Bend, Oregon Climate Pollution Fee

Project Overview

The City of Bend, Oregon enacted a Climate Pollution Fee in June 2026 to advance community decarbonization goals by disincentivizing new natural gas infrastructure and household appliances, like stoves, water heaters, and furnaces, in new residential construction. The city worked with local citizen committees, including the Environment and Climate Committee, to build public backing during city council reviews, allowing elected officials to hear and guide policy recommendations from community members rather than building the policy solely from internal municipal staff perspectives.

The fee applies to new residential construction, such as single-family homes, duplexes, townhomes, and accessory dwelling units, but not to existing home replacements or commercial builds. It takes effect April 1, 2027, timed to coincide with Oregon’s statewide residential building code update, which streamlines the process for builders and increases public awareness since a broader community already tracks state code revisions.

The fee scales across three tiers of home size and the relative carbon footprint of each home’s gas appliances: Tier 1 for homes under 1,500 sq ft, Tier 2 for homes between 1,500 and 3,000 sq ft, and Tier 3 for homes over 3,000 sq ft. In practice, a mid-size home installing a natural gas furnace would pay a one-time $1,500 fee, while a fully gas-equipped home would incur a fee up to $2,972. The fee schedule was calculated using the social cost of carbon multiplied by the metric tons of carbon dioxide emitted per appliance, then adjusted for regional fuel data, and also accounts for the current versus projected regional energy mix by subtracting the baseline emissions of electric alternatives until Oregon’s mandatory grid decarbonization milestones are met. Revenue from the fee is placed in a dedicated fund to reinvest in local building decarbonization through incentives and equity-focused energy efficiency upgrades.

Lessons Learned

Fees Instead of Bans

Direct appliance bans carry high legal risk following federal circuit court rulings against municipal gas bans, including California Restaurant Association v. City of Berkeley. Regulatory fees tied directly to environmental damages still provide a strong disincentive while maintaining legal defensibility. Developers pay the fee during the building permit application, though it will most likely be rolled into final home sale prices.

Fee Calculations

Municipalities cannot assign arbitrary fee amounts and must have legally defensible calculations. By coupling the social cost of carbon with regional utility and energy data to establish an explicit link between appliance selection and calculated climate impact, Bend created a legally durable calculation method. The city also factored in that the local electrical grid is not yet 100% fossil-fuel-free, subtracting the carbon footprint of equivalent electrical appliances and adjusting that subtractor annually as the grid mix changes, protecting the policy from pushback over short-term emissions from fossil-fueled electricity.

Compliance Scheduling

Aligning the policy’s start date with the state building code update simplified compliance for housing developers, giving the city time for internal permitting integration while coinciding with code changes builders were already tracking.

Program Contact

Cassie Lacy, Senior Management Analyst, City of Bend, Oregon