Op/Ed: California's Zero-emission Domino Theory

By Thomas Jelenić

The Domino Theory was the Cold War concept that if communism obtained a foothold in a region – say Vietnam in Southeast Asia – other countries would soon fall like a perfectly aligned row of dominoes to communism (e.g., Cambodia and Laos). Whether one supports the theory or not, it has at least one strong point: it was a simple story to tell.

It feels like California has adopted its own version of the Domino Theory: if California pushes the regulatory envelope for zero emissions, other states and countries will certainly adopt similar strategies. The narrative’s importance is that it counters the argument that California is building a regulatory state that will leave it hamstrung with costs and uncompetitive in a global marketplace.

This zero-emission Domino Theory is on full display in California’s maritime industry where port authorities and regulators are working to reduce emissions from port-related activities. California port authorities have led the way in establishing themselves as global green port leaders. It is a well-earned reputation. During the past decade, ports have reduced diesel particulate matter, a pollutant of particular concern to local communities, between 76 percent to 88 percent, depending on the port complex. That reduction is no mean feat. It translates to meaningful improvements in air quality and reductions in health risk.

But part of the argument for being a green leader is that other ports will follow California’s example. The dominoes must fall at each port around the country and, when it happens, California will not stand alone. We will have started the movement. Yet, to date, no has followed California’s green leadership; the dominoes remain upright.

No port outside of California requires or incentivizes the use of shore power for cargo vessels. No port has developed a meaningful Clean Trucks Program to accelerate the turnover of drayage trucks. Those ports that do have green port programs on paper are letting time, rather than command-and-control regulation, do the heavy lifting. With time, older, more polluting equipment is replaced with modern equipment that has the latest emissions control systems. This is the same strategy that has successfully reduced emissions from passenger vehicles across the country. In addition to achieving the same emission reductions, the time approach also eliminates stranded asset costs and the need to incentivize equipment replacement saving billions.

As California ports look to further burnish their environmental credentials, they face a difficult challenge. Because all available feasible, cost-effective technology has been deployed, two paths exist to further emission reductions. One is incremental through the use of near-zero technologies. In this case, incremental means achieving an additional 90 percent reduction on top of a previous 90 percent reduction in emissions standards for on-road and off-road equipment. For the mathematically challenged, that would be the equivalent of a 99 percent emissions reduction. The only hurdle to this pathway is that equipment is just now becoming commercially available and a new (California-only, of course) engine standard requiring equipment manufacturers to sell cleaner equipment is not expected until the 2023 timeframe and may only apply to on-road engines.

The other pathway is a paradigm shift with a move straight to zero-emissions. This pathway’s main hurdle is that the equipment available today is fully automated and costs about $35 billion to address just cargo-handling equipment statewide. This equipment makes-up only 4 percent of port-related diesel emissions and less than 1 percent of regional diesel emissions. Or, we can place our bets on electrified versions of the existing diesel-powered equipment marine terminals currently use. It should be noted that this equipment does not currently exist and nor does any of the supporting infrastructure necessary to power it. To further complicate matters, tackling zero emission “solutions” for other port-related equipment (locomotives, drayage trucks, harbor craft and tugs) is even more challenging and more expensive.

How California ports accomplish this transition to zero-emissions while remaining both competitive and an industry leader remains unanswered.

Not to be out done, California’s regulators are taking a cue from the ports and pressing for even more aggressive action. In a proposal heard by the California Air Resources Board (CARB) at the end of March, California will lay out their new vision for tackling emissions. This updated vision calls for beginning the transition to zero-emission cargo-handling equipment early, in 2026, despite the fact that no equipment capable of successfully operating in a marine terminal environment exists.

Even more disturbing, it upends the traditional approach to improving air quality. Normally, the State would require equipment manufacturers to build and sell equipment that meets an emissions performance standard. California would sometimes match that demand with a requirement that forces users to retire the oldest equipment to accelerate the introduction of the newest, cleanest equipment. This time, no proposal for tighter (or even zero) emission standards exists and there is no requirement for equipment manufacturers to sell zero emission equipment. Instead, it appears that California will give the equipment users a hearty “good luck” and the sole burden to find such equipment.

California regulators have targeted the maritime industry to lead the way on zero emissions because it can. State regulators are poised to set aggressive maritime sector targets that are decades ahead of the requirements proposed for other California industrial sectors. In doing so, it shifts the costs of technology development from all California industrial sectors to the maritime sector. The maritime sector will have to bear the burden of technology development that the rest of the State will be able to rely on to meet their requirements decades later.

All of this “leadership” is happening in the context of a decade-long slide in California ports’ market share – a trend that isn’t likely to end soon. Both California ports and regulators assure stakeholders that they will proceed judiciously and do not wish to harm the source of tens of thousands of jobs statewide. To that end, both port authorities and the State have repeatedly called for other jurisdictions to follow their lead to help maintain an even playing field. No one has followed.

Despite efforts by California ports and regulators to form partnerships outside of California, no dominoes have fallen elsewhere. The question to be asked, after more than a decade of California “leading” the way, is anyone willing to follow? Or, will California and its ports continue to stand alone?

The Author

Thomas A. Jelenić is Vice President for Pacific Merchant Shipping Association (PMSA). Mr. Jelenić works with policy makers, regulators, industry leaders and other entities to help ensure that sound science and industry issues are part of the discussion as California continues to call for the increased use of zero and near-zero emissions equipment at California’s ports and throughout the goods movement industry. Jelenić has two decades of maritime industry experience, including more than 14 years in environmental and planning positions at the Port of Long Beach, the nation’s second busiest seaport, and senior management roles in private consulting and logistics development.

(As published in the April 2018 edition of Marine News)

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