Are California Environmental Policies Inadvertently Increasing Greenhouse Gas Emissions?

By John McLaurin, President, Pacific Merchant Shipping Association

Could policies being proposed by California port authorities and regulators inadvertently lead to higher greenhouse gas (GHG) emissions?

This fundamental question is not being addressed by either but the policies they are proposing may have an unintended consequence of shifting cargo to less expensive gateways outside of California with longer transit times - therefore generating higher GHG emissions.

It’s a basic and fundamental question that should be asked.

An analysis conducted by Starcrest Consulting Group demonstrated that GHG’s will likely increase if cargo is diverted from West Coast ports to other destinations. GHG increases depend on a number of factors including port of origin, port of destination, inland destination and container vessel sizes moving the cargo.

California’s trade community faces a number of policy and regulatory costs no other North American port gateway imposes. The policies and proposals range from the cost of compliance with the recent adoption of the Clean Air Action Plan, estimated by the ports of Los Angeles and Long Beach to be $14 billion; a California Air Resources Board staff proposal to require zero emission marine terminal equipment and zero emission port drayage trucks for all ports in California; a statewide requirement that all vessels utilize either shore side electrical power at berth or some other technology; possible Tier 4 engine requirements for harbor craft; imposition of an Indirect Source Rule (ISR) by the South Coast Air Quality Management District (SCAQMD) making marine terminals, warehouses and distribution centers legally responsible for emissions from third-party members of the logistics chain (trucks, trains and ships). Under an ISR, facilities would be subjected to fines and/or limits and caps on business activity.

In addition, the SCAQMD has previously approved the introduction of legislation to impose a $100 per teu tax on cargo coming through the ports of Los Angeles and Long Beach. SCAQMD staff is also seeking authority to introduce a quarter-cent sales tax for the South Coast Basin (Los Angeles, Orange, San Bernardino and Riverside counties) to pay for emission reduction programs.

These increased costs and potential limitations on business activity amount to tens of billions of dollars to the trade community - costs found nowhere else and which do nothing to improve velocity, density or efficiency in the supply chain.

The movement of cargo is similar to water in a stream - it takes the path of least resistance. Given the increase in operational costs as well as the uncertainty of reliable cargo delivery, will cargo owners shift products to less expensive gateways with longer transit times and greater distances and, ironically, by doing so increase GHG emissions?

More importantly, has CARB, SCAQMD or any other California regulatory or public agency examined any of these unintended consequences as part of their analysis for their policies or regulatory proposals? The answer is NO.