Jean-Philippe Brisson, a partner in the nationally recognized law firm Latham-Watkins, released a whitepaper this week on design flaws in California’s Cap and Trade system, which will expand to cover transportation fuels, including diesel, in 2015. Among the concerns raised by Mr. Brisson is one shared by CTA that the California Air Resources Board has not adequately protected consumers from price spikes which experts are warning them could occur as Cap and Trade is implemented.
So far, CARB has ignored the warnings of experts, including their own select panel on market design, that costs from the Cap and Trade program could grow unchecked. Two CTA supported legislative efforts, including Assemblyman Henry Perea’s AB69 and Senator Andy Vidak’s SB1079, died without receiving a hearing this past session. Currently, only CARB or the Governor’s office could delay the inclusion of transportation fuels into Cap and Trade at the end of this year. Neither party has shown an inclination to do so.
Click here to read the whitepaper.
The United Nations Economic Commission for Europe released a report this week titled "Diesel Engine Exhausts Myths and Realities" which called into question claims that on-highway diesel emissions can be blamed for increased risk of lung cancer. Excerpts from the report below:
From the data and facts mentioned above, we conclude with a high degree of reliability that it is misleading to claim that people's exposure to diesel engines of road motor vehicles is the cause of increased risk of lung cancer. Eighty three per cent of particulate matters emissions in European Union countries (EEA, 2012a) and 97 per cent in the United States of America (EPA 2013) and Canada, is generated by other economic sectors, mainly the commercial institutional and household sector.
Therefore, the claim that emissions from diesel engine exhausts from road transport are the main cause of lung cancer in humans needs to be seriously challenged. It does not mean however, that measures to improve the environmental performance of the transport sector can stop. On the contrary, they must continue and in an aggressively well targeted way.
"The California Trucking Association’s (CTA) members have spent millions to upgrade to cleaner trucks only to have the rug pulled out from underneath them by the California Air Resources Board (CARB), who recently voted to grant broad regulatory delays to non-compliant companies. In this difficult business climate, CARB cannot be allowed to simultaneously increase pollution and punish environmentally responsible truckers without being held accountable."
One of Air Resources Board's main reasons for extending timelines for small fleets was to provide additional Proposition 1B and Carl Moyer funding. However, as CTA pointed out at last week's hearing, this delay will not help the fleets who need compliance assistance the most because of the (self imposed) limitations of the Prop 1B and Carl Moyer Programs.
For instance, the following fleets will still not be eligible for funding:
CTA was the only industry association to give testimony in support of providing compliance assistance to fleets currently ineligible to receive Moyer and 1B grants. Without additional flexibility on compliance assistance from CARB we are going to be right back in the same position in 2018.
Q: What is AB32?
A: In 2006, the Legislature passed and Governor Schwarzenegger signed AB 32, the Global Warming Solutions Act of 2006, which set a 2020 greenhouse gas emissions (GHG) reduction target into law. The California Air Resources Board (CARB) is primarily responsible for implementing AB 32.
Q: What is Cap and Trade and how does it impact fuel prices?
A: Cap-and-trade is an AB 32 regulation that is designed to reduce GHGs by setting a firm limit or “cap” on GHGs which then declines by approximately 3 percent each year.
Starting January 1st, 2015, California will enact the first ever cap on transportation fuel carbon emissions. The cost of carbon will be included in each gallon of fuel.
Q: How much will fuel prices increase?
A: The generally accepted formula is $1/ton of carbon equates to $0.01/gallon. This means that fuel prices could increase by $0.12-0.15/gallon starting 2015 and by at least $0.33-0.40/gallon by 2030. Due to the nature of cap-and-trade, these prices could be significantly higher in any given year.
Q: Why the automatic increase?
A: CARB has set a minimum price for carbon in cap-and-trade. Each year, the minimum price increases by 5% + inflation.
Q: Where does the money go?
A: Proceed from the sale of cap-and-trade allowances are, by law, supposed to fund programs designed to reduce GHGs and benefit disadvantaged communities. However, there is much debate about how to spend allowance revenue. Projects as diverse as transit operations, affordable housing, the high speed rail, and low income tax credits may be funded in the future.
Q: How do I find out how much carbon is trading for?
A: Quarterly auction results are posted on CARB’s website at http://www.arb.ca.gov/cc/capandtrade/auction/auction.htm
So much for that "Good Faith" compliance extension. California fleets of 4 or more vehicles who had applied for Proposition 1B grants are now being informed that taking advantage of the rule flexibility granted by the Air Resources Board in November has made them ineligible to receive Proposition 1B grants, potentially jeopardizing millions of dollars in incentive funding.
ARB Staff has, to date, not budged from this position despite having been informed:
2) Their Advisory and press release were released a whole month after the initial October 10th grant application deadline. Had this been the ARB's intent all along, there is no reason they could not have advised grant applicants in plain English that using the flexibility in the Advisory would result in a loss of Prop 1B grants.
This latest move by the ARB is, to be blunt, puzzling. While, on one hand, the ARB is mulling providing even more amendments to the Truck and Bus Rule to relieve financial pressure on fleets subject to the Truck and Bus Rule, this decision stands to throw the compliance plans of hundreds of fleets of all sizes into disarray and chaos.
I’ll cut red tape to help states get those factories built and put folks to work, and this Congress can help by putting people to work building fueling stations that shift more cars and trucks from foreign oil to American natural gas. - President Obama, State of the Union 1/28/14
|Deadline to Order Equipment in Event of Manufacturer Delay (TRU Retrofit only)|
Truck and Bus
Small Fleets - 1 truck must meet PM BACT
Phase-In - 90% must meet PM BACT
BACT - 1996-2006 must meet PM BACT
Must be 2007+ Engine
2006s must meet ULETRU
Truck and Bus
"Good Faith Compliance Extension" Deadline