Carbon Neutral FAQs


We achieve carbon neutrality in different ways for electricity and natural gas. Learn more by watching a short video:


What does carbon neutral mean?

For electricity, carbon neutral means that we match electricity demand with carbon free supply on an annual basis. For natural gas, carbon neutral means that we buy carbon offsets to balance emissions from natural gas use in Palo Alto. 

What is carbon neutral electricity?

In 2013, the City of Palo Alto Utilities (CPAU) committed to providing 100% carbon neutral electricity, defined as purchasing an amount of electricity from non-carbon-emitting sources (such as solar PV, wind, landfill gas, or small- and large-scale hydroelectric) that matches the total amount of electricity demand within our City on an annual basis.

To achieve this, CPAU has contracted for the construction of 13 new renewable energy generation facilities in California: five landfill gas, six solar, and two wind. These facilities allow CPAU to meet over 50% of Palo Alto’s electricity demand with renewable energy sources. During a year of normal or high rainfall, CPAU’s long-term contracts for carbon free hydroelectric power also meet at least 50% of electricity demand, enabling us to deliver 100% carbon neutral electricity.

Again, 100% carbon neutrality is an annual goal. Our ability to meet electricity demand with carbon free supply on a daily basis depends on factors such as the amount of available sunshine, wind, and hydroelectric power. In a dry year and/or on a cloudy day, renewable and hydroelectric energy supply may be insufficient to meet demand. On those days CPAU may have to buy market power from the grid, which includes unspecified sources that could be carbon-emitting generation facilities. On other days, CPAU has excess renewable and hydroelectric supply and sells the surplus energy to the market, replacing carbon-emitting generation and reducing emissions of greenhouse gases (GHGs) into the atmosphere.

Over the course of one year, Palo Alto achieves carbon neutral electricity by matching the number of megawatt-hours of electrical energy that Palo Altans use with an equal number of megawatt-hours of energy purchased from CPAU’s contracted renewable and hydroelectric generating sources This is likely in an average or high rainfall year, but in a dry year with low hydroelectric generation CPAU’s contracted sources may not provide enough non-carbon-emitting energy to achieve carbon neutrality. In that case, CPAU would purchase Renewable Energy Certificates, or RECs, which are equal to the environmental attributes of renewable energy, to ensure that 100% of our electricity demand is matched by renewable or hydroelectric supply and is carbon neutral. View an EPA video explaining RECs.

What is carbon neutral natural gas?

Since natural gas is a non-renewable fossil fuel, its use will always produce greenhouse gas (GHG) emissions. As of July 1, 2017, the City of Palo Alto purchases carbon offsets to balance GHG emissions from our natural gas use. These high-quality carbon offsets support projects that reduce the amount of GHGs in the atmosphere, such as planting trees or capturing methane from dairy farms. The climate impact of our natural gas use is thus carbon neutral. Purchasing carbon offsets is a good first step towards reducing carbon in the atmosphere, but our longer-term goal is to reduce our use of natural gas by maximizing efficiency and switching to high-efficiency electric appliances where possible.

Read about the carbon offset projects the City is working with. 

Why did Palo Alto invest in carbon neutral electricity and natural gas?

The City of Palo Alto is committed to improving sustainability and reducing its climate impact. Offering carbon neutral electricity and natural gas takes us closer to Palo Alto's goal of cutting carbon emissions to 80% below 1990 levels by 2030.

What does this mean for my rates?

Electricity: The City of Palo Alto's utility rates are cost-based. There were no CPAU electricity rate increases between 2009 and 2015, despite CPAU providing 100% carbon neutral electricity since 2013. In 2016 and 2017, Council approved rate increases to account for increasing costs stemming from several factors, including:
• Reduced availability of hydroelectricity during drought years
• Cost of deferred maintenance
• Increase in transmission costs
• Cost of renewable energy purchases

Even with the approved rate increases, CPAU customers' electricity bills are still lower than those in neighboring communities. Learn more about our current rates

Natural Gas: Starting September 1, 2017, a new line item in the gas section of utility bills reflected our switch to carbon neutral natural gas. This "carbon offset charge" adds four cents per therm, which is about a 4% increase to the natural gas portion of your bill, and it will cover the cost of offsets for the carbon emissions associated with your natural gas use.

Is energy efficiency still important?

Yes. Even with clean sources and offsets, using energy still has environmental impacts. Efficiency is our number one recommendation for minimizing the environmental impact of your energy use.

Is Palo Alto’s electricity carbon free? Is it 100% renewable? What do these terms mean?

Carbon free: Carbon free energy resources produce energy without emissions of carbon compounds, such as carbon dioxide, into the atmosphere. Examples of carbon free electricity resources include solar, wind, and hydroelectric power.

100% renewable:
 To qualify for California's Renewable Portfolio Standard, an energy source must meet the RPS Eligibility Rules. Those guidelines consider power generated from solar, wind, landfill gas and small hydroelectric sources to be renewable while power generated by large hydroelectric plants does not qualify as renewable. Since in a normal rain year about 50% of Palo Alto's power supply comes from large hydroelectric sources, our power is not considered to be 100% renewable under the state's standard.

How does the history of Palo Alto’s climate actions fit in with California’s actions?

California Governor Arnold Schwarzenegger issues Executive Order S-3-05, establishing a statewide GHG emissions reduction target of 80% below 1990 levels by 2050.

The California Global Warming Solutions Act of 2006 (AB-32) is signed into law. AB-32 sets a goal of reducing GHG emissions in California to at least 1990 levels by 2020.

Palo Alto becomes one of the first municipalities to adopt a Climate Protection Plan.

Palo Alto adopts the Carbon Neutral Plan. The plan achieves 100% carbon neutrality for Palo Alto’s electric supply portfolio.

SB-350 establishes California's GHG reduction target of 40% below 1990 levels by 2030. These new targets increase the state's ability to meet its long-term goal of 80% reduction below 1990 levels by 2050. Primarily a mandate for the state's utilities, the law increases the renewable electricity procurement goal from 33% to 50% and requires a doubling of statewide energy efficiency savings in electricity and natural gas end uses by 2030. SB-350 also authorizes utilities to undertake transportation electrification activities.

Governor Jerry Brown signs SB-32 into law, extending the state’s climate goals set by AB-32 and calling for further reduction of emissions to 40% below 1990 levels by 2030. This law is a broad mandate for the California Air Resources Board (CARB) to ensure that the state meet the new GHG target levels.

Palo Alto adopts its Carbon Neutral Natural Gas Plan.

Palo Alto adopts its Sustainability and Climate Action Plan (S/CAP), which establishes the goal of reducing GHG emissions to 80% below 1990 levels by 2030—twenty years ahead of California's goal.


SB 350 requires that electric utilities file an Electric Integrated Resource Plan (IRP) by January 2019.  As part of this process, staff presents of reports to the Utilities Advisory Commission (UAC). Visit the UAC calendar of upcoming meetings.

IRP related UAC presentations:

Why do Palo Alto and many states and countries use 1990 GHG levels as a baseline for GHG reduction targets?

In 1988, the international community established Intergovernmental Panel on Climate Change (IPCC) was established. In 1990, the IPCC published its first Scientific Assessment Report. This first assessment report uses 1990 GHG emissions levels as a baseline, which is why so many other state and city GHG reduction goals refer to 1990 GHG emissions levels.