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San Jose Mayor on transition to an electrified economy: It will ‘take a lot of federal and state investment’

San Jose Mayor Sam Liccardo joins Yahoo Finance Live to discuss the city’s plan to meet greenhouse gas reduction targets.

Video Transcript

[MUSIC PLAYING]

ZACK GUZMAN: In this week's Tipping Point segment dedicated to the problem of climate change, we're focusing in on San Jose, California, one of the first cities in the US to unanimously approve a course to meet the greenhouse gas emission reduction targets in the Paris Agreement. That move comes as the Bay Area, in general, grapples with other problems, including a rather large exodus, particularly among those in its tech community.

And for more on that, we're very happy to welcome the mayor of San Jose with us here today. Mayor Sam Liccardo joins us right now. And appreciate you being here, Mayor.

I mean, it's a big step. We'll start with the climate change step here, but it's obviously been something that you guys have been working on for a while. What does this do maybe to make it official in moving you guys forward?

SAM LICCARDO: Well, it's good to be with you. As you probably know, about 70% of our greenhouse gas emissions on this planet are being produced in cities. And cities are where the problems are, but certainly where the solutions are as well.

And so in San Jose, we're really trying to lean in. The first step is trying to green the grid. That's critical for every city. So we became the largest city in the country a few years ago to launch what's called community choice aggregation, where now about 99% of our residents and businesses are being provided electricity from a city utility that is providing supply that's about 90% from renewables or-- or hydro.

And so having 92% GHG-free electricity is critical, because then the next step is moving all your transit and transportation and buildings off of gas and onto the grid to really take advantage of the greenhouse gas-free energy. That is where we're really pushing in the last year or so.

AKIKO FUJITA: Mayor, San Jose became one of the first cities to ban gas hookups in new development. And since then you've had about 40 cities in California that's kind of followed suit. I wonder why the focus has been on this particular issue when you consider, overall, it only accounts for about 10% of emissions compared to something like transportation, which is much more significant.

SAM LICCARDO: Yeah, we've heard varying numbers about the emissions. It's probably a bit higher than 10, but certainly we recognize transportation is the big challenge. We have actually the largest penetration of electric vehicles here in San Jose than anywhere else in the country.

And we're also electrifying all of our buses, as well as much of our other transit. We had a century and a half old railroad system that we're electrifying today. And so we're pushing that direction on all sectors, but buildings are critically important, because we know that is where an awful lot of emissions can be controlled relatively quickly, and both through retrofits and through new construction.

By moving from gas to electric not only are we improving the planet's health, we're also improving our own health. We know it's much healthier in a building to not have the threat of gas. And we certainly know there are all kinds of health and safety risks with gas.

AKIKO FUJITA: It is, of course, a movement we've seen across the country. And along with that, utility companies certainly pushing back in a very significant way. What kind of pushback have you gotten from PG&E? I mean, the company obviously has their own financial issues stemming from the wildfires out in California, but they've got to take a significant hit from a movement like this.

SAM LICCARDO: Well, they are providing the electricity as well, that is as the wholesaler of the electricity. And so they don't actually lose in this whole calculus. At least out here in California, they've been supportive and encouraging it. We certainly have plenty of other challenges with PG&E, but that's not one of them. They've been a supportive partner in our transition to an electrified future.

AKIKO FUJITA: How is all this-- the conversation happening in tandem with obviously the state government, as well as the federal government? There's a lot of talk here with the Biden administration, particularly with Vice President Kamala Harris coming from California, that what has played out in the state is potentially being used as a template to shape the federal policy on climate.

SAM LICCARDO: Well, we think that's certainly important, but California faces a very big challenge that is not unique, certainly we know other parts in the country face as well, which is around grid resilience. And an awful lot needs to be invested in the grid to ensure that we can have more reliable power if we're going to make this transition to an electrified economy. And that's going to take a lot of federal and state investment as well.

And so it's important-- we hear a lot about microgrids these days. That's critically important as we battle the various natural disasters and challenges that all of our communities face. Those kinds of investments, I think, are going to be critical for us as we transition to ensure that we're not pushing folks off of one cliff as we are trying to save them from another.

ZACK GUZMAN: Yeah, Mayor Liccardo, I mean, California's big push here also comes at an interesting time when it stems from the kind of tech exodus we've been talking about. You were out with a new op-ed basically putting this into context, saying, you know, it's not all tech's fault in an op-ed titled "Silicon Valley exodus-- Stop blaming tech," to use the exact title.

When you look at that issue, obviously, I suppose, you know, California's green initiative could bring a lot of businesses' focus on that space to the state. But specifically what you're seeing there, I mean, how do you solve that issue if you do have a rather large amount of those jobs now fleeing California, San Jose, to other parts of the country like Austin?

SAM LICCARDO: Yeah, there's an interesting set of narratives going on right now. What we're hearing a lot is about the move of headquarters, for example. But in the cases of two major companies in San Jose that moved their headquarters, they're actually expanding their employment here in my city. It's just that they're moving the administration and the actual headquarters offices, which tells you it's probably an awful lot of it is about taxes and regulation and a lot less about the talent.

The talent is still very much here. They want to be here. They know this is where the engineering, computer science, and many other high-skill talented workforce-- members of the workforce are, and they want to continue to be here. But they know that the costs are constraining them in various ways, and certainly taxes are part of that.

Obviously, the cost of living is the giant challenge. And really, the op-ed was about the fact that if we really want to find solutions, it's important for political leaders to stop blaming tech and start focusing on those solutions. Because there are solutions out there if we have the political will to tackle these great challenges like housing costs.

AKIKO FUJITA: What are some of those solutions? How do you make the pitch to another company that's in San Jose, that's in the Valley right now sort of thinking, maybe I should follow suit because, to your point, the costs are, in fact, really high to operate in California?

SAM LICCARDO: Yeah, no question. And let's face it, they're always going to be high. It's always been that way. We're less concerned, or at least I'm less concerned, about the movement of a few headquarters or a couple billionaires to other states.

I'm much more concerned about whether we can continue to be the place where young innovators, where small companies want to be and to scale. That really is a critical issue for the future of our region. And in terms of reducing those barriers to entry, and let's face it, there are many certainly at the state level, regulatory barriers, tax barriers, but there's a lot we can do to reduce housing costs together.

Part of it is in local control. Certainly, we've got a lot of suburban communities that are not eager to build dense housing. They're not interested because of the financial pressures on cities and the way the state finance is regulated. They tend to lose money on the production of housing that is in their city budgets. And so we need to break through some of the local barriers.

At the same time, there's a lot of statewide barriers. We have a lot of litigation that is threatened against home builders because of well-intended but misused laws. There's a lot we can do in labor, for example, to try to expand the hiring pool in the trades to reduce construction costs. There's a host of things that we can do, but it requires us being willing to take on some of the sacred cows in politics.

ZACK GUZMAN: I'm glad you-- I'm glad you mentioned the tax issue, because that is something statewide we're hearing. Obviously, if you're going to do the trade-off between California and Texas, taxes are a big incentive there for why you might move. And that stood out to me in your op-ed, because you basically said-- the rule of holes is what you cited, when you find yourself in one stop digging, and yet we continue to see areas in California move higher on the tax front.

And you pointed out that San Francisco voters passed three business-targeted new taxes last year alone. So I mean, when you look at that, it does seem like California, San Jose, other cities might be in a tough spot when you're kind of in that death spiral of making up this revenue stopgap here by raising taxes and that leads into a very dark place. So how do you reverse that, though, if you are caught in a time where revenues are tight?

SAM LICCARDO: Well, certainly, we need to stop, as you mentioned. And by the way, I'm no tax purist here. I'm a Democrat. So like many of my other fellow Democrats, I've certainly advocated for revenues at different times. But we got to recognize when we are simply driving folks out.

And already in the state legislature there are new proposals for taxes. That is not what we need to do at a time of very high unemployment. We've got to recognize the environment for what it is. This is a time to be welcoming employers, not creating more barriers for them.

AKIKO FUJITA: We're, of course, talking about exits as in some tech companies who are considering moving out. But we started the whole conversation, Mayor, by talking about the growth potential around climate and green energy. And I wonder when you look at specifically the economic opportunity in San Jose, how rapid is that growth right now? And what do you anticipate from some of this build out for a lot of companies who have now, in fact, come in the reverse, come to California because of the regulations that are there that enable them to really dabble in what is likely to be some of this energy of the future?

SAM LICCARDO: Yeah, there's no question that when government is working well, we are really collaborating well with industry to understand how we can play a role in creating and paving a path for innovative clean tech for the solar and the wind of tomorrow to really be able to expand. I think as we look to the future, we know that it's around battery storage and energy storage that's going to be critical to ensure that many of our renewable energies will be successful and to ensure that we can really move toward a more electrified future.

And so I think you're going to see an awful lot of investment and focus over the next couple of years here in Silicon Valley around storage and everything else we need to do to ensure we can create some resiliency and localized sources of generation, in part because of the challenges with the grid, and in part because we just know it's a more efficient way to be able to green our economy.

AKIKO FUJITA: San Jose Mayor Sam Liccardo, it's always good to talk to you. Appreciate your time today.

SAM LICCARDO: It's great to be with you. Thanks for having me.