2,858 15.2% Community Center $34,464 218,777 567 8.7% City Yard $7,143 36,337 815 1.8% Attachment 7 South Bay Cities: Energy Efficiency Climate Action Plans SBESC and its program offerings are funded by California utility customers and administered by Southern California Edison and Southern California Gas under the auspices of the California Public Utilities Commission. Additional funding provided by WBMWD, LACSD, Metro and County of Los Angeles. Presentation to the Hermosa Beach City Council November 5, 2014 What is the EECAP? Background: •Funded through Southern California Edison to meet goals from the CA Long-Term Energy Efficiency Strategic Plan •Kicked off early 2014 – South Bay Cities and Sub-region •Hired consultants, Atkins Scope: •Greenhouse gas (GHG) emissions inventory for municipal operations and community emissions •Energy Efficiency strategies for emissions reductions •A start toward a Qualified Climate Action Plan Project Tasks 1. Assessment & Planning Report 2. EECAP Template 3. Inventories, Forecasts, and Target-Setting 4. Measure Development 5. Draft EECAP 6. Final EECAP 7. EECAP Adoption Community Inventories – Preliminary Findings 8% Reduction from 2005 to 2012 0 20,000 40,000 60,000 80,000 100,000 120,000 140,000 2005 2012Metric Tons CO2e Community GHG Emissions Off-Road Sources Wastewater Water Solid Waste Commercial Energy Residential Energy On-Road Transportation Municipal Inventories – Preliminary Findings 0 200 400 600 800 1,000 1,200 1,400 1,600 2005 2012Metric Tons CO2e Municipal GHG Emissions Streetlights - SCE Owned Solid Waste Fleet & Equipment Employee Commute Municipal Energy Municipal: 9% Reduction from 2005 to 2012 Represents 1% of community emissions Community Forecasts & Targets Forecasts: •Forecasts account for State measures that will provide local emission reductions •Fuel Efficiency Standards in Vehicles •Low Carbon Fuel Standard •New Building Code Standards •Water Conservation Requirements Targets: •State guidelines suggest 15% below 2005 levels by 2020 •A path toward the State’s 2050 goal (80% below 1990 levels by 2050) would require 49% reduction below 2005 levels by 2035 Community Forecasts & Targets Anticipating 19% reduction from 2005 levels by 2020 Anticipating 31% reduction from 2005 levels by 2035 - 20,000 40,000 60,000 80,000 100,000 120,000 140,000 2005 2010 2015 2020 2025 2030 2035MT CO2e 15% below 2005 49% below 2005 Local Measures On target to meet 2020 goal Local measures needed to meet goals post-2020 Note: Forecast assumes State measures are fully implemented and the remaining reductions needed would be from local measures Anticipated Schedule •Finalize IFT Report (December) •Draft Reduction Measures (Winter/Spring) •Draft EECAP (Spring 2015) •Final EECAP (Summer 2015) •Present and Adopt EECAP (Fall 2015) CONTACT INFORMATION Sabrina Bornstein Sabrina@southbaycities.org Cheryl Laskowski Cheryl.Laskowski@atkinsglobal.com Council Direction requested 1: GHG Inventory Update (Presentation) 2: MUNICIPAL CARBON NEUTRAL PLAN (Presentation) Pursue Employee Commute Reduction Program (look at all options) Continue to pursue Community Choice Aggregation (CCA) feasibility *Preference for strategies to pursue Carbon Neutrality by 2020 3: SCE STREET LIGHT ENERGY EFFICIENCY As recommended by Municipal Carbon Neutral Plan, explore shifting to SCE’s Green-Rate option or purchase Green-e Renewable Energy Credits 4: MUNICIPAL SOLAR ENERGY PRODUCTION Pursue program-level RFP for solar PV on municipal property 5: Economic Comparison of Carbon Neutrality leading edge/first to (Presentation only) 6: Community Carbon Neutrality Policy (No action requested) Solar Energy Systems, City Property Future development uncertain •City Hall, solar shades over parking lots •Self-storage adjacent to city hall •Community Center, shade structure over portion of parking lot Voter-imposed Legal issues •Municipal Parking Structure, solar shade over top level •Parking along Greenbelt, east of Clark Building Other ideas •Facility roofs if feasible (incl. library) •Shade structure over lawn bowling, skate park, other active uses •Shade structures over parking lots at Valley Park, South Park, etc. •Shade structures over other park areas •Community center, solar shade structure over front lawn area •Shade structures over diagonal parking/sidewalk along public street From: Robert Fortunato [mailto:Fortunato@ForStrategy.com] Sent: Wednesday, November 05, 2014 10:46 PM To: Fortunato@ForStrategy.com; Peter Tucker - External; 'Hany Fangary'; carolyn@carolynpetty.com; 'Nanette Barragan'; Michael DiVirgilio Cc: Elaine Doerfling; 'Phil'; 'Dency' Subject: RE: 11/5/14 HB City Council - Carbon Neutral Elaine, Please correct the record to reflect the following: Honorable Mayor Tucker, City Council and Staff, Please accept my apologies. I mistakenly included Phil Friedl in the letter from Dency and myself sent earlier today. Please remove Phil's name from the record. I take full responsibility for the error. Thank you, Robert From: Robert Fortunato [mailto:Fortunato@ForStrategy.com] Sent: Wednesday, November 05, 2014 2:26 PM To: 'Pete Tucker'; 'Hany Fangary'; 'carolyn@carolynpetty.com'; 'Nanette Barragan'; 'Michael DiVirgilio' Cc: 'Elaine Doerfling'; 'Phil'; 'Dency' Subject: FW: 11/5/14 HB City Council - Carbon Neutral Elaine, Please enter the following into the record for tonight's meeting. Honorable Mayor Tucker, City Council and Staff, Phil Friedl, Dency Nelson and I respectfully request the item related to Carbon Neutrality be pulled from tonight's agenda. The lack of transparency as well as the lack of inclusion of the key stakeholders in this process should be disturbing to anyone hoping for the best decision making process for our city. Only after the $20,000 consulting budget was depleted did anyone ask our opinion. We are the residents who, for seven years, have been advocating for this study to find alternatives that could bring investment, revenue and a lower cost structure to our city. Our opinions were not adequately reflected in the additional work done or the staff report that came forward. Additionally, we were never consulted on the report before it went to council. Lastly, but most importantly, only the costs were reflected in the staff report, biasing the council going forward. The benefits were buried in the consultants report at the end of 150+ pages of repetitive reports. We are happy to assist in making sure the correct information comes forward for a clear and transparent decision making process - but under no circumstances should a 175+ page report solicit input from the key stakeholders the day before or the day of a council meeting. Thank you listening and for all your service to our city, Robert Fortunato Phil Friedl Dency Nelson From: Robert Fortunato [mailto:Fortunato@ForStrategy.com] Sent: Wednesday, November 05, 2014 2:26 PM To: Peter Tucker - External; 'Hany Fangary'; carolyn@carolynpetty.com; 'Nanette Barragan'; Michael DiVirgilio Cc: Elaine Doerfling; 'Phil'; 'Dency' Subject: FW: 11/5/14 HB City Council - Carbon Neutral Elaine, Please enter the following into the record for tonight's meeting. Honorable Mayor Tucker, City Council and Staff, Phil Friedl, Dency Nelson and I respectfully request the item related to Carbon Neutrality be pulled from tonight's agenda. The lack of transparency as well as the lack of inclusion of the key stakeholders in this process should be disturbing to anyone hoping for the best decision making process for our city. Only after the $20,000 consulting budget was depleted did anyone ask our opinion. We are the residents who, for seven years, have been advocating for this study to find alternatives that could bring investment, revenue and a lower cost structure to our city. Our opinions were not adequately reflected in the additional work done or the staff report that came forward. Additionally, we were never consulted on the report before it went to council. Lastly, but most importantly, only the costs were reflected in the staff report, biasing the council going forward. The benefits were buried in the consultants report at the end of 150+ pages of repetitive reports. We are happy to assist in making sure the correct information comes forward for a clear and transparent decision making process - but under no circumstances should a 175+ page report solicit input from the key stakeholders the day before or the day of a council meeting. Thank you listening and for all your service to our city, Robert Fortunato Phil Friedl Dency Nelson Hermosa Beach Economic Benefits of Carbon Neutrality November 5, 2014 Project Overview Analyze the potential benefits of a “first-to achieve” carbon neutrality position •Research specific evidence of ‘first-to’ benefits compared to benefits from carbon neutral adoption more broadly •Qualitative analysis (e.g., interviews, case studies) •Quantitative impacts (to the extent possible) Pre-Requisite to analyzing ‘first-to achieve’ benefits: Options for the City of Hermosa Beach to credibly pursue carbon neutrality •Background research and benchmarking •Coordination with other recent efforts Findings Hermosa Beach could credibly pursue carbon neutrality community- wide, and could be among the first, if not the first US community to achieve carbon neutrality The goal is economically and technically feasible for Hermosa Beach with a host of community benefits – environmental, economic and social Added benefits from being ‘first-to’ achieve carbon neutrality are less substantiated and very difficult to quantify ‘First-to’ for Hermosa Beach may not garner significant outside attention due to ghg inventory size, which is smaller than many neighborhoods, eco-districts, major employers or universities within leading cities with aggressive carbon reduction goals Potential Options for Carbon Neutrality Community (2030) Municipal Operations (2020) Transportation Sector (2030) Eco District (2025) Electric Supply (2025) Need to define “carbon neutrality” in order to estimate the benefits and required investments Aggressive target dates proposed to position Hermosa Beach as “first-to” Evaluation Criteria – Ingredients for “first-to” success (note: dynamic tension among these) •Differentiating •Credible •Ambitious •Attracts Investment •Drives Innovation •Reflects community character •Replicable Cost-Benefit Summary: Illustrative Pathway (portfolio: efficiency, energy supply, offsets) Option 1. Community Option 2. Municipal Operations Option 3. Transportation Sector Option 4. Electric Supply Option 5. Eco-District Target Year 2030 2020 2030 2025 2025 Emissions Reduction Required (MT CO2e) 134,000 1,728 79,388 29,391 18,760 Estimated Level of Investment* to Achieve Goal – One Time $130M $1.9M $31M $98M $14M Annual Offsets, Green Rate $2.6M/yr $116k/yr $780k/yr $1.8M/yr $250k/yr Estimated Annual Cost Savings from Achieving Goal $36M/yr $450k/yr $24M/yr $12M/yr $1.8M/yr * Level of investment is the estimated size of the program to be financed in partnership with the City of Hermosa Beach, homeowners, business, contractors, developers, utilities, transportation agencies, federal/state agencies, grants, and other organizations and foundations. Cost-Benefit Summary: Qualitative Option 1. Community Option 2. Municipal Operations Option 3. Transportation Sector Option 4. Electric Supply Option 5. Eco- District Evaluation Criteria Differentiating Yes No Yes Somewhat Yes Credible Somewhat Yes Somewhat Yes Yes Ambitious Yes No Yes Somewhat Yes Attracts Investment Yes Somewhat Yes Yes Yes Drives Innovation Yes Somewhat Yes Yes Yes Reflects Community Character Yes Yes Somewhat Somewhat Yes Replicable Yes Yes Yes Yes Yes Estimated ‘First-To’ Benefits Conceptually, being ‘first-to achieve’ carbon neutrality could have economic benefits above and beyond the benefits cited, but the practical timeline between ‘first-to’ and ‘leading edge’ is closing Direct benefits from a ‘first-to achieve’ approach would lower investment required by about 10-30% (i.e., $12-40M for the community- wide goal) based on anecdotal evidence from other small scale projects and districts Potential indirect benefits, such as increased tourism and economic attraction can be qualitatively described Capturing the ‘first-to achieve’ benefits would require an active strategy around education, communications and branding Recommendations Define and adopt an aggressive carbon neutrality goal •No-regrets approach •“First-to” opportunities an extra incentive or implementation driver Develop the carbon neutral brand and proof of commitment •Active campaign •Allocation of resources to implementation and monitoring Where to begin? •Building efficiency and renewable energy •Integration into all future projects and development regulations (e.g., parking and street improvements and standards) •High profile tangible efforts that increase “brand” visibility and add credibility 7b 1 CITY OF HERMOSA BEACH COMMUNITY DEVELOPMENT DEPARTMENT MEMORANDUM Date: October 30, 2014 To: Honorable Mayor and Members of the Hermosa Beach City Council From: Ken Robertson, Director, Community Development Department Pamela Townsend, Senior Planner Subject: General Plan/Coastal Land Use Plan Update: Status Report The second large community workshop for the General Plan/Coastal Land Use Plan Update will be held November 6th from 6:00 p.m. to 8:30 p.m. at the Clark Building. The workshop will focus on the Vision and Way Forward. The workshop will provide a brief presentation followed by input gathered as people make their way around the room to seven stations, at their own pace. There will be activities for kids, snacks and at the closing a raffle to thank people for their input. People will vet a draft Vision Statement and Guiding Principles that will eventually provide a foundation for the future direction of the city over the next 20 to 30 years. People will weigh in on key issues and high level directions or solutions regarding Community Character, Vibrant Economy, and Healthy Environment and Lifestyles. Ideas on what’s missing from Hermosa (and what should not change) and big ideas for a bright future are sought. The Key Issues Report prepared by the consultants, Raimi + Associates is available for the Council and community to review and think about the issues facing the community over the next decade and beyond, in preparation for the workshop. The next step will be to provide a summary of what the community said on November 6th to the Council in December for its direction. The next phase will be identifying and evaluating alternative futures and preparation of the policy framework during the first part of 2015. The draft plan will be formulated in the summer and fall of 2015, and then public hearings will be held in 2016 to consider plan adoption. CONCUR: _______________________________ Tom Bakaly City Manager Attachments: 1. November 6 Community Workshop Flyer 2. Key Issues Report http://www.hermosabch.org/index.aspx?page=767 310 318-0242 ATTACHMENT 1 General Plan/Coastal Land Use Plan Update ATTACHMENT 2 2 Key Issues Report Contents Introduction ................................................................ 3 General Plan Update Process ....................................... 5 How Can You Participate? ............................................ 6 Key Issues Structure ................................................... 7 Small Beach Town Character ....................................... 8 Vibrant Economy ........................................................ 12 Healthy Environment & Lifestyles ................................ 16 Efforts to Address Key Issues ...................................... 19 3 Introduction General Plan/Coastal Land Use Plan Update 1 With many important decisions ahead for Hermosa Beach, the General Plan/Coastal Land Use Plan Update is an opportunity to ensure the policies that will guide the city’s future are designed to reflect local conditions and achieve the community vision. The City last adopted a General Plan and Coastal Land Use Plan in the early 1980’s. While conditions and issues affecting the city have changed, and the community’s vision has evolved, the policies and action plans to guide the city’s growth and development have not been comprehensively updated. The community’s desire to advance sustainability, enhance economic vitality, and preserve the eclectic beach character, were reinforced through the Community Dialogue process. The community engaged in setting the vision and defining the unique qualities for Hermosa Beach over the course of several months in 2013 and 2014. The Community Dialogue process culminated in the creation of a Decision-Making tool to enhance the transparency and effectiveness of decisions made by Council and City leaders. 2 In 2013 and early 2014, Hermosa Beach was awarded grants by the California Strategic Growth Council and the California Coastal Commission to comprehensively update the City’s General Plan and Coastal Land Use Plan, resulting in a Local Coastal Program. These grants were awarded based on the City’s priority objective to transform these plans into the City’s “Comprehensive Blueprint for Sustainability and a Low Carbon Future”. The integrated plan will be developed under a broad sustainability framework that aims to: •Link environmental performance with economic vitality; •Enhance coastal protection and sea level rise best practices; •Leverage collaborative partnerships; and •Advance implementation of sustainability and greenhouse gas reduction legislation (AB 32 and SB 375). 4 Once updated and adopted by the City Council, the integrated Plan will form the City’s overarching framework, with subsequent plans, programs, and activities designed to carry out the community’s vision, goals and policies. The City’s goals for the General Plan/Coastal Land Use Plan Update include: •Address economic and demographic changes. •Create updated policies for land use, community design, transportation, infrastructure, quality of life, economic vitality, and other key topics. •Create a framework and road map for sustainability and carbon neutrality as defined by Hermosa Beach. •Engage our community members in achieving our vision for the city’s future. •Make the Plan a relevant and easy to use document on a day-to-day basis. •Serve as a model for other California cities. •Meet the requirements of State law for these mandated planning documents. The updated Plan will guide how the city should develop and change, and where funds and resources for infrastructure, services and programs should be directed. 5 Existing Conditions and Key Issues The assessment of existing conditions and identification of the key issues facing the community are designed to provide an on-the- ground understanding of activities in the city today. By reviewing historic trends and changes or comparing community attributes to other similar communities in the region, a sense of what makes Hermosa Beach unique or different begin to emerge. The quantitative and qualitative information collected through the existing conditions analysis is then synthesized into a set of issues and opportunities to be addressed. Visioning The visioning process is designed to identify principles or priorities for the city’s future. Community input on their ideas or ideals for the future of Hermosa Beach is solicited through a series of workshops, stakeholder interviews, and technical working group meetings to craft a vision statement and guiding principles. The crafted vision and guiding principles, are supported by the existing conditions analysis, and lead the policies and technical elements of the General Plan and Coastal Land Use Plan updates. Alternatives After the guiding vision is established, alternatives are considered and evaluated. The alternatives analysis looks at the fiscal, physical, and environmental aspects of the proposed changes needed to meet the community vision and evaluates whether there are alternative scenarios in which the community vision can be met. Draft Plan The Draft Plan is the resulting collection of policies needed to achieve the community vision. The General Plan policies are a culmination of the existing conditions, vision, and alternatives analysis. The Draft Plan is evaluated and reviewed before being adopted by the City’s decision-makers. Environmental Review The General Plan Update and Coastal Land Use Plans are subject to environmental review under the California Environmental Quality Act to assess whether any adverse environmental impacts may occur through implementation of the General Plan or Coastal Land Use Plan. This assessment provides full disclosure to the community and can better inform decision makers on the potentially adverse environmental impacts of the General Plan Update. General Plan Update Process The General Plan/Coastal Land Use Plan Update process includes a series of defined phases or steps to ensure the adopted Plan addresses the community needs, goals, and vision in a comprehensive and integrated manner. The process for the Hermosa Beach General Plan Update includes these major steps. 6 How can you participate? Community involvement is needed at key points throughout the process to ensure the creation of a General/Coastal Land Use Plan that reflect the values of the community and is supported by the City and stakeholders. Opportunities to provide your input throughout the process include: •educational forums •a website •community meetings •workshops •environmental process •public hearings Technical and community working groups will review early products, followed by broad community input and policy board direction throughout the process. You can contact City staff at any time for more information or with questions at: 310-318-0242. 7 The key issues identified to date cover a wide array of topics, concerns, and challenges facing the community. These issues to be addressed as part of the General Plan update generally fall into one of three categories: small beach town character, vibrant economy, and healthy environment and lifestyles, which collectively create the sustainability framework for the General Plan/Coastal Land Use Plan update. Small Beach Town Character Vibrant Economy Healthy Environment & Lifestyles Key Issues Structure The key issues were identified through an analysis of existing conditions, interviews with community stakeholders, discussions with the General Plan Working Group, meetings with the technical working groups, and a series of community workshops. This Key Issues Report has been crafted to serve as a discussion tool for the Visioning and Alternatives analysis, and to inform the General Plan/Coastal Land Use Plan policy recommendations. Each topic identified in this report includes an issue statement, a brief description of the issue, how it may affect Hermosa Beach, and potential policy or program options for addressing the issue within the integrated General Plan/Coastal Land Use Plan. Additionally, the plans, programs, or General Plan element relevant to each issue are identified to provide information on existing policies and programs, and indicate the plan or element where new policies may be included. 8 1 Changing Demographics A change in housing types and commercial services may be needed to meet the needs of the community’s shifting demographics. Between 2000 and 2010, there was a negligible increase in the number of households, but a 5.1 percent increase in population. This corresponds to a 5 percent increase in average household size, with 2.04 people per household (2.42 for owner-occupied households). The median household income, $104,000 in 2012, also continues to increase. The increase in average household size may be related to the growing number of families living in Hermosa Beach or increased housing costs which result in larger non-family households to defray costs. Recent and continued changes in city demographics are an important consideration to ensure the services, land uses, and amenities are meeting the changing needs of Hermosa Beach residents, as well as visitors. Land Use Mix There is a desire to offer more retail, office and service uses to support greater economic diversity of the community. With over 10,000 housing units covering roughly 81 percent of land in the City, commercial, office and service uses are limited to key corridors and nodes within the city. Prioritization of retail services and office uses over residential uses within key commercial corridors or industrial neighborhoods of Hermosa Beach will be important to providing a balance of uses to serve the residential and visitor community. Lack of Available Land With limited vacant land, Hermosa Beach has limited room to accommodate new development and must look to infill projects, underutilized land or redevelopment if new development is to occur. Of the vacant land in the city, the majority of parcels are currently zoned for residential uses, placing greater pressure on underutilized commercial land to redevelop or densify. While redevelopment of underutilized spaces is a viable option, consideration of context and community character need to be considered so that new uses and development area consistent with the existing or preferred urban form of the city. Development Pressure and Constraints Both regulatory and market conditions place pressure, as well as constraints, on new or additional development in Hermosa Beach. Both residential and commercial development in Hermosa Beach can be constrained by parcel sizes, parking requirements, high land values, and a limited supply of vacant land. These constraints can make it more difficult, time-consuming, or costly to invest in or develop new uses in Hermosa Beach compared to nearby communities. Key Issues Report 9 Small Beach Town Character 2 Residential Type and Neighborhood Character New structures tend to be larger single-family units or high-end condominiums in neighborhoods traditionally filled with smaller beach cottages. With the limited amount of vacant land, most new housing units involve demolition and/or renovation of existing structures. The new structures are often built to maximize the use of space, resulting in larger, taller structures that are often not oriented toward the street. Without a concerted effort by the City to ensure context sensitive designs are incorporated into new structures in existing neighborhoods, the character of the street or block can and in many areas has changed dramatically. Pacific Coast Highway Corridor Revitalization The city’s primary corridor and entry point, Pacific Coast Highway, could be less focused on the automobile and more people friendly. The PCH/Aviation corridor in Hermosa Beach serves as the primary entry point into Hermosa Beach, though like many aging corridors, it lacks features that make the street safe and enjoyable for all users. Existing challenges include: an auto-oriented focus; lack of pedestrian or bike safety, lack of green space, street trees, and medians; limited cohesive design or identity; and position as barrier between east and west Hermosa; as well as Caltrans ownership. The revitalization of the PCH/Aviation corridor will enhance the economic activity of both businesses along the streets and the City as a whole. A conceptual Master Plan for the PCH/Aviation corridor focusing on aesthetics was approved by the City Council in 2014. The Master Plan proposes to increase pedestrian safety and amenities, adding new crosswalks and enhancing existing crosswalks and street trees along the corridor. The Master Plan also identifies preliminary concepts to develop new gateways or monuments and directional signage to bring better identity to Hermosa Beach. However, the plan does not address existing and future land uses and their relationship to the corridor. Pedestrian-Friendly Environment Pedestrian safety and accessibility can be improved throughout the community through small-scale safety improvements and amenities. The city’s grid street system, walk streets, and Greenbelt trail provide a great foundation for creating an enjoyable pedestrian environment. Wide rights-of-way along the main commercial corridors (80+ feet) matched with limited streetscape improvements (benches, sidewalks, public art, etc.) can deter pedestrian activity along the corridors, thereby reducing potential economic activity. Commercial areas that are more walkable would encourage shoppers to park and walk, increasing activity and the potential for sales and attracting new business. The renovation of Pier Plaza to exclude vehicle traffic and streetscape improvements along Pier Avenue are successful examples of streetscape improvements to enhance the pedestrian atmosphere. 10 3 Beach visitors represent a large customer base (over 900,000 beach visitors in 2010). Thus it is important to attract people going to the beach and using The Strand and encourage them to walk or bike up Pier Avenue. Streetscape improvements can improve curb appeal and walkability, increasing foot traffic in commercial areas. Parking Demand Limited parking and few alternative transportation options challenge the City’s ability to provide parking for residents and visitors in downtown and near the beach. The commercial downtown has limited parking supply to adequately meet the needs of shoppers and beachgoers. Street parking in these areas is regulated by parking meters and one-hour time limits. Even with public parking north and south of Pier Plaza and metered parking along Hermosa Avenue, residents and weekend visitors can fill up spots quickly, limiting public beach access, and deterring visitors from spending time and money in Hermosa Beach. However, there is a concern that more parking will bring more visitors to the beach, events and downtown generally. The Downtown Core Revitalization Plan proposes a comprehensive approach to parking supply, adding more spaces along Hermosa Avenue and structured parking to support economic development while adding visitor parking at the Civic Center or Community Center. School Capacity Recent growth in school-aged population has now exceeded the physical capacity of the City’s two public schools. With recent changes in the city’s demographic composition, Hermosa Valley and Hermosa View enrollments have grown from 671 and 395, respectively in the 2005-2006 school year, to 939 and 469 students during the 2012-2013 school year. With more than 1,400 students enrolled and physical capacity (at state acceptable levels) to hold just 1,000 students, Hermosa Beach City School District (HBCSD) has added portable classroom buildings and is using multi-purpose rooms for temporary classrooms, leading to fewer shared spaces. To address these issues, HBCSD prepared a Long Range Facilities Master Plan to evaluate alternatives to provide additional classroom and recreational/support facility space at each campus, including reopening the North School campus, currently leased to other parties. The HBCSD has placed a bond measure on the November 4th ballot to address the needs of the local student population through new construction, modernization and renovation projects at the District’s schools, including re-opening North School at the southwest corner of Valley Park. The City’s role in school capacity planning is to ensure that development standards and other land use patterns do not constrain the District’s ability to meet the growing capacity needs of the community and to support expansion of shared use facilities such as fields and playgrounds to meet the community’s recreational and physical activity needs. Key Issues Report Key Issues Report 11 Small Beach Town Character 4 Visual Obstructions Power lines, telephone poles, streetlights, and traffic signals along streets and obstruct views of the Pacific Ocean and other scenic vistas. Views of the Pacific Ocean and the surrounding Santa Monica Mountains and Palos Verdes Peninsula are valuable scenic qualities in Hermosa Beach. The community has taken steps to protect these qualities by adopting height limitations, however, overhead lines, telephone poles, and other infrastructure can obstruct or diminish these scenic vistas. At this time, areas of the community wishing to remove overhead power lines can do so by establishing and paying into a lighting or underground utility district. These districts currently cover Hermosa Avenue, Pier Avenue, Myrtle Avenue, Loma Drive, Beach Drive, and Bayview Drive. Zoning Code and Development Standards Development standards such as height or density limits, while designed to protect community character, can constrain development potential at key locations in the city. Development standards for both residential and commercial development in Hermosa Beach can simultaneously protect the community character and limit new investment opportunities by prescribing height, intensity, and use requirements that reduce the financial viability of a project. Striking a careful balance between protecting community character and scale and overregulating new uses will be considered in the General Plan update. Historic Resources Historic and potentially historic resources need to be identified, designated and protected as key landmarks of the community’s history. While a large segment of Hermosa Beach buildings are over 50 years in age, only a limited number have been identified as historic or potentially historic resources. The City’s existing Historic Resources Preservation Ordinance provides protection to identified resources only under limited conditions. This has left some potentially historic resources undocumented, threatened by new development or modification, or subject to inconsistent application of historic resource evaluations. As part of this General Plan Update process, the City conducted a survey, which preliminarily identified close to 30 additional sites as historic or potentially historic resources. The General Plan will identify additional opportunities to protect, preserve, and enhance the community’s historic resources. Coastal Access The coast is a statewide resource and adequate coastal access and resource protection is required as part of the California Coastal Act. The California Coastal Act relies on local governments to ensure access, visitor services, and recreational opportunities are available to all Californians and the State’s visitors. With almost half of the city located within the Coastal Zone, Hermosa Beach must prepare and implement a Local Coastal Program (LCP) that protects the coastal resource and 12 1 Economic Diversity There is a desire to diversify the city’s economic base beyond the tourism industry and make the local tax base more resilient to economic fluctuations. The combination of beach access and dominance of coastal-dependent or coastal-supportive establishments in Hermosa Beach results in a local economy that is heavily reliant on the tourism industry. Within the downtown area, the concentration of bars and nighttime uses have taken up space for office, retail, and other daytime uses needed to support a more diverse local economy. Additionally, residents are primarily employed in the professional, scientific, and management industries, while the majority of jobs available in the City are in the arts, accommodation, and food service industries. This mismatch of local employment opportunity, in combination with a lack of tenant diversity in the downtown area, leaves the local economy more susceptible to economic downturns. Employment Patterns There is a mismatch in employment industries between employees and residents, creating high commute rates in and out of the city. The largest employment sector measured by number of workers in Hermosa Beach is the accommodation and food service industry, accounting for 31% of all jobs in 2011. However, only four percent of Hermosa Beach residents work in this industry. Contrarily, there are 1,026 financial, information, and professional jobs in the city, but over 4,700 residents employed in this sector. The mismatch leads high numbers of residents leaving the community for work each day (95%), which results in a disconnect in the local economy, traffic congestion, and less free time to spend with family, all of which are important quality of life indicators for the community. Without sufficient office space and job opportunities to match the skill set of residents, many will continue to commute to other places for work. Higher Housing Costs High housing costs can make Hermosa Beach an unaffordable place to live for many, especially those employed in the city. The lack of available vacant land, and high land and development costs drive up housing costs in Hermosa Beach. In 2013, DataQuick reported a median sales price of homes in Hermosa Beach of $1.4 million. The high cost of housing limits the ability of many young professionals, seniors, and service workers to live in Hermosa Beach without spending a disproportionate share of their income on housing. Balanced Visitor and Resident Uses and Needs Visitors and residents have different and sometimes competing needs for local services and uses. With a changing residential population and a tourism-based economy, the market needs and demands of residents and visitors can sometimes be in Key Issues Report 13 Vibrant Economy 2 conflict with one another. Given the limited amount of commercial land and space available and high land costs, this effect may be magnified in Hermosa Beach. As a regional coastal destination, the City is also obligated to ensure that access to the coast and visitor-serving uses are maximized in the Coastal Zone. In addition to increased lodging options, additional retail and commercial uses that can serve residents and visitors alike would increase local tax revenues and decrease resident and visitor spending outside of the community. Downtown Evolution As a primary commercial area of the community, the downtown core requires special attention to ensure future uses balance economic development, beach access, and community character goals. In 2013, the City initiated a process to identify opportunities to increase the economic vitality of the downtown, focusing on how City assets, including the civic center property and parking lots, could be leveraged in conjunction with redevelopment of key privately held sites for increased economic vitality. The Downtown Core Revitalization Strategy identifies commercial tenanting, continued streetscape and Pier Plaza improvements, hotel development, parking, and zoning changes as key strategies to revitalize downtown. Implementation of the strategies will help to make positive changes in and around downtown, transforming the area into more a family-friendly atmosphere, and a more economically balanced business district. Entertainment and Nightlife While a vibrant economic draw for the city, drinking establishments and nightlife activities result in alcohol-related nuisances and crime, requiring additional public safety resources. With a number of nightclubs and bars downtown, Hermosa Beach has established a reputation as a party town and attracts visitors from all over the region to spend time at many of the community’s beachfront establishments. While there are benefits to this vibrant nightlife, it can create a place that is not welcoming to many segments of the community, and poses noise and character concerns that are incompatible with the changing demographics and nearby residential areas and result in an increased need for public safety resources to handle the higher rate of alcohol-related nuisances and crime. Lodging Demands Additional opportunities to provide visitor lodging, including low and moderate-cost options, are needed to support the volume of visitors to Hermosa Beach. The provision of a variety of lodging options to ensure Californians and visitors of all income levels can enjoy the California coast is a top priority of the Coastal Act and California Coastal Commission. 14 3 Within the Coastal Zone area of Hermosa Beach, there are currently three small-scale hotels, Grandview Inn, Beach House Hotel, Sea Sprite Motel, and one hostel, Surf City Hostel, some of which are moderately priced. Additional moderately priced lodging options can be found just outside of the Coastal Zone with Hotel Hermosa, Hampton Inn, Quality Inn, and a Holiday Inn Express all located along PCH or Aviation Boulevard. In the South Bay region, hotel occupancy rates have hovered around 75% since 2011. Proposed hotel projects in the downtown have the potential to provide additional lodging opportunities within the Coastal Zone while concurrently increasing sales tax and transient occupancy tax revenues. While there are several moderately priced hotels in Hermosa Beach, additional lodging options are scarce in the City. Vacation rentals are not allowed in the city outside commercial zones, although they exist and can pose neighborhood compatibility issues (VRBO, airbnb, etc.). Retail Leakage The retail competition among beach cities leads to residents and visitors leaving Hermosa Beach to spend money outside of the community. There are over 5 million square feet of competitive retail space within 10 miles of Hermosa Beach, in downtown, open air, and enclosed mall format. The two main competitive destinations are the downtown districts, or other areas of Manhattan Beach and Redondo Beach. The retail rents and vacancy rates in Manhattan Beach have out-performed Hermosa Beach, with downtown rents of $6.74/sq. ft./month and an overall retail vacancy rate of 1.5 percent, compared to $4.27/sq. ft./month and 3.2 percent in downtown Hermosa Beach. As reported in the Downtown Core Revitalization Strategy, the downtown is also less competitive in terms of ‘livability and walkability,’ than surrounding regional competitors. The absence of a pedestrian friendly public realm and spaces and destinations for a diversity of people with safe pedestrian walkways, outdoor seating and attractions, reduces foot-traffic and appeal of the downtown and Pier Plaza for daytime residents and visitors. When businesses compare location options, rents and vacancies are key factors. Higher rents and lower vacancy rates in Manhattan Beach, illustrate the appeal for new business, as developers perceive a potential for greater return on their investment. Beach and Event Programming The number of programmed or organized events at the beach and in the downtown can limit public access and enjoyment. As a key part of the Southern California beach culture, there are a number of social and recreational events that occur on the beach or Pier Plaza throughout the year. These events range from volleyball tournaments, parades, summer concerts, surf festivals, beach clean up days, and street fairs. These events can draw several thousand visitors, with recent events like the Discovery Channel’s FinFest attracting an estimated 15,000 Key Issues Report 15 Vibrant Economy 4 attendees, the annual St. Patrick’s Day parade attracting 30,000 spectators, and the Fiesta Hermosa events on Memorial Day and Labor Day weekends attracting 150,000 visitors over the course of the three-day weekend. While these events are a major economic driver, and attract many visitors to the community, they can also constrain parking capacity, divert public safety resources, and crowd local restaurants and services, which may limit the use and general enjoyment of the beach by members of the public and residents. Oil Drilling The March 2015 ballot measure regarding whether to lift the citywide ban on oil drilling for a proposed oil drilling and production project has the potential to affect the City’s fiscal resources in years to come. As a result of a Settlement Agreement, the electorate will vote on whether to lift the ban on oil drilling and allow an oil drilling and production project at the City Maintenance Yard. There are concerns in the community of the potential environmental, health impacts and fiscal impacts that may result. 16 1 Carbon Neutrality Achievement of the City’s carbon neutrality goals will require careful thought creative solutions and persistence. In March of 2010, the Hermosa Beach City Council established a goal to become carbon neutral staring with municipal operations. The City has continued efforts to define what carbon neutrality means for Hermosa Beach and a timeline and road map. The programs and policies necessary to achieving carbon neutrality in Hermosa Beach will need a strong commitment from City leadership and the community, which generated 134,253 metric tons of carbon dioxide (equivalent) in 2007. The largest generators are transportation and building electrical demand. With few successful examples to model its efforts on, Hermosa Beach will need to be a local and regional leader by identifying, funding, and implementing creative solutions and possibly advanced technologies. The General Plan Update can assist this process by embedding the vision, goal, policies and actions to achieve carbon neutrality throughout the Plan, influencing how the city develops and redevelops, and how people live, work and play, in a way that is acceptable to the Hermosa Beach community. Natural Hazards Tsunamis, earthquakes, and natural hazards must be evaluated to ensure the built environment and vulnerable populations of Hermosa Beach are adequately protected. As noted in the City’s Natural Hazard Mitigation Plan, there are several public, quasi-public, or private facilities located in Hermosa Beach and nearby Torrance that are critical to health and safety of Hermosa Beach. These facilities include hospitals, water towers, pump stations, public safety facilities, the community center, supermarkets, local shopping district, schools, and areas with vulnerable populations such as assisted living facilities, and a motor home park. Of the critical or essential facilities in Hermosa, all are susceptible to damage from earthquakes and windstorms, and six of these facilities are in the downtown area and are susceptible to flooding or tsunamis. Though environmental hazards such as flooding, tsunamis, and earthquakes cannot be prevented from occurring, the City can ensure risks to buildings, infrastructure, and residents are minimized through land use siting, building standards, preparation courses, and emergency response protocols. Climate Change Sea level rise and climate change must be carefully considered for their potential effect on the built environment and vulnerable populations. Climate scientists anticipate average temperatures to increase between 3.2o F and 5.6o F, sea levels to rise as much as 65 inches, and precipitation to decrease approximately 20 percent over the next century. The combination of these changes may result in more severe drought conditions, number of days of extreme heat, and more severe weather, sea level rise, higher storm surges, increased flooding, increased air pollution, reduced water supplies, Key Issues Report 17 Healthy Environment & Lifestyles 2 and other conditions, all of which can affect infrastructure systems, public and private property, and the local population. Current state planning documents indicate the low-lying areas of the downtown will become most vulnerable to storm surges and flooding. Especially vulnerable populations may be at higher risk to the detrimental health effects or reduced ability to take action to cope or adapt. The effects of climate change have the potential to increase the severity of hazards and number of facilities susceptible to damage. New natural hazard event threats, such as extreme heat or precipitation events that have not been previously considered in emergency operations planning in Hermosa Beach may occur. The resiliency of the city’s population, infrastructure and economy are important considerations. While these effects may seem long-term, planning and incrementally adapting land use patterns, infrastructure and the built environment may provide the most options and the most efficient course of action. Auto Reliance Vehicle Trip Reduction While considered a walkable community, the high rate of employment inflow/outflow and lack of transit options results in high vehicle trip rates. The dependence on other communities to meet the employment and retail service needs of Hermosa Beach residents results in more frequent and longer trips and a higher rate of auto-dependence. Per capita, Hermosa Beach residents drive 72.6 miles per day (higher than the LA County average, though lower than nearby cities) and approximately 80 percent of residents commute to work in single-occupant vehicles. The limited transit system coverage and frequency also contribute to higher rates of auto travel. With residents traveling further for retail services or as part of daily commuting, the potential for traffic congestion, accidents, and vehicle emissions increase. Alternative Modes of Transportation Walking and biking rates and use of local or regional transit and neighborhood vehicles are limited by user perception of convenience and safety and a need for infrastructure to support alternative modes. Convenient and safe routes are needed within Hermosa Beach to facilitate higher rates of biking and walking. The city not only has a high rate of pedestrian and bicycle collisions along primary arterials, but users’ perception of unsafe conditions due to high speeds and volumes of vehicles can also inhibit biking or walking. Infrastructure and educational efforts provided by the City, school district, organizations, or regional entities can help to increase walking and biking rates. The use of electric bike, Segway’s, neighborhood vehicles and similar vehicles to get around locally would benefit from slow speed lanes. Alternative fuel vehicles require infrastructure planning to ensure quick and available refueling capabilities. Beach Cities Transit, LADOT Commuter Express, and LA County Metro provide transit service in Hermosa Beach. These operators provide fixed-route services with 30 to 60 minute headways during peak periods. Improvement of both motorized and non- 18 3 motorized transportation mode options are needed in Hermosa Beach in order to meet community character and sustainability goals to decrease auto reliance. Public Health and Physical Activity An increasing rate of children and adults are vulnerable or suffer from preventable causes of chronic illness. The Beach Cities Health District statistics on public health and physical activity show that obesity is affecting a higher rate of children, and that nearly 40 percent of adults do not meet federal guidelines for daily physical activity. Stress, sun exposure and older child bearing age are also elevated health concerns in the city. The trend toward an older population also has health consequences. Infrastructure improvements, land use pattern, the built environment and program offerings play a role in encouraging residents to be more physically active and lead healthier lives. Parks and Open Space The demand for parks and open space, specifically sports fields, has increased in recent years. While the City provides a high rate of parks/open space per resident (5.7 acres), more than half of the 112 acres is the beach, and park space across the city is not evenly distributed among neighborhoods, especially those east of PCH. The public facilities designed to serve the community include buildings like the Community Center and Clark Building, as well as parks and trails like the Hermosa Valley Greenbelt and The Strand. Available meeting or gathering space capacity ranges from 20 people to 500 people, however adequate space is often lacking. Though the City has maximized the efficient use of limited available space, the public facilities and parks do not meet the recreational or programming needs or desires of the community, particularly the needs for recreational programming and activities such as a swimming pool, track, or sports fields. The largest barrier to full implementation of the Parks and Recreation Master Plan is a lack of physical and fiscal resources. Infrastructure Many of the city’s aging infrastructure systems do not meet current design specifications or public health and safety standards and regulations. As health and safety standards associated with stormwater discharge, and water and air quality, have evolved over time, infrastructure system designs and operations in Hermosa Beach have not kept pace. Upgrades to these infrastructure systems are costly and often happen on an as- needed repair basis rather than as a comprehensive upgrade. The Community Dialogue Financial/Fiscal Report identified key systems that need replacement or major upgrades, including the sewer system, storm drain system, police, fire and city hall, park and community building, with an estimated cost exceeding $100 million. The City Council’s Strategic Plan has started to systematically address each of these. These affect property values, economic vitality, and health. Key Issues Report 19 Efforts to Address Key Issues While many of the key issues identified and discussed as part of this report are not new, the City and regional agencies have developed various plans and programs aimed at addressing these key issues. To date, these plans and programs have been implemented to varying degrees. The plans and programs relevant to each of the key issues are identified in the matrix below. The General Plan will serve as a unifying document, identify approaches and solutions that can be implemented to address, resolve, or mitigate many of the key issues that face Hermosa Beach now and in the years to come. Existing General PlanExisting Coastal Land Use PlanMunicipal CodeDowntown Core Revitalization StrategyPCH/Aviation Corridor Master PlanParks and Recreation Master PlanSustainability PlanCarbon Neutral Scoping PlanNatural Hazard Mitigation ProgramEmergency Operations PlanSouth Bay Bicycle Master PlanSustainable South Bay: Integrated Land Use & Transportation StrategyBeach Cities Livability PlanChanging Demographics X Land Use Mix X X X X Lack of Available Land Development Pressure and Constraints X X Residential Type and Neighborhood Character X Pacific Coast Highway Corridor Revitalization X X X Pedestrian Friendly Environment X X X Parking Demand X X X X X School Capacity X Visual Obstructions X X X Zoning Code and Development Standards X X X X Historic Resources X Coastal Access X X Coastal Development Permitting Authority X X Economic Diversity X X X Downtown Evolution X X Entertainment and Nightlife X Higher Housing Costs X Balanced Tourist and Resident Uses and Needs X X Lodging Demands X Oil Drilling Retail Leakage X X Beach Programming X X Employment Patterns X X X X X Carbon Neutrality X X X X X Natural Hazards X X X X Climate Change X X X Auto Reliance X X X X X Alternative Modes of Transportation X X X X Public Health and Physical Activity X X Parks and Open Space X X X X Infrastructure X X Energy Use X X X X Relevant Plans and Programs Small Beach Town CharacterVibrant EconomyHealthy Environment & Lifestyles Prepared for the City of Hermosa Beach By Raimi + Associates