Musing Over CAAP 2017
By Jock O’Connell
Late last month, the Ports of Los Angeles and Long Beach released their proposed 2017 Clean Air Action Plan (CAAP) Update. The document, now open for public comment through September 18, outlines a highly aggressive strategy to “ultimately achieve zero emissions for trucks and terminal equipment.”
The two ports have also released a detailed cost analysis by EnSafe, a Tennessee-based consulting firm. The numbers in the EnSafe analysis quickly fall into the daunting “a billion here, a billion there” category. Unfortunately, as we shall see, the numbers that are not in the EnSafe study are likely to be even more daunting.
Here we don’t propose to do a full-blown audit of EnSafe’s cost estimates. Instead, we simply would like to emphasize just how extraordinarily conditional those estimates are by highlighting the several times the folks at EnSafe candidly concede that their cost estimates could very well prove to be, well, fantastic.
The following quotes – pre-emptive mea culpas if you will – are from the introductory pages of the EnSafe report:
“In many cases, assumptions have been made to estimate the cost of technology that is not commercially available.”
“At this time, the state of near-zero and zero-emission technology development varies…The variability in the emerging near-zero and zero-emission market creates large uncertainties in the costs of future equipment and related infrastructure.”
“This analysis assumes terminal and Port operations remain the same or similar to existing conditions.”
“This analysis does not include maritime terminal costs resulting from implementation of the near-zero and zero-emission technology into ongoing terminal operations such as increased costs resulting from reduced productivity, lost revenue from repositioned cargo to other terminals during construction, or costs of phased construction.”
“The analysis does not include cost estimates for fueling or charging infrastructure for heavy-duty trucks, which is likely to exist outside the Harbor Districts and throughout the region.”
“Furthermore, estimates are based on costs in 2017; inflation and the ‘future cost of money’ have not been included in this analysis.”
These are all very reasonable and honest allusions to the conditionality of economic forecasting. Projecting costs or even future levels of maritime traffic at the two ports is fraught with the perils of prophecy, especially given the fluid nature of today’s shipping industry (e.g., alliance consolidation, ever larger vessels, shifting trade routes) as well as the fairly peculiar competitive challenges posed by California’s aggressive regulatory environment.
I am prepared to wager heavily that, by 2030, the cost estimates offered by EnSafe will be a mere fraction of the actual expenditures that will ultimately be required to implement CAAP 2017. So that is why many of us find the reluctance of public officials to squarely address what we believe is the most fundamental issue here: Who’s going to pay?
Right now, neither the State of California nor the United States Government appears eager to contribute more than token amounts. Will the shipping lines, terminal operators, truckers, railroads pony up the billions that will be needed? Will the ILWU offer wage and benefit concessions? Will port pilots hold a bake sale? Will beneficial cargo owners agree to a CAAP compliance surcharge or would they just take their business elsewhere?
Perhaps, taking a cue from the President, we should just demand that the Chinese pay
The commentary, views, and opinions expressed by Jock O’Connell are his own and do not reflect the views or positions of the Pacific Merchant Shipping Association. PMSA does not endorse, support, or make any representations regarding the content provided by any third party commentator.