This week the Sustainable Energy and Environment Coalition (SEEC) held a briefing on enriching energy innovation at the local and regional level. The idea was to show off policy approaches being implemented in our cities that could be positively translated at the federal level. And one of the most interesting examples are the policy choices being made in Boulder, Colorado, a nationally-recognized hub for clean energy innovation and sustainability initiatives. The event panel showcased the city’s strategic approach for developing locally “networked” energy systems that promote private competition and drive energy innovation with the support of a diverse clean tech ecosystem.
Boulder is a unique city with an interesting past. Since the 1960s the city has levied an ‘open spaces’ tax – a small sales tax that produces revenue for the acquisition, preservation, and management of public lands around the city, preventing city sprawl and acting as a source of revenue for key economic growth policies. Building off of the successes of the open-space policy, in 2007 Boulder adopted its Climate Action Plan tax, a carbon tax on residential, commercial, and industrial consumers of electricity. Although the tax rate is relatively minimal – $0.0046/kWh for residential consumers, $0.0009/kWh for commercial businesses, and $0.0003 for industry – the revenue raised in 2010 amounted to about $1.8 million. For a city of about 100,000 citizens, this revenue is a substantial sum, and it is being used in a very targeted way – it is reserved for a set of initiatives pursuing widespread use of renewable energy and energy efficiency technologies, outlined by the city’s CAP strategic areas.
Since the initial implementation of the CAP tax in 2007, the city’s sustainability projects have grown in scope and depth, and are also supported by a number of state and federal loan guarantee and rebate programs that bolster project outcomes for renewable energy and energy efficiency technology commercialization. The city’s new ‘Energy Future’ plan involves a round-table, collaborative effort between city officials, public utility companies, and representatives from the DOE’s National Renewable Energy Laboratory (NREL) and the Renewable and Sustainable Energy Institute (RASEI) at UC Boulder to create innovative proposals and improvements on the community’s solar, wind, and transportation initiatives.
The Boulder carbon tax is a central example of a high-impact way policymakers can effectively implement a small carbon price without harming US industrial competitiveness, and without incurring opposition from consumers worried about unrealistically high energy prices. The city’s vision for a carbon charge motivates the community with resources to invest back into clean energy technologies. This is something that ITIF has proposed as a key way the federal government can provide a dedicated source of revenue for energy innovation programs like ARPA-E and the Innovation Hubs.
While national replication of Boulder’s adoption of a carbon tax – which passed on its first proposal with a 57% majority – may not be politically feasible currently, the city’s initiatives serve as a sophisticated model of a well-developed innovation ecosystem at work. Boulder is home to a university and a successful combination of federal laboratories and private clean tech companies, and the city now depends on these resources to provide ideas and action in the pursuit of their commitment to sustainability. This kind of innovation cluster – backed with a dedicated revenue stream – fosters breakthroughs in technology, commercialization, and ideas for how to bridge the gap between the two. This case study demonstrates the capacity of communities to leverage bi-partisan support for clean energy initiatives at the community level. A national carbon tax as a revenue raiser for innovation may be out of reach for now, but integrated community support for clean tech innovation is not.