City Council
Staff Report
From: City Manager
Report Type: ACTION ITEMS
Lead Department: Public Works
Meeting Date: March 2, 2026
Report #:2602-5985
TITLE
Review the 2024 Greenhouse Gas Inventory and S/CAP Key Performance Indicators Annual Progress Report, and Approve the 2026-2027 S/CAP Work Plan and Receive Six S/CAP Studies Recommended by the Climate Action and Sustainability Committee; CEQA Status: Review GHG Inventory and Key Performance Indicators: Not a Project; Potential Environmental Impacts of the S/CAP Work Plan were Studied in the June 5, 2023 S/CAP Addendum to the 2017-2031 Comprehensive Plan EIR; this Project is also Exempt Pursuant to CEQA Guidelines Section 15183
RECOMMENDATION
Staff recommends that the City Council:
1. Review the 2024 Citywide and Municipal Greenhouse Gas Emissions Inventories; and
2. Review the Sustainability and Climate Action Plan (S/CAP) Key Performance Indicators Annual Progress Report for calendar year 2024.
The Climate Action and Sustainability Committee and staff recommend that the City Council:
3. Approve the 2026-2027 S/CAP Work Plan; and
4. Receive the following studies:
a. S/CAP Funding and Financing Study;
b. S/CAP Funding Source Survey;
c. EV Charger Needs Assessment; and
Single-family, Multi-family, and Non-Residential Building Sector Studies.
EXECUTIVE SUMMARY
This staff report presents the Palo Alto Citywide and Municipal GHG Emissions Inventories for calendar year 2024, a historical comparison of Citywide GHG Inventories, the Sustainability and Climate Action Plan (S/CAP) Key Performance Indicators (KPI) Annual Progress Report for calendar year 2024, and the Climate Action and Sustainability Committee recommended priorities for the 2026-2027 Sustainability and Climate Action Plan Work Plan.
In addition, the Climate Action and Sustainability Committee is recommending the City Council’s receipt of six studies that were attached to and summarized in the staff report for the December 13, 2025 Climate Action and Sustainability Committee (CASC) workshop on electrification funding and financing strategies. These studies document the work done to develop models and data for City staff and policy makers to use to support strategic decision- making about community-scale electrification funding, financing, and program design. They also include insights about the financial dynamics of community-scale electrification based on three illustrative scenarios analyzed. One key insight surfaced is that if the City were to rely on up- front incentives available to all community members as a way to achieve its goals, it would result in City expenses that exceed currently available resources for climate action. This points to the need for new strategies and additional modeling. Staff intends to use these tools and data throughout 2026 and 2027 to support strategic planning efforts under 2026-2027 S/CAP Work Plan item C13 (Develop Funding and Financing Strategies for Consideration) and to model different strategies and scenarios for community-wide electrification.
The City has made significant strides in implementing the Sustainability and Climate Action Plan (S/CAP) to meet its sustainability goals, including its goals of reducing greenhouse gas (GHG) emissions 80% below 1990 levels by 2030 (the “80 x 30” goal) and achieving carbon neutrality by 2030. By 2024, Palo Alto reduced total citywide GHG emissions 50.2% from the 1990 baseline, despite a population increase of 22% during that same time period. This is a 4% reduction from 2023, when GHG emissions reductions were 48.3%. For municipal operations, in 2024 the City emitted a total of 14,590 MT CO2e, which is a slight reduction from 2023, and roughly a 64% reduction from the 2005 baseline, although an equivalent comparison cannot be made due to significant changes in methodology.
The City has reached the end of its 2023-2025 S/CAP work planning period. The 2023-2025 S/CAP Work Plan guided S/CAP Implementation with 77 work items, of which 27 focused on sustainability and 50 on climate action. The proposed 2026-2027 S/CAP Work Plan includes 28 strategies focused on Climate Action, 16 strategies focused on Sustainability, and 3 strategies for overall S/CAP Communications for all areas of the S/CAP.
BACKGROUND
In June 2023, City Council adopted the 2022 Sustainability and Climate Action Plan (S/CAP),2 certified the Comprehensive Plan Environmental Impact Report Addendum: Update to the Sustainability and Climate Action Plan,3 and accepted the 2023-2025 S/CAP Work Plan.4 The S/CAP aligns with several goals of the 2030 Comprehensive Plan Implementation plan, as well as the City Council 2025 Priority Area ”Climate Action and Adaptation, & Natural Environment Protection”.5,6
Both the Palo Alto Citywide and Municipal GHG Emissions Inventories calculate emissions for calendar year 2024. As a result of various City-led initiatives, programs, and activities focused on sustainability and climate action, by the end of 2024 Palo Alto reduced total citywide greenhouse gas (GHG) emissions 50.2% from the 1990 baseline, despite a population increase of 22% during that same time period. Due to changes in methodology, it is not possible to do an equivalent comparison of the 2024 Municipal GHG Inventory with previous inventories.
However, by the end of 2024 the City reduced total municipal GHG emissions roughly 64% from the 2005 baseline.
Due to delays associated with the COVID-19 pandemic, the 2019 GHG inventory was not completed until 2021. Previous GHG inventories were all completed by the following calendar year. Staff and external experts worked to complete both the 2023 and 2024 GHG inventories in 2025 to provide more timely reporting on the City’s progress towards the 80 x 30 and carbon neutrality goals. While this report focuses on the 2024 GHG inventory, new data from the 2023 GHG inventory is also included in figures, tables, and attachments. In addition, staff and external experts updated the 1990 Citywide GHG inventory to align with the methodology used for the 2019 through 2024 Citywide GHG inventories. This allows for a more equivalent comparison between the inventories.
The City has reached the end of its 2023-2025 S/CAP work planning period. The 2023-2025 S/CAP Work Plan guided S/CAP Implementation with 77 work items, of which 27 focused on sustainability and 50 on climate action.
Staff developed a proposed 2026-2027 S/CAP Work Plan to continue progress towards achieving the S/CAP goals. Development of the 2026-2027 S/CAP Work Plan aligns with one of 2 2022 Sustainability and Climate Action Plan;
https://www.cityofpaloalto.org/files/assets/public/v/1/sustainability/reports/2022-scap-report_final.pdf 3 Comprehensive Plan Environmental Impact Report Addendum: Update to the Sustainability and Climate Action Plan, 2023; https://www.cityofpaloalto.org/files/assets/public/v/1/agendas-minutes-reports/agendas- minutes/city-council-agendas-minutes/2023/2023comprehensive-plan-environmental-impact-report-addendum- update-to-the-scap.pdf
4 2023-2025 S/CAP Workplan, 2023;
https://www.cityofpaloalto.org/files/assets/public/v/1/sustainability/reports/2023-2025-scap-work-plan_final.pdf 5 2030 Comprehensive Plan; https://www.cityofpaloalto.org/Departments/Planning-Development- Services/Housing-Policies-Projects/2030-Comprehensive-Plan 6 City Council, May 5, 2025; Agenda Item #8; SR #2504-4466, https://portal.laserfiche.com/Portal/DocView.aspx?id=170163&repo=r-704298fc the four Council Priorities for CY 2025: Climate Action and Adaptation, and Natural Environment Protection, and fulfills Council Priority Objective CA 23 - Develop and obtain Council approval for strategies and a 2026/2027 work plan for the next phase of S/CAP implementation of climate and sustainability goals. At the January 9, 2026 Climate Action and Sustainability Committee meeting, the Committee received an update on the status of the 2023-2025 S/CAP Work Plan and discussed the recommended priorities for the 2026-2027 S/CAP Work Plan.11 The Committee voted unanimously, inclusive of staff and committee consensus modifications, to recommend that the City Council approve the work plan.
Council recognized the importance of developing a long-term financial strategy as part of S/CAP implementation in the 2023–2025 Work Plan, which included initiation of an S/CAP Funding Study to explore potential funding and financing sources, as well as several complementary studies (an EV Charger Needs Assessment, studies of electrification opportunities in multi- family and non-residential buildings, and a Funding Source Survey).
The City issued a Request for Proposals for these studies in August 2023 and retained a consultant team - Willdan, E3 (a Willdan company), and Rincon - to complete them.12 This model and its input studies – including assessments of gas equipment in single-family, multi- family, and non-residential buildings, an Electric Vehicle (EV) charger needs assessment, and a survey of funding sources – provide data to evaluate different electrification rollout scenarios and their financial implications.
ANALYSIS
The City is committed to a sustainable future. The City owns, operates, and maintains a full- service utilities portfolio that provides electric, natural gas, fiber, water, refuse, and wastewater services to residents and businesses in Palo Alto. Palo Alto’s continued leadership in advancing sustainability commitments has succeeded mainly because of the continued collaboration of community stakeholders, City departments, and the leadership of the City Council.
This report presents a 2026-2027 S/CAP Work Plan to continue the City’s progress on sustainability and emissions reduction, a 2024 update to the Citywide and Municipal GHG Emissions Inventories showing progress to-date, and asks the City Council to receive six reports related to the S/CAP Funding Study that provide data and a modeling framework that will be used for policy discussions on funding community-wide electrification through 2026 and 2027.
Starting with the 2019 Citywide GHG Emissions Inventory, the City followed the calculation and reporting standards outlined in the Global Protocol for Community-Scale GHG Emissions Inventories (GPC). However, the 1990 Citywide GHG Emissions Inventory followed a different methodology, and did not include several emissions sources, including: Airport Emissions, Off- Road Vehicles and Equipment, Caltrain Commuter Rail, Composting, Palo Alto Landfill Gas Flaring, and Wastewater Biosolid Treatment. Staff and external experts corrected this error and the 1990 Citywide GHG Emissions Inventory now follows the same GPC Protocol used in the 11 Climate Action and Sustainability Committee, January 9, 2026; Agenda Item 1; SR #2507-5027, https://cityofpaloalto.primegov.com/Portal/Meeting?meetingTemplateId=18309 12 City Council, January 16, 2024; Agenda Item #4; SR #2308--1939, https://portal.laserfiche.com/Portal/DocView.aspx?id=70170&repo=r-704298fc 2019 through 2024 Citywide GHG Emissions Inventories. Historical comparisons are now more equivalent and provide a clearer picture of the City’s sustainability and climate action progress.
Palo Alto’s 2024 Citywide Greenhouse Gas Emissions Inventory In 2024, Palo Alto emitted an estimated 397,791 metric tons (MT) of carbon dioxide equivalent (CO2e) from the residential, commercial, industrial, transportation, waste, water, and municipal sectors. In comparison to the 1990 base year emissions (which have increased to 798,868 MT from the previously calculated 780,119 MT due to corrections in methodology and additions of excluded emissions sources), these emissions represent a 50.2% decrease in total community emissions, despite a population increase of 22% during that same period. Emissions in 2024 equated to 5.9 MT per capita. The California Air Resource Board’s 2017 Scoping Plan Update recommends a goal for local governments of 6 MT CO2e per capita by 2030 and 2 MT CO2e per capita by 2050.15 In order to achieve 80 x 30, Citywide GHG Emissions need to be at 160,000 MT CO2e (corrected from the previous target of 156,024 MT CO2e).
Of the GHG emissions reductions to date, 46.4% came from providing carbon free electricity for the City’s electricity portfolio, 23.4% from declines in transportation emissions, 16.7% from reduction in natural gas (methane) consumption, 11.5% from declines in solid waste emissions, and 1.9% from declines in wastewater-related emissions.
For citywide GHG emission sources in 2024, 64.1% of GHG emissions were from Transportation and Mobile Sources, 31.9% from Natural Gas (Methane) Use, and the remainder are from other sources. As shown in Figure 1, the two largest categories of emissions are Transportation and Mobile Sources (including On-Road Transportation, Airport Emissions, Off-Road Vehicles and Equipment, and Caltrain Commuter Rail) and Natural Gas (Methane) Use (including Residential, Commercial, and Industrial). The full 2024 Citywide GHG Emissions Inventory can be found in Attachment A.
15 California Air Resources Board 2022 Scoping Plan Appendix D Local Actions, November 2022; https://ww2.arb.ca.gov/sites/default/files/2022-11/2022-sp-appendix-d-local-actions.pdf Figure 1: 2024 Palo Alto Citywide Greenhouse Gas Emissions by Sector As shown in Figure 2, total GHG emissions steadily decreased between 1990 and 2021.
However, emissions increased between 2021 and 2022 and slightly increased between 2022 and 2023. The main driver of the increase in 2022 was On-Road Transportation, in part due to the shift away from pandemic-level (reduced) driving frequency, returning to the office after working from home, and economic recovery. These effects likely continued into 2023 as employers continued to change hybrid work policies and economic and travel activities continued to shift.
GHG emissions from Transportation and Mobile Sources are estimated to have increased slightly (by less than 1%) between 2023 and 2024 but remain 27% lower than 1990 Transportation and Mobile Sources emissions. Within Transportation and Mobile Sources, On- Road Transportation increased slightly (less than half a percent). However, this estimate is preliminary due to lack of data. Vehicle miles traveled (VMT) data for 2024 were not yet available when the 2024 GHG inventory was prepared. City staff and external experts calculated a preliminary estimate of 2024 VMT by scaling 2023 per capita VMT based on 2024 population for passenger vehicles and service population for commercial vehicles and buses. This estimate reflects demographic growth and may not capture actual VMT trends. The largest increase between 2023 and 2024 within Transportation and Mobile Sources was from Airport Emissions,
which increased 22.4% from 2023. The full comparison between GHG inventories can be found in Attachment B.
Figure 2: Palo Alto Citywide GHG Emissions by Sector, 1990 and 2019 – 2024 Of the estimated 64.1% of GHG emissions from Transportation and Mobile Sources in 2024, the majority are attributed to internal combustion engine (ICE) vehicles: 69% of all Transportation and Mobile Sources emissions are attributed to ICE passenger vehicles, 18% to ICE commercial vehicles, and 2% to ICE buses. No emissions are attributed to electric vehicles because all electricity in the City is carbon neutral. Of the remaining Transportation and Mobile Sources emissions, 8% are attributed to Off-Road Vehicles and Equipment (including lawn and garden equipment), 2% to Caltrain Commuter Rail, and 1% to Aviation fuel.
GHG emissions decreased by 4% between 2023 and 2024. This decrease was primarily driven by reductions in Natural Gas (Methane) Use: residential natural gas GHG emissions decreased by
14.2%, commercial by 10.9%, and industrial by 20.1% since 2023. Overall, Natural Gas (Methane) Use GHG emissions in 2024 were 34.5% lower than 1990 levels. Residential and commercial natural gas (Methane) use contributed nearly equally to GHG emissions (44% and 45% of emissions from Natural Gas (Methane) Use, respectively), with a remaining 7% of the emissions attributed to industrial natural gas use.
Palo Alto’s 2024 Municipal Greenhouse Gas Emissions Inventory In 2024, the City emitted a total of 14,590 MT CO2e from municipal operations, which is a slight reduction from 2023. As shown in Figure 3, GHG emissions from Palo Alto’s municipal operations are from five main sectors: Buildings and Other Facilities, Streetlights and Traffic Signals, Wastewater Facilities, City Vehicles and Equipment, and Indirect Emissions. Since the methodology has changed significantly for certain sectors since the first Municipal GHG
Inventory was conducted in 2005, it is no longer possible to do an equivalent comparison with previous Municipal GHG inventories. However, the methodologies for Buildings and Other Facilities, Streetlights and Traffic Signals, and City Vehicles and Equipment are similar enough to do rough comparisons for those sectors. By the end of 2024 the City reduced total municipal GHG emissions roughly 64% from the 2005 baseline.
Figure 3: 2024 Palo Alto Municipal Greenhouse Gas Emissions by Sector The largest contributor to municipal GHG emissions, about 37%, is attributed to the Regional Water Quality Control Plant (RWQCP). Since the RWQCP is owned and operated by the City, 100% of GHG emissions are attributed to the City. These GHG emissions include indirect nitrous oxide (N2O) emissions from wastewater effluent (about 95% of total wastewater GHG emissions), process nitrous oxide emissions from the treatment of wastewater without nitrification/denitrification (about 4% of total Wastewater Facilities sector GHG emissions), and natural gas combustion/leakage (about 1% of total Wastewater Facilities GHG emissions).
The second major contributor to GHG emissions is attributed to the Indirect Sources sector, or the City’s Scope 3 sources. These indirect sources account for about 33% of total GHG emissions and include GHG emissions resulting from employee commute mobile combustion (about 44% of the Indirect Emission Sources GHG emissions) and methane emissions resulting from landfilled solid waste (about 56% of the Indirect Emissions Sources GHG emissions).
The third major contributor to GHG emissions includes GHG emissions from natural gas usage in Buildings and Other Facilities (excluding the RWQCP). These GHG emissions accounted for 22% of total GHG emissions and are driven by natural gas combustion (about 97% of Buildings and
Other Facilities GHG emissions), and natural gas leakage (about 3% of Buildings and Other Facilities GHG emissions).
The final contributor to GHG emissions includes the City’s vehicle and equipment fleet sector.
Together, these account for about 9% of total GHG emissions and are mainly driven by the City’s on-road vehicle fleet powered by gasoline, renewable diesel, and compressed natural gas (CNG) and off-vehicle/equipment fleet powered by gasoline and diesel. The City’s on-road vehicle fleet makes up about 97% of City Vehicle and Equipment Fleet GHG emissions, while off-road vehicles and equipment make up the remaining 3%.
Since electricity in the City is carbon-neutral, there are no GHG emissions from electricity consumption in City-owned buildings and facilities, streetlight and traffic signals, EVs, or City water-energy consumption.
A comparison of 2005 and 2022 through 2024 Palo Alto Municipal GHG emissions is shown in Figure 4. Overall GHG emissions declined slightly, with about a 5% reduction from 2022 to 2023, about a 1% reduction from 2023 to 2024, and about a total decrease of 6% over the three-year period. For reference only, in 2005 the City emitted a total of 40,499 MT CO2e from municipal operations. The full Palo Alto Municipal Greenhouse Gas Inventory for calendar year 2024 can be found in Attachment C.
Figure 4. Palo Alto Municipal GHG Emissions, 2005 and 2022-2024 The City prioritizes GHG emissions reductions in its municipal fleet. In 2023, the City transitioned from conventional fossil diesel to renewal diesel, which has a roughly 70% lower
GHG emissions factor than conventional fossil diesel. Table 1 and Figure 5 show a historical comparison of On-Road Vehicle GHG emissions by City Department.
Table 1: On-Road Vehicle GHG emissions by City Department (MT CO2e) City Department 2022 2023 2024 % of Total in
2024
Administrative Services 8.3 2.8 2.6 0.2%
Community Services 88.9 87.9 93.2 7.4%
Fire 228.9 118.7 118.5 9.3%
Information Technology 2.5 2.4 2.3 0.2%
Planning and Development 18.1 22.2 18.7 1.5%
Police 430 421.7 420.5 33.2%
Public Works 337.8 323.5 274.9 21.7%
Utilities 435.7 328.5 337.4 26.6%
Total MT CO2e 1550.2 1307.6 1268.1 100.0%
Note: Percentages and MT CO2e may not add to the total due to rounding Figure 5: Palo Alto On-Road Vehicle GHG Emissions by City Department
Palo Alto’s Progress Toward Carbon Neutrality
Carbon neutrality focuses on balancing the amount of GHGs emitted against the amount of GHGs removed from the atmosphere. The City strives for net zero emissions – reducing GHG emissions as close to zero as possible, then “offsetting” remaining emissions. This is similar to trying to balance a scale. If there are GHG emissions remaining after reduction strategies have been exhausted, “offsets” are used to balance out or get to zero. Offsets are actions, such as carbon sequestration, taken to reduce – or “offset” - the amount of GHGs emitted. Carbon sequestration is the process of capturing and storing atmospheric carbon dioxide. For example, buying into new forest growth to store carbon in trees in one geographic area can offset GHGs emitted in another area.
The City currently purchases carbon offsets to balance emissions from natural gas (methane) use, but the offsets are not included in the Citywide GHG Inventory. These offsets are included, however, for the purpose of estimating progress towards achieving carbon neutrality. As shown in Figure 6, the inclusion of natural gas (methane) carbon offsets results in 66.1% emissions reductions.
Figure 6: 2024 Progress Toward Carbon Neutrality
Palo Alto in Context
The City aims to lead by example in its climate goal setting and progress. Palo Alto is among the most ambitious cities in California in carbon neutrality goals: in a review of cities engaged in the Green Cities California coalition, only four aim to achieve carbon neutrality by 2030 (Palo Alto,
Half Moon Bay, Menlo Park, and Watsonville). Many cities’ targets cannot be compared directly because of different baseline years. Table 2 displays the emission reduction targets of surveyed cities using the same baseline year as Palo Alto (1990).
Table 2: Comparison of Select Greenhouse Gas Emission Reduction Targets City Reduction Target Reduction Target Year Baseline Year Palo Alto 80% 2030 1990
Santa Monica 80% 2030 1990
Watsonville 80% 2030 1990
Cupertino 66% 2030 1990
Belmont 40% 2030 1990
Beverly Hills 40% 2030 1990
San Mateo 45% 2030 1990
Irvine* 90% 2040 1990
Santa Barbara 100% 2035 1990
*The City Council of Irvine has not ratified their climate action plan.
Most cities have reduced their emissions by less than half their target reduction percentage, and seven of the 21 surveyed cities have reduced emissions by less than 20% compared to their baselines (ranging between 1990 and 2016). Three of the surveyed cities have achieved reductions of more than 30%, as shown in Table 3.
Table 3: Greenhouse Gas Emission Reductions of Surveyed Cities City Reduction Target Baseline Year GHG Inventory Year GHG Reduction Cities with 1990 baseline year
Palo Alto 80% by 2030 1990 2024 50%
Santa Monica 80% by 2030 1990 2023 54%
Santa Barbara 100% by 2035 1990 2019 15%
Belmont 40% by 2030 1990 2023 15%
Beverly Hills 40% by 2030 1990 2019 8%
Burbank 40% by 2030 1990 2022 6%
San Mateo 45% by 2030 1990 2023 1%
Irvine* 90% by 2040 1990 No data No data
Watsonville 80% by 2030 1990 No data No data
Cities with other baseline years
Sunnyvale 56% by 2030 2008 2023 37%
Berkeley 100% by 2045 2000 2023 41%
Hayward 55% by 2030 2005 2023 35%
Millbrae 49% by 2030 2005 2023 30%
Menlo Park 90% by 2030 2005 2023 27%
Half Moon Bay 40% by 2030 2005 2023 27%
Brisbane 66% by 2030 2005 2023 16%
Santa Barbara 100% by 2035 1990 2019 15%
Belmont 40% by 2030 1990 2023 15%
Solana Beach 85% by 2045 2016 2018 9%
Mountainview 80% by 2050 2005 2019 14%
Burlingame 40% by 2030 2005 No data No data
*The City Council of Irvine has not ratified their climate action plan.
S/CAP Key Performance Indicators Annual Progress Report Achieving 80 x 30 and carbon neutrality by 2030 are the overarching goals for the S/CAP. The S/CAP also outlines Goals and Key Actions in eight areas: Climate Action, Energy, Electric Vehicles, Mobility, Water, Climate Adaptation and Sea Level Rise, Natural Environment, and Zero Waste. The climate action areas of Climate Action, Energy, Electric Vehicles, and Mobility primarily focus on the 80 x 30 and carbon neutrality by 2030 goals. The sustainability areas of Water, Climate Adaptation and Sea Level Rise, Natural Environment, and Zero Waste do not necessarily have a direct impact on greenhouse gas reductions, but have critically important sustainability, public health and safety, regional, resource conservation, and equity benefits that contribute to overall climate action. Progress towards achieving the S/CAP Key Performance Indicators can be found in Attachment D and are summarized in Attachment E. 2026 – 2027 S/CAP Work Plan
The City has reached the end of its 2023-2025 S/CAP work planning period. The 2023-2025 S/CAP Work Plan guided S/CAP Implementation with 77 work items, of which 27 focused on sustainability and 50 on climate action.
Of the 50 climate action items, 16 were ongoing work items and 34 were discrete projects, of which 27 were completed, 6 are in progress, and 1 is delayed (not started). Of the 27 sustainability work items, 14 were ongoing and 13 were discrete projects, of which 8 were completed. Five of the remaining items are in progress and one is delayed.
A summary of the progress of the 2023 – 2025 S/CAP Work Plan can be found in Attachment F.
The proposed 2026-2027 S/CAP Work Plan includes 28 strategies focused on Climate Action, 16 strategies focused on Sustainability, and 3 strategies for overall S/CAP Communications for all areas of the S/CAP. The full 2026 – 2027 Work Plan can be found in Attachment G.
At a high level, the Climate Action priorities in the Work Plan are intended to help the community develop a funding strategy for community-wide electrification at a pace that balances community willingness to fund climate action, utility rate impacts, and the community’s desire to maintain leadership in this area. It will do this through piloting cost- efficient building electrification and EV charging program models in the single-family, multi- family, and non-residential sectors that minimize the cost to the City while remaining attractive to customers. In parallel, staff will present different strategies and scenarios for funding community-wide electrification and carbon neutrality using the data and modeling frameworks developed in the S/CAP Funding Study.
The key areas of focus for the Sustainability priorities in the Work Plan are water, sea level rise, wildfire protection, natural environment, green stormwater infrastructure, and zero waste.
While sustainability strategies do not necessarily have a direct impact on greenhouse gas reductions, they have critically important sustainability, public health and safety, regional, resource conservation, and equity benefits that contribute to overall climate action. These strategies contribute towards achieving the goals of the S/CAP and are directly tied to the Sustainability Key Actions.
The City developed a 2026-2027 S/CAP Work Plan to continue progress towards achieving the S/CAP goals. Development of the 2026-2027 S/CAP Work Plan aligns with one of the four Council Priorities for CY 2025: Climate Action and Adaptation, and Natural Environment Protection, and fulfills Council Priority Objective CA 23 - Develop and obtain Council approval for strategies and a 2026/2027 work plan for the next phase of S/CAP implementation of climate and sustainability goals. At the January 9, 2026 Climate Action and Sustainability Committee meeting, the Committee received an update on the status of the 2023-2025 S/CAP Work Plan and discussed the recommended priorities for the 2026-2027 S/CAP Work Plan.17 The development of the 2026-2027 S/CAP Work Plan is described in more depth in the staff report for the January 9, 2026 Climate Action and Sustainability Committee meeting. At that meeting the Committee voted unanimously, inclusive of staff and committee consensus modifications, to recommend that the City Council approve the work plan.
Six Studies Requested to be Received
The Climate Action and Sustainability Committee and staff recommend the City Council receive six studies that were attached to and summarized in the staff report for the December 13, 2025 17 Climate Action and Sustainability Committee, January 9, 2026; Agenda Item 1; SR #2507-5027, https://cityofpaloalto.primegov.com/Portal/Meeting?meetingTemplateId=18309 Climate Action and Sustainability Committee (CASC) workshop on electrification funding and financing strategies.19 These include:
The S/CAP Funding and Financing Study (Attachment H), which uses an “S/CAP Funding Model” developed via collaboration between the consultant and City staff and the data and analysis from the other studies to model three illustrative electrification scenarios that show various financial dynamics of community-scale electrification. The EV Charger Needs Assessment (Attachment I), which evaluates illustrative scenarios for EV adoption and charging strategies in Palo Alto to show charging capacity needs and the financial and operational dynamics of different business models and strategies for providing EV charging.
Three studies of building electrification strategies and costs in the single-family (Attachment J), multi-family (Attachment K), and non-residential sectors (Attachment L) that provide data and insights that can be used for program design and strategic planning.
The S/CAP Funding Source Survey (Attachment M), an inventory of potential funding sources for community-wide electrification.
The City intends to use these tools and data throughout 2026 and 2027 to support strategic planning efforts under 2026-2027 S/CAP Work Plan item C13 (Develop Funding and Financing Strategies for Consideration).
All studies are described in more depth in the staff report for the December 13, 2025 Climate Action and Sustainability Committee workshop.
FISCAL/RESOURCE IMPACT
Most of the proposed work of the 2026-2027 Work Plan will draw from funding approved as part of the Adopted FY 2026 Operating and Capital Budgets, or with funding appropriations proposed for FY 2027, with the intent of achieving the goals of the 2026-2027 Work Plan without significant increases to overall Council spending authority in FY 2027. Resource availability for each Work Plan Item can be found in Attachment G. Funding for FY 2027 will be subject to Council appropriation as part of the annual budget process and in recognition of funding constraints, may impact the ability to pursue all items. There are also several grant opportunities that staff will pursue in order to mitigate costs to the City.
The City will also be considering the costs of expanding beyond the levels of climate action in the 2026-2027 S/CAP Work Plan to community-wide electrification. While more work is needed on strategy and scenario modeling of the funding needed for community-wide electrification, the three illustrative scenarios modeled in the S/CAP Funding Study showed it is highly likely 19 Climate Action and Sustainability Committee, December 13, 2025; Agenda Item #A; SR #2507-5025, https://cityofpaloalto.primegov.com/Portal/Meeting?meetingTemplateId=18114 that significant financial investment would be needed that exceeds current available resources if the City were to pay for all the needed incremental investment using incentives. As part of the 2026-2027 S/CAP Work Plan, staff will need to work with the City Council and the community to grapple with the funding needs for community-wide electrification in a current environment where federal support has changed and with the local competing priority of maintaining low utility rates.
In the illustrative 80x30 scenario modeled by E3, there are large up-front investments that are offset by other avoided investments in gas equipment and other long-term savings. Within the 2025-2030 period, the time it takes to reach 80% reductions, the total incremental investment need is $491 million but the community would realize more than that in net benefits over the next 20 years. Notably, the net benefits and costs are not evenly distributed through the community, and further modeling included in the 2026-2027 S/CAP Work Plan will help staff understand the needs of each part of the community better. The study also notes investment costs and benefits beyond 2030 and beyond achievement of the 80x30 goal which are uncertain, and the modeling will help refine those elements further as well.
The scenario did find that if the City alone were to pay that debt service (in other words, providing up-front incentives for 100% of the incremental cost), it would create an ongoing City expense that exceeds currently available funding sources. Finding creative program designs that avoid the need for large up-front incentives will be critical to achieving success in community electrification. Brainstorming alternative program ideas was a focus of a December 13, 2025 CASC public workshop and is the main focus of the 2026-2027 S/CAP Work Plan.
Further modeling included in the 2026-2027 S/CAP Work Plan will refine these numbers, update assumptions, and model more cost-efficient strategies for City Council consideration.
STAKEHOLDER ENGAGEMENT
Outreach and communications is an integral part of S/CAP implementation and is a component of all S/CAP initiatives. The communications focus of the 2026 - 2027 S/CAP Work Plan includes building widespread awareness about sustainability and climate action, running effective outreach campaigns to drive community action and program participation in initiatives to achieve S/CAP goals, and tracking community sentiment and engagement to guide decision making. The following work items are included:
C1. Build awareness about sustainability and climate action and City programs available to the community
C2. Drive community actions to achieve S/CAP goals
C3. S/CAP Data Collection and Annual Reporting
The City seeks community-wide feedback through a variety of ways, including the annual Palo Alto Community Survey. The Palo Alto Community Survey is a community feedback tool that helps the City Council and City staff understand community perspectives on current services and programs, as well as unmet needs and priorities. The 2024 and 2025 Community Surveys included a question about familiarity with the S/CAP and 80 x 30, with 42% of residents noting they were familiar with the S/CAP and 80 x 30 in both surveys. The only difference is that in 2025 6% of respondents noted that they were very familiar with the S/CAP and 80 x 30 compared to 5% in 2024. The communications focus of the 2026 – 2027 Work Plan will strive to increase awareness from the current 42% of residents who are familiar with the S/CAP and 80 x
30. The City will continue stakeholder engagement through the City Council or a Council Committee and the Climate Action Working Group and will also continue engagement through other outreach depending on the program or strategy included in the workplan. As the 2026-2027 S/CAP Work Plan is implemented, additional outreach will evolve with the work plan elements.
The City is also coordinating regionally with other municipalities on programs and regulations that could inform future outreach planning and activities.
While much of the policymaker interaction on the 2026-2027 S/CAP Work Plan will be with the City Council, staff will also consult with Council-appointed Commissions for the following work items:
Mobility-related work items (CA21 – CA25) may require consultation with the Planning and Transportation Commission depending on the project. Infrastructure-related Climate Action items (CA19 – CA20) and Water-related work items (S1-S3) would require consulting or informing the Utilities Advisory Commission (UAC) at various stages of the projects. The UAC would also discuss the potential rate impacts of any utility-related climate action programs as part of the utility financial planning process.
Stakeholder engagement for the development of the 2026-2027 S/CAP Work Plan is described in more depth in the staff report for the January 9, 2026 Climate Action and Sustainability Committee meeting.
ENVIRONMENTAL REVIEW
The Council’s review of the 2024 Greenhouse Gas Inventory and S/CAP Key Performance Indicators Progress Report does not meet the definition of a project requiring CEQA review, under Public Resources Code section 21065, since it will not cause a physical change in the environment. In June 2023, City Council certified the Comprehensive Plan Environmental Impact Report Addendum: Update to the Sustainability and Climate Action Plan. The strategies proposed in the 2026-2027 S/CAP Work Plan are consistent with the Sustainability and Climate Action Plan (S/CAP), the 2023-2025 S/CAP Work Plan, and the Comprehensive Plan. Potential environmental impacts of this project were studied in the June 5, 2023 S/CAP Addendum to the 2017-2031 Comprehensive Plan EIR. In addition, the City Council’s discussion and review of the proposed 2026-2027 S/CAP Work Plan is not a project as defined by CEQA because it is consistent with an existing general or comprehensive plan and does not require additional CEQA review (CEQA Guidelines section 15183).
ATTACHMENTS
Attachment A: 2024 Citywide Greenhouse Gas Emissions Inventory Attachment B: Historical Comparison of Citywide Greenhouse Gas Emissions by Sector Attachment C: 2024 Municipal Greenhouse Gas Emissions Inventory Attachment D: S/CAP Key Performance Indicators Progress Report Attachment E: S/CAP Key Performance Indicators Progress Summary Attachment F: 2023-2025 SCAP Work Plan Status
Attachment G: 2026-2027 S/CAP Work Plan
Attachment H – M Links
Attachment N: Summary of December 13, 2025 CASC Workshop APPROVED BY:
Brad Eggleston, Director Public Works/City Engineer