Palo Alto's environmentalists cheered two years ago, when the city officially declared its electric portfolio "carbon neutral."

Now comes the next challenge: How to get residents to switch off natural gas and plug into clean electricity?

The Utilities Department is exploring a slew of programs aimed at accomplishing this task: from encouraging homeowners to make their homes "all-electric" to making it easier (and in some cases, mandatory) to install electric-vehicle charging stations at apartment buildings and parking lots.

The effort, commonly known as "fuel switching," was sparked by both the city's switch to a "carbon-neutral" electricity portfolio and the City Council's appetite for new programs that take advantage of the switch.

Last December, Councilmen Marc Berman and Pat Burt and former Councilman Larry Klein co-authored a memo calling for staff to consider prospective programs that would result in switching from natural-gas devices to electrical ones.

In the memo, the three councilmen wrote that the city's "clean electricity resources prove an exceptional opportunity to be used as a clean energy foundation to reduce our other major (greenhouse gas) sources."

They noted that natural gas, while enjoying "good press," is in fact "only marginally better than coal." That's because of all the non-combusted methane gas that is released into the atmosphere during the process of extracting and delivering natural gas.

"Our carbon-neutral electricity is far better for the environment and we therefore believe that Palo Alto should take a series of steps to promote change from gas use to use of electricity," the memo stated. "Additionally, we should pursue more steps to support adoption of electric vehicles powered by clean electricity, replacing use of petroleum, or largest source of greenhouse gases."

Palo Alto has already taken several large steps to encourage the use of electric vehicles. In the last two years, the city significantly reduced the amount of time it takes to get a permit to install charging equipment. It also beefed up the building code to require all new single-family homes to include the necessary conduits to enable future installation of charging equipment.

But getting people to switch their home appliances and heating systems from gas to electricity could be a trickier proposition.

According to a report released by the Utilities Department earlier this month, the biggest barrier to the upgrade is the electric panel capacity needed to accommodate the increased load. This upgrade alone could cost between $2,500 and $5,000, according to the report. Adding the needed conduits and wires would add another $1,000 to $2,000 per appliance.

These high costs indicate to staff that it would be more cost effective to apply new programs to new construction rather than existing homes. It also means that the city would have to come up with "creative programs and initiatives" to help existing homes overcome the substantial additional upfront costs. Once in place, the electric systems are expected to reduce water-heating expenditures by $4 per month while raising the cost of space heating by $2 per month.

Upfront costs aren't the only challenges. Even if the city succeeds in converting most homes from gas to electricity, it would still face the daunting task of tackling the commercial sector.

The Utilities Department estimates that residential structures account for a little more than a third of the city's total natural-gas use, while the commercial sector accounts for about two thirds. In both the residential and commercial sectors, space and water heating make up by far the biggest share of natural-gas use, according to the department.

Space heating in the residential sector accounts for 22 percent of the city's natural-gas use, while water heating accounts for 11 percent. In the commercial sector, space and water heating account for 18 percent and 24 percent of the city's total use, respectively.

Commercial cooking, meanwhile, makes up 16 percent of total use while commercial processing accounts for another 4 percent. The recent report notes that while introducing heat-pump technologies for water and space heating is relatively less burdensome, "retrofitting existing large commercial buildings for space-heating applications is likely to be cost prohibitive." (Heat pumps transfer heat from one space to another via electricity, rather than generating heat themselves.)

"Space heating and water heating are the big dogs," the city's Chief Sustainability Officer Gil Friend told the Utilities Advisory Commission (UAC) at the commission's July 1 meeting. "Commercial cooking is next and is a little bit different of a beast to go after."

At the meeting, the commission enthusiastically endorsed staff's two-phase work plan for exploring and ultimately implementing the fuel-switching initiatives. The focus in the next year and a half will be to promote heat-pumping technologies at existing homes through education, rebates and bulk-buy programs.

The city will also be providing resources to residents who want to make their homes all-electric, including lists of qualified architects, case studies and channels for homeowners to share ideas. According to the work plan, staff will also explore new funding sources that could be used to provide financial incentives for people wishing to make their homes all-electric.

Staff also plans to explore further changes to the building code to expedite electrification for new construction and remodeling projects; consider changes to utility fees to encourage electrification; and explore opportunities to electrify existing and new city buildings.

Further into the future, the city plans to explore bulk-buying programs for electric vehicles for Palo Alto residents and consider space-heating initiatives for large commercial structures.

The utilities commission was full of praise for the suite of new initiatives, with Commissioner Judith Schwartz saying she is really excited to see the work commence on these programs. She also encouraged staff to take a closer look at the commercial sector and noted that Palo Alto, unlike most other cities, sees its population balloon in the daytime because of commuting employees. Schwartz suggested exploring things like installing solar canopies on office buildings where people are charging their cars.

Commissioner James Cook also endorsed the city's growing momentum toward fuel switching, while Commissioner Steve Eglash lauded the fact that the city is pursuing these initiatives without hiring additional staff or significantly raising costs. The existing work plan is expected to stretch for two to three years and cost about $380,000.

"If we can take on major new initiatives like sustainability across the city and not have it contribute to an ever larger and more bloated city budget, then we not only did something good for the environment but for all the citizens and businesses in the city," Eglash said.

Bruce Hodge, founder of the group Carbon-Free Palo Alto, also supported the new initiatives, though he suggested that the efforts are "somewhat timid." He urged utilities officials to introduce more programs relating to electric vehicles and to review and update the list of programs on an annual basis, if not more frequently.

"We're a little bit ahead of the curve but electrification has been presented as a solution by many different bodies," Hodge said. "I think it's a very good course and probably one of the most important issues that UAC is facing today and certainly for the next decade."