California’s Schizophrenic Zero-Emission Goals Signal Abandonment of Its Sustainable Freight Action Plan

By Mike Jacob, Vice President, Pacific Merchant Shipping Association

Everything in California’s freight infrastructure and freight air quality policy world seemed to be in order just a few months ago. Having just finished a multi-year planning effort, formalized in 2015’s Executive Order B-32-15, which resulted in 2016’s Sustainable Freight Action Plan, everyone began 2017 on the starting line of a new, collaborative implementation phase to begin to transform freight toward zero-emissions.

The Plan was ambitious, but it was developed in conjunction with all stakeholders at the table and had at its core a logical, organized, and measurable policy consistency. This policy consistency rested on meeting multiple, laudable goals: introducing a new generation of zero-emission and near-zero equipment while simultaneously making the supply chain more efficient and creating the financing for these investments by turning California’s freight system back into an economically competitive powerhouse. The state vision was nothing less than a Plan to achieve the ultimate win-win-win in investment and productivity. All sides applauded the Governor for having the wisdom to understand that true sustainability requires ongoing public and private investment in both infrastructure and environmental improvements.

One of the many things that the Sustainable Freight Action Plan got right was its acknowledgement that, given the large economic and environmental consequences at stake, the State needed to do things right and not just fast. Given the reach of freight-dependency to roughly one-third of the State economy, this is no simple task. The consequences of doing the transformation incorrectly are significant. The Plan acknowledged these consequences and concluded that to be successful at transforming some of the world’s most complex and economically significant supply chains, a large amount of research and data gathering would need to occur prior to the State implementing aggressive regulations, incentives or restrictions.

Unfortunately, even before the young Sustainable Freight Action Plan can celebrate its first birthday, the State’s policies on zero-emissions and freight infrastructure have lost their clarity. Instead, two recent actions demonstrate that the Plan is devolving into a rudderless, contradictory, and inconsistent policy jumble.

First, in March, the Air Resources Board took a big step backward by jumping ahead of the Plan’s measured timelines. Instead, the Board directed its staff to begin the process of developing Indirect Source Rules concepts for freight facilities. And, with no warning or notice to the public whatsoever, the Board unilaterally began a new rulemaking to require up to 100% zero-emissions cargo handling equipment at most of California’s seaports by 2030.

This arbitrary policy-making approach from CARB presuming the need for regulatory action is not how the Sustainable Freight Action Plan proposed to deal with the question of introducing zero-emissions equipment at marine terminals.

The Plan came to the sobering (and correct) conclusion that the industry would need incentives to help accelerate the transition to new technologies, to assist early adopters, and to fund and finance the investments needed to make this transition. But, the Air Resources Board ignored this and instead accelerated itself into an extremely aggressive rulemaking stance. By prospectively requiring Port zero-emissions equipment by 2030, along with freight facility Indirect Source Rules and up to 100% at-berth rules, CARB has completely undermined the processes outlined in the Plan.

Not long after CARB set its accelerated regulatory goals for 2030 for zero-emission Port equipment operations in March, the State Department of Finance (DOF) proposed Budget Trailer Bill language which runs directly counter to the policies and direction of Executive Order B-32-15 and the Sustainable Freight Action Plan. In this language, (now in SB 103, recently passed by the Legislature) the DOF endorsed a ban on the use of any funds on “fully automated” cargo handling equipment and would instead require that these state funds only be spent on zero-emissions cargo handling equipment which is “manned.”

This restriction effectively prohibits any of the $3 billion in new freight funds raised by increased gas taxes from being used as an incentive for the early introduction of zero-emission equipment at Ports. When this new ban was challenged in recent budget hearings by several legislators as being counter-productive, the DOF replied that private companies are still free to purchase any equipment that they wish with their own money and with private investments at their own pace.

The internal inconsistencies of these CARB and DOF policies are as stark as their goals are contradictory. While regulators now seek to accelerate zero-emissions outcomes, SB 103 is specifically intended to put the brakes on the same zero-emissions investments. It seems as though just a year after the Plan adoption, the focus has been lost. Indeed, the State looks to be more concerned with setting unrealistic, but politically correct goals, and moving ahead with regulations and funding bans without data or an investment plan.

If the State is serious about transitioning to a zero-emissions future at our seaports, then it needs to abandon these contradictory policy foibles. Achieving emissions reductions, enhanced competitiveness, and improved efficiency at ports and marine terminals that we all desire is possible, but only if the Plan, which counseled a measured balance and review of rulemaking and incentives, of costs-and-benefits, and cooperation with industry to facilitate the private investments, is followed.

Taken separately, each of these actions to abandon the path agreed to in the Sustainable Freight Action Plan is frustrating. Taken together, the schizophrenic juxtaposition of these divergent policies is maddening.