Seattle's Heating Oil Tax: A Missed Opportunity for Environmental Justice

by Tushar Khurana

In September 2019, Seattle Mayor Jenny Durkan signed a law that would tax home heating oil sold within the city and could eventually require residents to upgrade or decommission their heating oil tanks by 2028. The legislation was introduced to meet the City's climate goals by hastening the transition to cleaner electric home heating across the city. It was also lauded in a mayoral press release as a "bold and thoughtful approach" to environmental policy that "help[s] our most vulnerable residents move off heating oil." Revenue from the tax is intended to fund rebates for homeowners and help provide 1,000 fully paid electric heat pump installations for low-income residents.

While framed as equitable climate policy, a closer inspection of Seattle's heating oil tax suggests otherwise. Environmental justice advocates acknowledge the climate, health, and economic impacts of oil heat but contend that the mechanism of the bill places the burden of a clean energy transition on lower-income and BIPOC city residents — a population already disproportionately harmed by fossil fuels.

There are around 150,000 single-family homes within Seattle city limits, according to census data. In correspondence with the Emerald, the Office of Sustainability and Environment (OSE) estimated that 13,000—15,000 of these homes use oil heat, and that number is dwindling. Oil is the most polluting and expensive fuel for home heating and can cost two to three times more than the electricity for a modern heat pump, which also provides air conditioning. This added benefit is particularly crucial as a rapidly changing climate increases the likelihood of warmer temperatures and extreme heat waves — like the record- and asphalt-shattering event the Pacific Northwest witnessed last summer.

Seattle's oil heating systems — commonly found in older homes — were largely installed between the 1920s and 1950s, and their underground stainless steel oil tanks are known to corrode and leak, contaminating the soil and groundwater. Washington's Pollution Liability Insurance Agency insures leaking residential oil tanks across the state. In an email to the Emerald, the agency shared that it paid out an average of $17,000 for over 5,000 systems from January 1996 to September 2021. The cost of cleaning up the contamination is sometimes greater than the $60,000 insurance limit it provides.

While the downsides to heating oil are abundant, Seattle's OSE reports that the average cost to convert to an electric heat pump and decommission the oil tank is around $18,000. This is perhaps the main barrier to the transition.

Given the pandemic, resulting unemployment, and the meteoric rise in housing prices that Seattle has sustained over the years, expecting residents to either retrofit their energy systems or pay the consequences through an added tax would seem callous, and the City appears to agree. Originally scheduled to come into effect in September 2020, the tax — which would have been 24 cents on the gallon — has now been deferred twice and is currently scheduled to kick off in April 2022.

Community groups are hoping to do away with the tax altogether. "The tax intends to disincentivize oil heat so that homeowners can transition to alternative systems, and use the revenue gained to help relieve the burden on low-income households," said Debolina Banerjee, climate policy analyst at Puget Sound Sage. "For the high-income and moderately high-income households, it's easier for them to transition and avoid the tax." They make this investment and quickly see a payoff on their heating bill. "Low-income households," Banerjee continued, "get stuck with the extra burden." These households rarely have the cash or credit score to upgrade their heating system. And landlords lack the incentive to do so as long as their renters are left to foot the bill.

Environmental justice practitioners often refer to "energy burden," or the percentage of a household's income that is spent on energy. The U.S. Energy Information Administration has shown that energy costs are regressive, which means that low-income owners typically pay more for their energy than high-income owners, because poorer households tend to use less-efficient energy systems and live in older, poorly insulated houses. One in four U.S. households spend over 6% of their income on energy and forgo food and medicine to afford utility payments. Closer to home, a survey by Puget Sound Sage confirms these findings, adding that participants might also respond to increases in energy prices by not heating their homes, unplugging appliances, and cutting out basic necessities, like rent, mortgage payments, elder care, and child care.

In recognition of this extra burden, most utilities offer income-based assistance programs, but they tend to fall short. Even in Seattle — whose publicly owned utilities have higher rates of energy assistance enrollment than neighboring corporate utilities like Puget Sound Energy — Seattle City Light estimates that 90,000 households qualify for the Utility Discount Program but only 35,000 households are enrolled, often because people simply don't know the programs exist.

"Outreach and support is often one of the last-considered and least-funded items," said Banerjee. "The fact is that there is no proactive approach from utilities to reach out to people, help them gain access, or even maintain a record of low-income households." What's more, low-income people may have more pressing priorities, like securing housing and food, that prevent them from doing in-depth research into their home energy options.

Curtailing carbon pollution, and doing so urgently, is imperative to staving off increasingly dire climate catastrophes. In Seattle, buildings are the second largest source of greenhouse gas emissions. This is the sector where the energy transition hits home, literally. But homes are at the crosshairs of a crisis in affordability as well.

"One of the things that policy makers fail to understand is that older single-family homes function as low-income housing — not affordable, but low-income housing nonetheless," explained Maria Batayola, chair of the Beacon Hill Council and environmental justice coordinator for El Centro de la Raza.

By ignoring this precarious reality, the heating oil tax leaves residents in a bind. On the one hand, the tax adds to Seattle's already high costs of living. On the other hand, retrofitting and weatherizing older houses increases home values and rents and can spur further displacement and gentrification unless explicitly paired with preventative measures. This type of policy outcome is what prompts Batayola to ask the ominous question, "Is there room in Seattle for poor people?"

In the wake of the 2020 uprisings for racial justice and the threat of pandemic-induced cuts to social spending, a coalition of community organizations converged to form the Solidarity Budget platform and call for a City budget that "centers the needs … of Seattle's most vulnerable residents" and "prioritizes collective care and liberation."

This year, one of the Solidarity Budget demands was an ambitious $85 million per year for the next three years, which would fund a complete transition of all homes and buildings off fossil fuels. Community groups arrived at that number in consultation with Seattle's OSE. The City finally allocated only $1.7 million toward the transition this budget cycle.

By opposing the heating oil tax and offering an alternative, organizers are building upon what is known in climate justice circles as a "just transition" framework. According to the national Climate Justice Alliance network, just-transition initiatives shift us from dirty to clean energy in a manner that is democratic, creates meaningful work, redistributes resources and power, and redresses historical harm. While the current heating oil tax enforces existing patterns of repression, a just transition demands deeper work to challenge those arrangements.

Jess Wallach of 350 Seattle says the City could begin to assist a "just transition" framework "with targeted investments in the 14,000 City-owned affordable housing units, [where] over 70% of households are below 30% of the area median income, and 60% are People of Color." Transitioning our affordable housing stock could reverse environmental harms within this demographic by cutting carbon emissions, indoor air pollution, and utility bills. Paired with anti-gentrification policy, these retrofits could deter displacement instead of exacerbating it.

Batayola adds that for the remainder of older single-family homes, these retrofits could easily complement pressing community needs. In Beacon Hill, weatherization — which is already included in the program — could include triple-paned windows and HEPA filters to mitigate the noise and air pollution from frequent air traffic.

In addition to the health benefits and utility savings, a planned investment of this nature also promises much-needed jobs. Earlier this year, the City's Office of Economic Development released a set of recommendations on developing an equitable clean energy workforce. As Wallach suggests, a City-funded transition could make good on those proposals by "ensuring that the new clean energy jobs are union jobs" and by "developing job pipelines, creative partnerships, apprenticeship programs, and recruitment pathways directly from Seattle Public Schools and affordable housing projects to make sure that women and BIPOC folks are getting into these jobs."

In attempting to replace what Batayola describes as a "middle-class solution" with these types of creative programs rooted in regeneration, the organizers are relying on a holistic community-driven approach. Wallach says the coalition's proposals only came about because "we were successful in bringing up a conversation with our communities and City leaders about what it's actually going to take" to address this transition equitably.

Editors' Note: A previous version of this article stated that Washington's Pollution Liability Insurance Agency "paid out an average of $17,000 for over 5,000 systems from January to September 2021." This article was updated on 01/10/2022 to clarify that the agency paid out the aforementioned amount from January 1996 to September 2021.

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