How Jerry Brown’s War on Climate Change May Only Make Things Worse  

Jock O'Connell
Sacramento-based international trade economist who specializes in the logistics of foreign trade

In his quest to improve air quality locally, Gov. Jerry Brown actually risks pushing more greenhouse gasses into skies globally.

Last July, Brown issued an executive order commanding state agencies to develop “an integrated action plan by July 2016 that establishes clear targets to improve freight efficiency, transition to zero-emission technologies, and increase competitiveness of California’s freight system.”

The executive order is widely seen by industry as a prelude to the announcement later this year of more stringent air quality mandates that will pose costly new burdens on the state’s goods movement sector. 

The movement of freight is integral to the state’s economy. As the executive order acknowledged: “California’s complex freight transportation system is responsible for one-third of the State’s economy and jobs, with freight-dependent industries accounting for over $700 billion in revenue and over 5 million jobs in 2013.”

The state’s freight transportation system is also exceedingly complex, as multilayered as it is multifaceted. It involves activities as diverse of home pizza deliveries to the hauling of freshly-harvested produce in the Central Valley to the air cargo operations at LAX and SFO.

Perhaps because of its complexity, state policymakers have tended to fixate on the freight traffic associated with the state’s seaports, especially the three huge container ports at Los Angeles, Long Beach, and Oakland.  (The cover of the California Freight Mobility Plan is tellingly dominated by a full-color photo of a large container ship.)

Maritime officials expect to see the California Air Quality Board impose new regulations that can be met only by investing tens of billions of dollars (according to new study by Moffat & Nichol, a leading infrastructure advisory firm) on new equipment and infrastructure.

The rub is how to finance compliance with these stiffer environmental mandates without driving a substantial volume of business away from California ports.

Terminal operators at ports here and around the world are financially stressed, as a new report from London-based Drewry Shipping Consultants attests. Only weeks ago, one major terminal operator unilaterally cancelled its lease at the Port of Oakland in order to focus its limited financial resources elsewhere.

Inevitably, new business costs get passed on. Saddled with huge new expenses, terminal operators at California ports will be obliged to charge higher fees. But the shipping lines and cargo owners they serve have choices, especially when the great majority of the cargoes passing through the Ports fof Los Angeles and Long Beach ports originate in or are destined for other regions of the U.S.

Even in the absence of costly new California-only air quality mandates, the state’s ports are already at risk of seeing an important share of the transpacific trade diverted to East or Gulf Coast ports through the expanded set of locks at the Panama Canal.

That’s good, you say. Fewer ships calling at California ports should mean cleaner air for California residents.

Perhaps, but there is a perversely ironic trade-off in diverting shipments away from some of the nation’s greenest ports and sending them off to ports on the East and Gulf coasts.

The fact is that diverting containers from the Ports of Los Angeles and Long Beach would add immeasurably to the CO2emissions from steamships carrying imported goods for American consumers and industry.

Consider that the sailing distance from Shanghai, Asia’s largest container port, to the Port of Los Angeles is about 5,810 nautical miles. A ship sailing from Shanghai to the Port of New York-New Jersey via the Panama Canal would cover approximately 10,600 nautical miles, a journey some 85% longer.

While in U.S. territorial waters, ships are obligated to burn low-sulfur fuels. On the high seas, however, they typically switch to a cheaper but infinitely more noxious bunker fuel, a major source of greenhouse gas emissions.

To compound the irony, cargoes diverted through the Panama Canal cargo often wind up at ports in states where the responsible parties are decidedly more cavalier about climate change.

In Florida, Gov. Rick Scott has reportedly banned state officials from referring to global warming or climate change or rising sea levels. The head of the South Carolina Port Authority recently disputed the need for ships to turn off their massive diesel engines while in port. The Port of New York/New Jersey lately rescinded a regulation calling for cleaner trucks to move containers.

So there you have it: The law of unintended consequences strikes again.

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