Tucson_Resilient_Together-_Final_Technical_Memo.pdf

City of Tucson

Cost-Benefit Analysis and Multi-Criteria

Analysis of Key Climate Action and

Adaptation Strategies

(Final Technical Memo)

February 24, 2023

Table of Contents

Table of Contents 1

Final Technical Memo

About 4

Acronym Glossary 5

1. Background 6

1.1. Overview 6

2. Cost Benefit Analysis - Analytical Framework 7

2.1. Interpreting Results 10

3. CBA Results Overview 11

3.1. CBA Results 11

3.2. Carbon Emission Reductions 17

3.2.1. Carbon Neutrality by 2030 (BAP) 17

3.2.2. Carbon Neutrality by 2030 (BAU) 20

3.2.3. Annual and Cumulative Carbon Reductions 21

3.3. Air Pollution Reductions 28

4. CBA Methodologies and Key Assumptions 28

4.1. Common Methodologies 28

4.1.1. Carbon Emissions 28

4.1.2. Air Pollution 29

4.1.3. Energy Prices 30

4.2. Strategy E-1: Decarbonize City-owned and operated buildings and facilities 31

4.2.1. E-1.1: Benchmark energy use of City buildings and facilities using EnergyStar Portfolio Manager 31

4.2.2. E-1.2: Create an internal carbon tax for City departments that is informed by the City's emissions portfolio 31

4.2.3. E-1.3: Implement ongoing weatherization and retro-commissioning (building tune-ups) 31

4.2.4. E-1.4: Develop a net zero building framework for City-owned buildings and facilities, including but not limited to energy efficiency, electrification, and renewables 33

4.2.5. E-1.5: Utilize an energy services company (ESCO) to rapidly but strategically implement energy efficiency measures and equipment in City-owned buildings, and ongoing energy management 33

4.3. Strategy E-3: Procure zero-emission electricity and decarbonize City and community power supply 35

4.3.1. E-3.2: Work with community advocates and other jurisdictions to co-form a community choice energy program or joint powers authority to procure 100% renewable power for Tucson 35

4.3.2. E-3.4: Pursue solar service agreements (SSAs) or virtual power purchase agreements (VPPAs) to meet the City's power needs for municipal operations 36

4.4. Strategy T-1 & T-2: Champion walking, cycling and rolling as sustainable and climate-resilient mobility options & Invest in safe, comfortable, and convenient public transit as the backbone of a sustainable and resilient transportation system 36

4.4.1. T-1.1: Use various funding sources, including Prop 411, to implement bicycle, pedestrian, and other zero-emission mobility projects identified in Move Tucson to create a transportation network aligned with the Complete Streets approach 36

4.4.2. T-1.5: Increase safety for all road users, including pedestrians and cyclists, by eliminating lanes on wide roads and creating public space, walkways, enhanced crossings and signals, and protected bike lanes 40

4.4.3. T-2.1: Maintain and expand the Frequent Transit Network to increase Sun Tran service frequency and improve Sun Tran bus service 41

4.5. Strategy T-5: Transition public agency fleets to zero-emission and near zero-emission vehicles 42

4.5.1. T-5.1: Implement a fleet management plan that mandates all newly purchased City vehicles (including replacements) are zero-emission vehicles and implements fleet efficiency evaluations to ensure that the City does not own or use more vehicles than it needs at any time 43

4.5.2. T-5.2: Develop capital project plans to install charging stations to meet the projected demand of fleet vehicles 46

4.5.3. T-5.3: Develop implementation plan for replacement of City-owned medium-to-heavy duty vehicles with zero and near zero emission vehicles 46

4.5.4. T-5.5: Create a funding and purchase plan for battery electric buses, paratransit vehicles, and other zero emission vehicles across all public transportation services 47

4.6. Strategy RR-1: Implement a Community-wide Zero Waste Plan and accompanying initiatives to achieve zero waste for City operations by 2030, and community-wide zero waste by 2050 49

4.7. Strategy RR-2: Create a community-wide organics collection and treatment program 50

5. Multi Criteria Decision Analysis: 53

5.1. Broad Criteria Chart 54

5.2. Analytic Hierarchy Process 58

5.3. Results 62

5.3.1. Detailed Results 65

Table 14. Detailed Strategy Scores for Governance & Leadership 75

6. Appendix - Model Data - Cost Benefit Analysis 81

6.1. General inputs 81

6.2. Transportation inputs 84

6.3. Energy inputs 110

6.4. Waste inputs 112

Disclaimer 116

References 117

About

AutocaseTM (created by Impact Infrastructure) is a team of professionals across North America that have developed best-practice cost-benefit analysis approaches and automated economic evaluation software tools while being involved in all facets of real estate, infrastructure development, and policy evaluation.

The firm has worked with corporations and all levels of government to support decision making, project prioritization, and stakeholder outreach. Our primary goal is to create a standardized suite of business case analysis tools to promote the development of more sustainable and resilient communities. The firm’s professional economists conduct rigorous economic assessments to help decision makers prioritize worthy but competing projects based on maximum economic, environmental and community benefits.

This study is conducted in partnership with Buro Happold – integrated consulting engineers and advisors - who collaborated around the development of the decarbonization strategies, economic modeling assumptions and data parameters.

Acronym Glossary

AFLEET - Alternative Fuel Life-Cycle Environmental and Economic Transportation

BCR - Benefit-Cost Ratio

CAAP - Climate Action and Adaptation Plan

CAC - Criteria Air Contaminants

CBA - Cost-Benefit Analysis

CO2e - Carbon Dioxide Equivalent

DOE - U.S. Department of Energy

DOT - U.S. Department of Transportation

EASIUR - Estimating Air Pollution Social Impact Using Regression

EIA - U.S. Energy Information Administration

EPA - Environmental Protection Agency

ESCO - Energy Service Company

EUI - Energy Use Intensity

EV - Electric Vehicle

GHG - Greenhouse Gas

GREET - Greenhouse Gases, Regulated Emissions, and Energy Use in Transportation

GWP - Global Warming Potential

ICE - Internal Combustion Engine kWh - Kilowatt-Hour

LCCA - Life Cycle Cost Analysis

MCDA - Multi Criteria Decision Analysis

MMBtu - Million British Thermal Units

MSW - Municipal Solid Waste

MT - Metric Tonne

NEPA - National Environmental Policy

NOx - Nitrous Oxide

NPV - Net Present Value

O&M - Operations and maintenance

SOx - Sulfur Oxide

SSA - Solar Service Agreement

TEP - Tucson Electric Power

VMT - Vehicle Miles Traveled

VPPA - Virtual Power Purchase Agreement

VTPI - Victoria Transport Policy Institute

WARM - EPA Waste Reduction Model

WHO - World Health Organization

1. Background

1.1. Overview

This technical memo depicts the details of two distinct quantitative economic and business case analyses developed to complement the broader planning efforts supporting the Tucson Resilient

Together Climate Action and Adaptation Plan (CAAP). Autocase Economic Advisory, in collaboration with Buro Happold, conducted a two-stage analytical approach to support the decision process around the CAAP implementation – a Multi-Criteria Development Analysis

(MCDA) framework to help better understand the relative merits of the full list of CAAP strategies , and a more granular economic business case Cost Benefit Analysis (CBA) on a short-list of strategies to understand relative value in monetary terms. There are numerous innovative and practical strategies to help drive towards the CAAP goals; however, these options are not all created equal with varying costs, benefits, and impacts over a long-term period. These analyses are intended to provide additional insights into strategy outcomes.

1. Cost Benefit Analysis (CBA): this is an enhanced economic business case analysis conducted on a short-list of six decarbonization strategies (containing 20 actions) from the full list of strategies developed in the Tucson Resilient Together CAAP. The intent is to use a rigorous cost benefit analysis business case framework to quantify and monetize the incremental life cycle financial, social and environmental (triple bottom line) costs and benefits over a long-term study period. This allows for deeper understanding into the quantitative outcomes of the various climate strategies. As the City’s implementation plan for these strategies becomes more developed, the evaluation process can support an iterative planning process if the City elects, which is not within the scope of this current project. The goal is to inform policy design, quantify community impacts, and understand trade-offs within the various options using a well-established framework with best-available scientific data, empirical evidence, and peer-reviewed literature. This sustainable business case for the actions aligns strategic environmental goals with economic value and offers

Tucson the opportunity to understand the costs and benefits of climate actions beyond solely their accounting ledger of financial costs by measuring the intrinsic social and environmental performance. The CBA was conducted at an early stage in the capital planning process to implement the strategies and actions of the CAAP. As such there was limited quantitative information developed on the strategies and actions evaluated. The analysis is intended to speak to high-level projected outcomes, based on a series of underlying assumptions and information garnered from a variety of jurisdictions. As the

City’s efforts focus on implementation a more robust CBA could be iterated upon with more certainty and specificity around strategy designs and parameters, which is not within the scope of this current project.

2. Multi-Criteria Decision Analysis (MCDA): To support an evaluation of the full list of strategies at this stage of solution development, a MCDA was developed to incorporate a broader set of considerations in addition to cost-benefit analysis outcomes such as equity outcomes, community drivers, and other project characteristics. An MCDA is a decision-support process that allows stakeholders to identify the goals, objectives, and criteria for a project, as well as the associated metrics that may be used to score a project as a measure of compliance or project success. These quantitative and qualitative metrics are commonly weighted to identify the hierarchy of criteria or preferences, such that strategies that target the same broad objective can be compared against other criteria scores that are of most importance to stakeholders. The MCDA allows a broader ranking and prioritization among strategies, and achieves this by scoring, weighting, and ranking each strategy on a relative basis to each other based on a set of key criteria and sub-criteria. This formalized quantitative approach will help to prioritize proposed actions and strategies for implementation. The list of criteria, sub-criteria and quantitative scoring framework were developed specifically for this early stage of the capital planning process to implement the strategies, with limited quantitative information on the CAAP strategies. This MCDA could be iterated upon and supplemented as quantitative information on the strategies is more developed.

This technical memo is segmented into these two analyses, with each section outlining the key concepts, methodologies, assumptions, results, and data.

2. Cost Benefit Analysis - Analytical Framework

The City of Tucson initiated the development of this report to ensure a fact-based financial and economic assessment of a selection of possible decarbonization strategies. As part of this evaluation, Tucson can integrate these economic findings into the decision support and stakeholder engagement process. These analytical efforts can create an objective, defensible, and transparent screening process for both the financial and broader societal impacts of various integrated sustainability and resiliency planning, policy, and infrastructure options available.

When planning for climate mitigation and adaptation policies and projects, it is essential to consider, not only the upfront cost of a project or policy, but what benefits will society as a whole see from implementing those projects or policies.

Cost-Benefit Analysis (CBA) is an established economic approach for comparing the benefits and costs of a given project or activity. CBA involves identifying, quantifying, monetizing and summing in dollars, to the extent possible, the value of incremental costs and benefits over the life of a project. It provides a systematic evidence-based economic business case approach to quantify and attribute monetary values to the direct financial impacts, as well as broader social, environmental, and equity impacts resulting from an investment using empirical data and peer-reviewed literature. This analysis is comprised of a financial analysis - specifically a life cycle cost analysis (LCCA), depicting the estimated high-level costs over a long-term study period, including upfront capital costs, ongoing operations and maintenance, any avoided costs or revenues associated with the strategies and actions. The framework then adds the quantified and monetized social and environmental co-benefits or disbenefits, accounting for a broader set of non-financial impacts.

The importance of CBA for decision makers is that its results provide a quantitative measure of a project’s worthiness. The analysis involves a comprehensive account of a project’s benefits and costs over the entire project life cycle and a “side-by-side” comparison of net benefits for alternative investments. The analysis is depicted on an incremental comparative basis to a base case - in this analysis, the base case would be the status quo across the actions and strategies without these

CAAP investments with the exception of the decarbonization of the existing grid (based on a 80% renewable by 2035 target for Tucson Electric Power (TEP) applied to the Western Electricity

Coordinating Council / Southwest emission factors by the U.S. Energy Information Administration

(EIA, 2022)).

CBA is an industry standard decision-support tool used to inform and improve public policy, programs and projects. Essentially, this approach helps prioritize projects in a standardized way, as well as provide insights as to the impacts on various project stakeholders. For example, the US, Europe, and the UK mandate legislative requirements to use CBA to evaluate policies and policy reforms, and CBA is required for a variety of merit-based federal grant funding programs.

Additionally, the World Bank and other multilateral financial institutions, such as the Inter-American

Development Bank and Asian Development Bank widely use CBA to help bring about a better allocation of resources, to provide insights into overall societal welfare gains, direct financial impacts, sustainability impacts, and assess project risks.

The methodological framework of CBA can be used as a screening-level lens in which to better understand the long-term trade-offs for greater upfront investment in climate mitigation and adaptation actions from a development and policy standpoint and the future implications to those investments. Results are presented to help prioritize projects and better understand trade-offs.

Strategies and Actions Evaluated

The climate action strategies evaluated within the plan are multi-faceted, and the underlying modeling to value the numerous economic impacts are complex. It is important to note that this is a high-level conceptual strategy evaluation - at an early implementation planning stage, where the minutiae of the quantitative effects and implementation has not yet been determined. The intent is to serve as an initial valuation to provide greater insight into the strategy outcomes at this stage.

These particular strategies were selected among the broader list of strategies for a few key reasons. First, these strategies were likely to have the most significant municipal emissions reduction potential given the 2030 carbon neutrality target, giving them some level of priority with respect to implementation. On a related note, some of these strategies could have significant community-wide emissions reductions, which would make significant dents in the newly set community-wide emissions goal. Second, these strategies were selected because of their potential co-benefits. Third, these strategies were selected because of the challenges and resources required to implement. The strategies selected for this analysis are more involved, so they merit examination to better inform the City’s actions going forward. Fourth and finally, these were selected because they reflect some of the community’s priorities.

The strategies and actions evaluated are listed in Table 1.

Table 1. Strategies / Actions Evaluated

Strategy Action Details

Decarbonize City-owned and operated buildings and facilities

E-1.1

Benchmark energy use of City buildings and facilities using EnergyStar

Portfolio Manager

E-1.2

Create an internal carbon tax for City departments that is informed by the City's emissions portfolio

E-1.3

Implement ongoing weatherization and retro-commissioning (building tune-ups)

E-1.4

Develop a net zero building framework for City-owned buildings and facilities, including but not limited to energy efficiency, electrification, and renewables

E-1.5

Utilize an energy services company (ESCO) to rapidly but strategically implement energy efficiency measures and equipment in City-owned buildings, and ongoing energy management

Procure zero-emission electricity and decarbonize

City and community power supply

E-3.2

Work with community advocates and other jurisdictions to co-form a community choice energy program or joint powers authority to procure

100% renewable power for Tucson

E-3.4

Pursue solar service agreements (SSAs) or virtual power purchase agreements (VPPAs) to meet the City's power needs for municipal operations

Champion walking, cycling, and rolling as sustainable and climate resilient mobility options

T-1.1

Use various funding sources, including Prop 411, to implement bicycle, pedestrian, and other zero emission mobility projects identified in

Move Tucson to create a transportation network aligned with the Complete Streets approach

T-1.5

Increase safety for all road users, including pedestrians and bicyclists, by eliminating lanes on wide roads and creating public space, walkways, enhanced crossings and signals, and protected bike lanes

Invest in safe, comfortable, and convenient public transit as the backbone of a sustainable and resilient transportation system T-2.1

Maintain and expand the Frequent Transit Network to increase Sun

Tran service frequency and improve Sun Tran bus service

Transition public agency fleets to zero-emission and

Near-zero-emission vehicles

T-5.1

Implement a fleet management plan that mandates all newly purchased City vehicles (including replacements) are zero-emission vehicles and implements fleet efficiency evaluations to ensure that the

City does not own or use more vehicles than it needs at any time.

T-5.2

Develop capital project plans to install charging stations to meet the projected demand of fleet vehicles

T-5.3

Develop implementation plan for replacement of City-owned medium-to-heavy duty vehicles with zero and near zero emission vehicles

T-5.5

Create a funding and purchase plan for battery electric buses, paratransit vehicles, and other zero emission vehicles across all public transportation services

Implement a Community-wide Zero Waste Plan and accompanying initiatives to achieve zero waste for City operations by 2030, and community-wide zero waste by 2050

RR-1.1

Complete a solid waste characterization study to understand how much metal, glass, plastics, food waste, and other materials are in

Tucson's waste stream, in order to devise tactics to reduce waste and disposal costs

RR-1.2 Implement Zero Waste Plan for community-wide solid waste diversion

RR-1.3

Incorporate Zero Waste goals and objectives into the City's waste contracts and franchise agreements

Create a community-wide organics collection and treatment program

RR-2.1

Prioritize food waste reduction via food loss prevention, food rescue/donation, and organics composting

RR-2.2

Coordinate with haulers to establish an organic waste curbside collection program across the City and provide residents with organic waste bins and education

RR-2.3

Develop a comprehensive strategy to divert organic waste from Los

Reales Landfill

Key Study Parameters

The study period is consistent for all strategies from 2023 to 2050. While each action underpinning each strategy may vary in implementation timing and duration, for sake of consistency and simplicity where project timing is not explicitly referenced, the models assume a 2023 implementation and 27 years of operation. Annual cash flows (benefits and costs) are accounted for throughout the entire study period. To discount the future cash flows into today’s dollars, a discount rate of 3% was selected for the analysis. By utilizing the real discount rate across the economic analysis, annual cash flows are not required to be inflated as this discount rate is net of expected annual inflation. All values are reported in 2022 dollars ($2022) unless otherwise noted.

2.1. Interpreting Results

The section below outlines the results from the cost benefit analysis for the project. The results are segmented into two core cash flow components - financial and social/environmental impacts.

● Financial cash flows include the life cycle costs associated with the different scenarios such as upfront capital costs, ongoing operations and maintenance costs such as utilities, avoided costs, as well as any revenues. Given the limitations of the quantitative data available at this time for the implementation of the strategies, these are not probable cost estimates, more like rough order of magnitude approximations using data from relevant sources and programs in other jurisdictions. Certain actions may have been more challenging to source data with greater uncertainty underpinning estimates or missing data leading to incomplete costing development.

● Social/environmental impacts include the cash flows associated with reduced emissions from renewable energy generation, energy consumption, productivity from active transportation, enhanced roadway safety, among others. These reflect both market and non-market sources of value attributable to the CAAP actions.

Results are presented as Net Present Value (NPV) and Benefit Cost Ratio (BCR). Using the two metrics together, one can get a sense of the scale of the impact (NPV), as well as the value generated per unit invested (BCR).

NPV is the present value of benefits net costs over the project’s useful life inclusive of financial, social, and environmental impacts. Future cash flows are discounted into current dollars at rates of 3%. NPV is the principal measure of an investment’s economic worth:

● NPV > 0, means benefits are larger than costs.

● NPV < 0, means costs are larger than benefits.

BCR is estimated as the present value of benefits divided by the present value of costs from capital expenditures and/or operations and maintenance. BCR is intended to illustrate the benefits that are achieved for every dollar invested.

● 0 < TBL-BCR < 1, project delivers less than $1 in benefit for every $1 in costs.

● TBL-BCR > 1, project delivers more than $1 in benefits for every $1 in costs.

3. CBA Results Overview

3.1. CBA Results

This investigation reveals the net present value, benefit-cost ratio, carbon (referred to as carbon or carbon dioxide equivalents (CO2e) throughout) emissions reduced, and NPV per metric ton of CO2e of implementing each strategy, as shown in the tables and figures below.

Table 2 presents summary results for the CBA. Summing across the strategies returns $7.9 billion in net present value associated with 76 million metric tons of CO2e reduced over the study period of 2023 to 2050, and just over 1.3 million metric tons reduced in 2030. The NPV per mt CO2e reduced over the study period ranges from $6/mt CO2e to $8,500; this metric can aid decision making of which initiatives are more cost effective at reaching carbon neutrality.

With the adoption of Tucson Resilient Together, the City is committing to achieving carbon neutrality in municipal operations by 2030 and community-wide by 2045. However, 2050 was selected as the end of the study period to account for post-implementation costs and benefits, recognizing that climate action and adaptation efforts will need to be sustained beyond the target year

Table 3 presents the detailed present values by strategy. Tables 4 and 5 present the annual and cumulative CO2e per year for each action over the duration of the study period.

Table 2. Summary Results

E-1.1, E-1.2, E-

1.3, E-1.4, E-

1.5 & E-3.4

E-3.2 T-1.1, T-1.5 &

T-2.1

T-5.1, T-5.2, T-

5.3 & T-5.5 RR-1 RR-2 Total

NPV $12,794,000 $4,450,299,000 $2,615,893,000 $22,317,000 $802,897,000 $22,938,000 $7,927,138,000

BCR 1.11 2,303.28 452.17 1.15 n/a 1.21 32.07 mt CO2e Reduced

(2023-2050) 2,020,437 53,952,570 308,112 291,353 17,295,150 2,494,504 76,362,126

NPV per mt CO2e

Reduced $6 $82 $8,490 $77 $46 $9 $8,711 mt CO2e Reduced in

82,828 651,208 11,706 13,709 441,237 63,640 1,264,329

Key findings and drivers for each of the strategies are detailed below.

E-1.1, E-1.2, E-1.3, E-1.4, E-1.5 & E-3.4

● The City will face consultant and municipal staff costs along with the costs of building retro-commissioning, retrofitting, and electrification by the energy service company (ESCO), and increased costs from energy consumption.

● The electricity consumption in the base case is lower than in the design case due to electrification where natural gas consumption is converted to electricity consumption, even with energy savings from retrofitting and retro-commissioning. Even though this is the case, there are still air pollution and CO2e emissions reduction because the emission factors in the base case are greater than the design; emissions in the design are offset due to the City contracting VPPAs, and subsequently RECs, to cover its electricity consumption (action E-

3.4).

● The increased consumption of electricity from electrification results in higher electricity costs to the City. This incremental electricity cost outweighs the avoided cost of natural gas from the elimination of natural gas consumption, and creates a negative financial NPV due to electrification.

E-3.2 & E-3.3

● The price of Community Choice Energy is assumed to be lower than the residential, commercial, industrial electricity prices and the model therefore returns a positive financial

NPV. Additionally, the sheer scale of the impact - the entirety of Tucson - to which the price and avoided air pollution and CO2e emissions causes the magnitude of these impacts.

T-1.1, T-1.5 & T-2.1

● Based on current assumptions that a mode shift would grow at approximately 1% per year

(with walking, cycling and rolling as ⅔ shift and ⅓ shift to public transit), this small percentage increase would lead to roughly 2x higher transit bus VMTs (each year), as compared to actual public transit VMTs reported in 2019. This has sizable implications on the results presented in T-1.1, T-1.5, and T-2.1. There are significant benefits from reducing a high proportion of VMTs, but also face high costs to hire sufficient bus drivers to meet such elevated demand. For example in T-2.1, it is estimated that just under 900 Sun Tran employees would need to be hired (each year) to meet the increased public ridership, as compared to the workforce of 420 drivers in 2019.

● The number of walking, cycling, and rolling commuters grows over time as an increasing percentage of commuters switch to sustainable modes of transportation. This ultimately leads to a higher annual benefit resulting from physical activity.

● Although the model factors in the increasing percentage of commuters that switch to sustainable modes of transportation, there is a parallel effect from population increases that causes the City’s VMTs to increase over time, which results in an increasingly higher annual number of avoided crashes.

● The proposed road diet safety enhancements are expected to result in an average of three avoided fatal crashes and 18 avoided incapacitating injury crashes each year.

● Avoided fatality crashes account for 70% of the total avoided crash value and avoided incapacitating injury crashes account for the remaining 30%.

T-5.1, T-5.2, T-5.3 & T-5.5

● T-5.1

○ Light-duty trucks are the largest driver, accounting for 50% of the cash flows.

Passenger cars are not far behind, responsible for 41% of cash flows, while motorcycles make up the remaining 9%.

○ The financial savings stemming from avoided fuel purchases are 1.65 times the projected amount spent on electricity to fuel electric vehicles.

○ The financial savings stemming from avoided maintenance costs are 2.3 times the projected amount spent on vehicle purchase costs.

● T-5.3

○ Heavy-duty trucks are the largest driver, accounting for 63% of the cash flows, while medium-duty trucks are responsible for 37%.

○ The financial savings stemming from avoided fuel purchases are 1.5 times the projected amount spent on electricity purchases.

○ The financial savings stemming from avoided maintenance costs are 2.5 times the projected amount spent on vehicle purchase costs.

● T-5.5

○ Sun Tran buses are the largest driver, accounting for 88% of the cash flows, while

Sun Van vehicles only make up 12%.

○ The financial savings stemming from avoided fuel purchases are 1.2 times the projected amount spent on electricity purchases.

○ The financial savings stemming from avoided maintenance costs are 1.9 times the projected amount spent on vehicle purchase costs.

RR-1 & RR-2

● Recyclable waste accounts for 42% of Tucson’s municipal solid waste (MSW). Mixed paper is the largest driver, accounting for 42% of recyclable waste. This is followed by mixed plastics (24%), dimensional lumber (15%) and mixed metals (9%)..

○ The recyclable waste with the largest effect on carbon emission reduction is mixed metal, which reduces 4.39 tonnes of CO2e per ton recycled. This is followed by mixed paper (3.55 tonnes of CO2e per ton recycled), dimensional lumber (2.66 tonnes of CO2e per ton recycled), carpet (2.38 tonnes of CO2e per ton recycled) and mixed plastics (0.93 tonnes of CO2e per ton recycled).

● Organic waste accounts for 43% of Tucson’s municipal solid waste (MSW). Food waste is the largest driver, accounting for 66% of organic waste. Yard trimmings make up the remaining 34%.

○ The organic waste with the largest effect on carbon emission reduction is food waste, which reduces 0.12 tonnes of CO2e per ton composted, whereas yard trimmings reduce 0.05 tonnes of CO2e per ton composted. Therefore, food waste has a much stronger effect on carbon emission reduction, as a ton of composted food waste reduces 240% more CO2e than a ton of composted yard trimmings.

○ By implementing a community composting program, compost facilities can generate revenue through the sale of fertilizer and other soil amendments. It is estimated that Tucson can offset 17% of its compost program cost with this revenue source.

Table 3. Detailed Results

1.3, E-1.4, E-1.5

& E-3.4

E-3.2 & E-3.3 T-1.1, T-1.5 &

T-2.1

T-5.1, T-5.2, T-

5.3 & T-5.5 RR-1 RR-2 Total

Financial Municipal Staff Costs -$9,664,000 -$1,933,000 -$5,798,000 -$5,798,000 -$1,933,000 -$1,933,000 -$27,059,000

Financial Consultant Costs -$200,000 $0 $0 $0 $0 $0 -$200,000

Financial Transportation Capital Expenditures $0 $0 $0 -$73,689,000 $0 $0 -$73,689,000

Financial Transportation Operations and Maintenance $0 $0 $292,610,000 $158,699,000 $0 $0 $451,309,000

Financial Cost of Electricity &/or Natural Gas -$58,789,000 $1,747,852,000 $0 -$71,737,000 $0 $0 $1,617,326,000

Financial Cost of Municipal Building Retro-commissioning -$17,220,000 $0 $0 $0 $0 $0 -$17,220,000

Financial Cost of Municipal Waste Resource Recovery $0 $0 $0 $0 $0 -$109,453,000 -$109,453,000

Financial Cost of Municipal Retrofitting & Electrification by

ESCO

-$27,490,000 $0 $0 $0 $0 $0 -$27,490,000

Financial Revenues - Waste Resource Recovery $0 $0 $0 $0 $0 $18,242,000 $18,242,000

Social &

Environmental Air Pollution Reductions - Electricity & Natural Gas $29,039,000 $245,254,000 $0 $0 $0 $0 $274,293,000

Social &

Environmental Air Pollution Reductions - Transportation $0 $0 $1,314,000 $770,000 $0 $0 $2,084,000

Social &

Environmental

Avoided Accidents from Road Diet & Multimodal

Safety Enhancements $0 $0 $1,241,010,000 $0 $0 $0 $1,241,010,000

Social &

Environmental

Carbon Emission Reductions - Electricity & Natural

Gas $97,118,000 $2,459,126,000 $0 $0 $0 $0 $2,556,244,000

Social &

Environmental Carbon Emission Reductions - Transportation $0 $0 $771,000 $14,072,000 $0 $0 $14,843,000

Social &

Environmental Carbon Emission Reductions - Waste $0 $0 $0 $0 $804,830,000 $116,082,000 $920,912,000

Social &

Environmental Productivity from Active Transportation $0 $0 $869,363,000 $0 $0 $0 $869,363,000

Social &

Environmental Reduced Transportation Congestion $0 $0 $212,084,000 $0 $0 $0 $212,084,000

Social &

Environmental Reduced Transportation Noise $0 $0 $4,539,000 $0 $0 $0 $4,539,000

Financial NPV -$113,363,000 $1,745,919,000 $286,812,000 $7,475,000 -$1,933,000 -$93,144,000 $1,831,766,000

Social & Environmental NPV $126,157,000 $2,704,380,000 $2,329,081,000 $14,842,000 $804,830,000 $116,082,000 $6,095,372,000

NPV $12,794,000 $4,450,299,000 $2,615,893,000 $22,317,000 $802,897,000 $22,938,000 $7,927,138,000

BCR 1.11 2,303.28 452.17 1.15 n/a 1.21 32.07 mt CO2e Reduced (2023-2050) 2,020,437 53,952,570 308,112 291,353 17,295,150 2,494,504 76,362,126

NPV per mt CO2e Reduced $6 $82 $8,490 $77 $46 $9 $104 mt CO2e Reduced in 2030 82,828 651,208 11,706 13,709 441,237 63,640 1,264,329

3.2. Carbon Emission Reductions

3.2.1. Carbon Neutrality by 2030 (BAP)

The proposed climate action strategies are expected to drive reductions in carbon emissions. To reach the City’s goal of carbon neutrality across City operations by 2030 and carbon neutrality community-wide by 2045, a progressive and dynamic approach must be undertaken through targeted policy interventions identified in the CAAP. This section isolates the quantities of carbon equivalents (CO2e) for the strategies included in the CBA. Figure 1 presents the share of carbon mitigation between the City and Community, with the majority (95%) of carbon reductions occurring at the community-wide level.

In order to compare the carbon reductions attributable to the strategies assessed in the CBA, a baseline must first be determined. Two baselines - a business as planned (BAP) and a business as usual (BAU) - are presented in this report for each the City and the Community perspective .

The BAP from Tucson Resilient Together is defined as assuming that plans, proposed initiatives, and policies not yet implemented are being implemented as planned. For the City these include:

TEP will achieve its preferred portfolio of 70% renewable energy by 2035, the City successfully transitions its light-duty vehicle fleet to electric by 2030 (per commitments in the 2022 EV

Readiness Roadmap), and that the City is on track to achieve zero waste by 2050. For the

Community, the BAP from Tucson Resilient Together assumes that TEP achieves its preferred portfolio of 70% renewable energy, and that the City implements the full-build scenario from Move

Tucson through 2045 (meaning that all planned transit and transportation projects are completed) with an accompanying increase in VMT (City of Tucson, 2023).

Modified City and Community BAPs are presented in this report for both the City and Community to avoid double counting as the BAPs from Tucson Resilient Together already incorporated some of the strategies considered in the CBA. The BAP for the City nets actions T-5.1. The BAP for the

Community nets action T-1.1. Furthermore, the BAPs only reflect Scope 1 and 2 emissions, and therefore RR-1 and RR-2 emission reductions are not included in the strategy reductions derived from the CBA.

The carbon reductions derived from the strategies assessed in the CBA were subtracted from the

BAP to derive CAAP pathways for both the City (actions E-1.3, E-1.5, T-5.3, and T-5.5) and the

Community (action E-3.2); see Figures 2 and 4.

When the City is looking at its impact from the strategies in 2030, there is a reduction of nearly

94,000 mt CO2e that represents an abatement of 92% of its BAP emissions. Similarly, for the

Community in 2030, there are 0.7 million mt CO2e reduced that represents an abatement of 9% of its BAP emissions.

It is important to note that the consultant team was not scoped to estimate the BAP or BAU for the

Community past 2030, so Autocase was unable to compare the CBA strategies’ carbon reductions against the Community’s baseline emissions at year 2045. Communitywide climate action measures, even if implemented on a rapid timeframe, can take several years to be reflected in reduced greenhouse gas emissions at the communitywide scale, particularly for land use changes which influence long-term development patterns and major infrastructure projects that need to go through multiyear design, permitting, and procurement processes. Figures 8 to 11 illustrate the annual and cumulative reductions from 2023 - 2050, inclusive of 2045, and Table 4 and 5 present the quantified tonnes of carbon reduced in the year 2045.

Figure 1. City and Community Share of CO2e Abatement in 2030

Figure 2. City BAP Pathways 2023 - 2030

Figure 3. Community BAP Pathways 2023 - 2030

3.2.2. Carbon Neutrality by 2030 (BAU)

Similar to the BAP pathways, the abated CO2e from the strategies in the CBA are compared to the

BAU, as presented in Tucson Resilient Together (City of Tucson, 2023); these BAUs only reflect

Scope 1 and 2 emissions, and therefore RR-1 and RR-2 emission reductions are not included in the strategy reductions derived from the CBA.

The carbon reductions from the CBA for the City (actions E-1.3, E-1.5, T-5.1, T-5.3, and T-5.5) and for the Community (actions E-3.2 and T-1.1) were subtracted from the BAU to derive a CAAP pathway for both the City and the Community (see Figures 4 and 5).

When the City is looking at its impact from the strategies, there is a reduction of 50,000 mt CO2e for an abatement of 66% of its BAU emissions in 2030. Similarly, for the Community, there are 0.7 million mt CO2e for an abatement of 7% of its BAU emissions in 2030.

Figure 4. City BAU Pathways 2023 - 2030

Figure 5. Community BAU Pathways 2023 - 2030

3.2.3. Annual and Cumulative Carbon Reductions

The actions included in the six strategies evaluated are expected to be implemented simultaneously. Annual CO2e reductions are expected to be 1.3 million metric tons in 2030, 4.7 million metric tons in 2045, and 5.2 million metric tons in 2050 (Figure 6, Tables 5).

These annual reductions translate into cumulative CO2e reductions of 5.8 million metric tons by

2030, 51 million metric tons by 2045, and 76 million metric tons by 2050, cumulatively (Figure 7, Table 4).

To better understand which actions have the greatest potential for GHG emissions reductions, the carbon reductions are segmented by each action within the figures below. Implementing action E-

3.2 (community choice energy for all of Tucson) returns the greatest share of abated CO2e followed by implementing RR-1 (zero waste) due to the sheer scale of these applicable actions - the entirety of Tucson city population.

Figure 6. Annual CO2e Emissions Reduction – All Actions 2023 - 2050

Figure 8. Cumulative CO2e Reductions by all Actions 2023 - 2050

The City has two distinct carbon neutrality targets - carbon neutrality across City operations by

2030 and carbon neutrality community-wide by 2045. Figures 9 and 10 below dissect the carbon emissions associated with each action into City or Community categories to help illustrate which actions contribute to meeting 2030 vs. 2045 carbon neutrality targets.

To help reach carbon neutrality across municipal operations by 2030, retro-commissioning, electrifying, and retrofitting municipal operations drive the greatest share of CO2e reductions

(Figure 9). To help reach community-wide carbon neutrality by 2045, by far encouraging community choice energy along with waste diversion and composting provides opportunity to reach neutrality

(Figure 10).

Figure 9. Annual CO2e Emissions Reductions - Actions for Municipal Carbon Neutrality 2030

Figure 10. Annual CO2e Emissions Reductions - Actions for Community Carbon Neutrality 2045

Table 4. Cumulative CO2e Reductions 2023 - 2050

Strategy 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036

E-1.3+1.5 10,825 33,525 68,441 115,301 173,312 241,245 317,537 400,365 482,787 564,804 646,415 727,621 808,422 889,223

E-3.2 103,354 297,205 573,016 925,602 1,352,388 1,852,757 2,427,696 3,078,904 3,876,596 4,853,165 6,050,468 7,522,657 9,138,490 10,915,413

T-1.1 13,497 27,128 38,594 50,173 61,863 73,665 85,578 97,284 109,099 120,740 132,251 143,861 154,767 165,769

T-5.1 227 734 1,582 2,778 4,352 6,335 8,757 11,589 14,429 17,277 20,133 22,997 25,469 27,941

T-5.3 389 1,239 2,671 4,670 7,279 10,541 14,497 18,925 23,364 27,814 32,275 36,748 40,563 44,378

T-5.5 92 483 1,948 4,191 7,357 11,594 17,049 23,498 30,042 36,680 43,414 50,244 55,986 61,778

RR-1 50,736 153,498 309,566 520,155 786,524 1,109,938 1,491,631 1,932,868 2,401,184 2,897,170 3,421,427 3,974,566 4,557,210 5,169,991

RR-2 7,318 22,139 44,649 75,023 113,441 160,088 215,140 278,780 346,326 417,863 493,477 573,257 657,293 745,675

Total by year 186,438 535,951 1,040,468 1,697,893 2,506,516 3,466,162 4,577,885 5,842,214 7,283,828 8,935,513 10,839,860 13,051,951 15,438,199 18,020,168

Table 4. Cumulative CO2e Reductions 2023 - 2050 (continued)

Strategy 2037 2038 2039 2040 2041 2042 2043 2044 2045 2046 2047 2048 2049 2050

E-1.3+1.5 970,024 1,050,825 1,131,626 1,212,427 1,293,228 1,374,029 1,454,830 1,535,631 1,616,432 1,697,233 1,778,034 1,858,835 1,939,636 2,020,437

E-3.2 12,859,471 14,976,884 17,274,049 19,757,549 22,434,155 25,310,831 28,394,740 31,693,248 35,213,931 38,808,301 42,477,831 46,224,025 50,048,417 53,952,570

T-1.1 176,868 176,868 188,159 198,644 209,218 219,880 230,632 241,472 252,401 263,419 274,525 285,721 296,916 308,112

T-5.1 30,413 32,885 35,357 37,568 39,779 41,990 44,201 46,412 48,623 50,834 53,045 55,256 57,467 59,678

T-5.3 48,193 52,008 55,823 59,181 62,539 65,897 69,255 72,613 75,971 79,329 82,687 86,045 89,403 92,761

T-5.5 67,619 73,510 79,450 84,641 89,875 95,152 100,472 105,835 111,241 116,690 122,182 127,717 133,294 138,914

RR-1 5,813,554 6,488,554 7,195,657 7,935,541 8,708,896 9,516,425 10,358,840 11,236,867 12,151,246 13,102,727 14,092,074 15,120,065 16,187,489 17,295,150

RR-2 838,497 935,853 1,037,840 1,144,554 1,256,096 1,372,567 1,494,070 1,620,709 1,752,591 1,889,825 2,032,520 2,180,788 2,334,744 2,494,504 year 20,804,639 23,787,387 26,997,961 30,430,105 34,093,786 37,996,771 42,147,039 46,552,787 51,222,436 56,008,357 60,912,898 65,938,451 71,087,366 76,362,126

Table 5. Annual CO2e Reductions 2023 - 2050

Strategy 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036

E-1.3+1.5 10,825 22,700 34,916 46,860 58,011 67,933 76,292 82,828 82,422 82,017 81,611 81,206 80,801 80,801

E-3.2 103,354 193,851 275,811 352,586 426,786 500,369 574,939 651,208 797,692 976,569 1,197,303 1,472,189 1,615,833 1,776,923

T-1.1 13,497 13,631 11,467 11,578 11,690 11,802 11,914 11,706 11,815 11,641 11,510 11,610 10,906 11,002

T-5.1 227 507 848 1,196 1,574 1,983 2,422 2,832 2,840 2,848 2,856 2,864 2,472 2,472

T-5.3 389 850 1,432 1,999 2,609 3,262 3,956 4,428 4,439 4,450 4,461 4,473 3,815 3,815

T-5.5 92 391 1,465 2,243 3,166 4,237 5,455 6,449 6,544 6,638 6,734 6,830 5,742 5,792

RR-1 50,736 102,761 156,069 210,589 266,368 323,414 381,693 441,237 468,316 495,986 524,257 553,139 582,644 612,781

RR-2 7,318 14,821 22,510 30,374 38,419 46,646 55,052 63,640 67,546 71,537 75,614 79,780 84,036 88,382 year 186,438 349,513 504,517 657,425 808,623 959,646 1,111,723 1,264,329 1,441,614 1,651,686 1,904,347 2,212,091 2,386,248 2,581,969

Table 5. Annual CO2e Reductions 2023 - 2050 (continued)

Strategy 2037 2038 2039 2040 2041 2042 2043 2044 2045 2046 2047 2048 2049 2050 Total

E-1.3+1.5 80,801 80,801 80,801 80,801 80,801 80,801 80,801 80,801 80,801 80,801 80,801 80,801 80,801 80,801 2,020,437

E-3.2 1,944,058 2,117,413 2,297,165 2,483,500 2,676,606 2,876,676 3,083,909 3,298,508 3,520,683 3,594,370 3,669,530 3,746,194 3,824,392 3,904,153 53,952,570

T-1.1 11,099 0 11,292 10,485 10,574 10,662 10,751 10,840 10,929 11,018 11,107 11,196 11,196 11,196 308,112

T-5.1 2,472 2,472 2,472 2,211 2,211 2,211 2,211 2,211 2,211 2,211 2,211 2,211 2,211 2,211 59,678

T-5.3 3,815 3,815 3,815 3,358 3,358 3,358 3,358 3,358 3,358 3,358 3,358 3,358 3,358 3,358 92,761

T-5.5 5,841 5,891 5,940 5,191 5,234 5,277 5,320 5,363 5,406 5,449 5,492 5,535 5,577 5,620 138,914

RR-1 643,563 675,000 707,103 739,884 773,355 807,528 842,415 878,028 914,379 951,481 989,347 1,027,991 1,067,424 1,107,662 17,295,150

RR-2 92,822 97,356 101,986 106,715 111,542 116,471 121,503 126,639 131,882 137,233 142,695 148,269 153,956 159,760 2,494,504

Total by 2,784,471 2,982,748 3,210,574 3,432,145 3,663,681 3,902,985 4,150,268 4,405,748 4,669,649 4,785,921 4,904,541 5,025,554 5,148,915 5,274,760 76,362,126 year

3.3. Air Pollution Reductions

In addition to carbon emission reductions attributable to the strategies, there are also expected to be air pollutants - SOx, NOx, PM2.5, and VOC - emission reductions associated with reduced electricity and natural gas consumption by municipal buildings as well as reduced exhaust emissions from active transit and electric vehicles.

Table 6. Air Pollution Reductions by Strategy Assessed in the CBA (metric tons)

Air Pollutant

1.3, E-1.4, E-

1.5 & E-3.4

E-3.2 T-1.1, T-1.5 &

T-2.1

T-5.1, T-5.2, T-

5.3 & T-5.5

Total (2023-

2050)

SOx 763 86 2 -10 840

NOx 263 86 34 68 451

PM2.5 32 1 4 3 39

VOC 101 3 161 111 376

4. CBA Methodologies and Key Assumptions This section provides an overview on the key steps and assumptions underpinning the evaluation of the strategies and individual actions included in this analysis. The intent is to speak to the key elements in each action's impacts and how they are calculated. Given the nature of this high-level analysis, many assumptions were used to approximate impacts and data sourced from alternative yet similar locations. As specific CAAP strategies and actions are implemented, more technical planning and engineering data could be used to supplement and override the assumptions developed for this stage of evaluation.

4.1. Common Methodologies

4.1.1. Carbon Emissions

Reducing electricity consumption from the grid and natural gas consumption is expected to reduce

CO2e (Carbon, CH4, and N2O), thereby generating societal benefits. For each unit of energy produced and used, CO2e are released into the atmosphere, quantified using emission factors. The social benefit of reduced CO2e is monetized by applying the social cost of carbon to the amount of carbon dioxide equivalent emissions reduced.

Method

● Greenhouse gas - CO2, CH4, and N20 - emission factors are from TEP purchased and owned generation (Buro Happold, personal communication, 2022); see Table A.3 in the appendix.

● The base case assumes Tucson Electric Power (TEP) decarbonizes its portfolio by 80% by

2035 from transitioning 70% of its portfolio to wind and solar sources of energy (TEP, 2020).

A straight line depreciation is applied between 2023 and 2035. For years 2035 to 2050 the emission factor remains constant.

● The design case for the City assumes that by 2045 the City procures VPPAs to cover its energy consumption needs with renewable energy certificates (RECs) exchanged in return

(action E-3.4). A straight line depreciation is applied between 2023 and 2045. A simplifying assumption is made that the renewable energy generated by the projects that issued the

RECs offset the base case energy, and subsequently the base case emissions.

● The design case emission factors for the Community assumes that the community co-forms a community choice energy program (referred to as a community choice agreement, CCA) to procure 100% renewable power for Tucson by 2045 (Action E-3.2).

● When emission factors are combined with energy consumption, the quantity of emissions is converted into CO2e using global warming potentials (GWP) sourced from the EPA

(2022). CH4 has a GWP of 29.8 and N20 has a GWP of 273 (EPA, 2022).

● Emission factors for natural gas combustion are also sourced from the EIA (2022) and follow the same conversion process from CO2, CH4, and N20 to CO2e as described for electricity; see Table A.3 in the appendix.

● The environmental benefit of reduced GHGs is monetized by applying the social cost of carbon to the amount of carbon dioxide equivalent emissions reduced. Autocase applied the social cost of carbon in line with most recent US federal guidance (Executive Order

13990) from the Government’s Interagency Working Group on Social Cost of Carbon

(2021). The social cost of carbon is $57 per metric tonne of CO2e in 2023 and grows through the duration of the study period to reflect the increasing damages of climate change, see Table A.3 in the appendix.

● The social cost of carbon is a conservative estimate of the negative effects of climate change. The cost of carbon pollution is an estimate of the economic cost of damages relating to health, agricultural losses, property flooding and the value of ecosystem services.

The estimates, and there are many estimates, are conservative because they do not yet capture all the identified impacts of rising levels of CO2e in the atmosphere.

4.1.2. Air Pollution

Reduced criteria air contaminants (CACs) stem from the following sources in this analysis:

reducing electricity and natural gas consumption in buildings as well as reducing vehicle miles traveled by ICE vehicles. Reducing electricity consumption from the grid and natural gas consumption (in the design case compared to the base case) may generate environmental benefits from reduced air pollution being emitted. For each unit of energy produced and used, air pollution emissions are released into the atmosphere, quantified using emission factors.