Balancing California’s environmental goals
It seems placid dairy cows are next up in the crosshairs of California legislators and environmental regulators. The cows didn’t do anything to get themselves on the “most wanted” list. It’s just that the state has identified cows as a major source of greenhouse gases and decided something needs to be done about them.
Cows are serious business in California—some five million of them reside here. The state’s dairy farmers produce 20 percent of the entire U.S. milk supply and more than $9 billion in annual retail sales.
But dairies have now joined a growing parade of industries the state is cracking down on in its war on greenhouse gas emissions.
California’s battle is without question the most aggressive and ambitious in North America.
Earlier this month, the California Air Resources Board (CARB) issued a draft “2030 Target Scoping Plan Update” that aims to reduce greenhouse gas emissions by 40 percent below 1990 levels; set a greenhouse gas reduction target of 80 percent below 1990 levels by 2050; require that 50 percent of California’s electricity be derived from renewable resources; reduce petroleum use in motor vehicles by up to 50 percent; and double the energy efficiency savings from existing buildings. For those involved in transporting California products to other parts of the world, CARB and other state agencies have drafted a “California Sustainable Freight Action Plan” to transition the freight system to zero- or near zero-emissions equipment.
On a separate but concurrent track, the South Coast Air Quality Management District (SCAQMD) is moving on a 2016 Air Quality Management Plan (AQMP). The draft plan contains measures that target ports, railroads, and warehouse operations and could be implemented via “facility caps” which are aimed at driving industry to adopt zero- and near zero-emissions technologies. These “facility caps” may limit the number of ships, trucks, or trains in and out of freight facilities.
But wait, there’s more.
The ports of Long Beach and Los Angeles are also moving forward with the next evolution of their Clean Air Action Plan (CAAP), which includes efforts to reduce greenhouse gas by mandating zero-emissions cargo-moving equipment by 2030. The cost to replace marine terminal equipment and harbor drayage trucks to zero emissions will be in the billions of dollars.
Few would argue against the reduction of greenhouse gases, but at what cost to Californians? Will efforts here make a difference in the world’s environment if others don’t follow suit?
One thing is for sure: adhering to these mandates will result in increased costs and transformative changes in personal behavior, business sectors and land-use policy. It is a realignment of California’s economy as well as how the state allocates scarce government resources—radical changes in California’s political and societal priorities.
The state’s policy objective is transitioning from protecting public health to mitigating climate change. That’s a huge swing.
The critical flaw in this strategy is that it is based on unilateral actions affecting only California, whereas the causes and effects of greenhouse gas emissions are global in nature. California’s contribution to worldwide greenhouse gas emissions is very small—about 1.2 percent to 1.3 percent. A major reduction here would have minuscule benefit to the environment unless the same measures are adopted by other states and nations.
Further, if state policies are too restrictive or too expensive, it could drive business away. When that happens, emissions are simply moved from one geographic area to another. While it might be seen as a moral victory, in reality the world’s environment and the state’s economy both lose.
These kinds of public policy requirements dealing with greenhouse gas emissions could inflict real economic harm on the maritime, logistics, dairy and other industries.
The maritime industry in particular is undergoing severe economic disruption. Ocean carriers and terminal operators are declaring bankruptcy and merging. By some estimates, the industry is estimated to have lost between $6 billion and $10 billion this year alone. Of concern to California should be the rise of multiple attractive alternative cargo gateways.
To be successful, environmental policy development requires sound economic analysis. If the goal is to address and positively impact climate change, then our public agencies and political leadership should be focused on policy objectives that will be readily embraced and adopted by others, not just on headlines.
California should be a leader on these issues. We need innovative public policy as much as we do innovative technology in order to successfully address climate change. But in doing so, we must ask ourselves if we have created the kind of regulations that other states and nations will follow, or are we simply reducing our environmental footprint by driving goods movement—or cows—out of the state? If all our environmental policies do is exile five million cows to other states, or divert cargo to other gateways, we will have achieved nothing.
John McLaurin,
President,
Pacific Merchant Shipping Association
The real threat (and solution) for U.S. jobs
In mere weeks, Donald Trump will be inaugurated as president, and part of the platform upon which he rode to Washington was the idea that manufacturing jobs can and should return to the United States.
Let’s leave aside the issue of whether this is possible for the moment and look more closely at the real threat to those jobs. While the outsourcing of manufacturing, increased levels of imported goods, and free trade in general have been vilified as U.S. job killers by some politicians and pundits, that view disregards a much more potent dynamic: technology.
Technology is the fundamental reason why the manufacturing jobs of the 1950s and ‘60s have gone away and won’t come back—not trade deals and currency devaluation.
Factories in Los Angeles and New England still churn out good ol’ Made in the U.S.A. apparel, but at prices considered unpalatable to most American budgets. The issue is not whether consumer goods can be made in the U.S., it’s whether American consumers can afford them.
And this is where technology is really the threat and the solution. Makers of robotics and artificial intelligence are creating automated factories, warehouses, and vehicles that have little regard for hardline trade policies. And that innovation isn’t going to stop for anything.
Those advances in technology certainly threaten jobs as they exist today, but they also create new, different jobs. After all, a human being is still needed to build, program and maintain all of the various systems and machines required for highly automated functions.
The real questions to ask are: do these advancements threaten the total number of jobs available in the future; and, more hopefully, can we as an economy adapt our workforce and vocational infrastructure to match the jobs that will be created?
Let me reemphasize: the handwringing over trade deals is a diversion. Almost every economist worth their salt recognizes free trade lifts economies, though not necessarily evenly or quickly. But there is simply no way for politicians or governments to restrict technology development the way they can trade.
Rather than complain, people should be figuring out how to ride this incredible (albeit scary) wave of technological innovation, rather than be displaced by it. This goes beyond grandma not being able to work the remote for the television. This is about resetting what work looks like and how people can prosper in a world where automation becomes more ubiquitous than we can imagine. It may sound harsh, but instead of waiting for manufacturing jobs to return from Mexico or overseas, unions and other groups should be looking to identify and train their members for the new jobs created by technological advancement.
From a supply chain perspective, think about how your role, and that of your department, will be transformed by technologies that exist today, and those that are coming. When the topic of trade and lost or outsourced jobs comes up at the next dinner party you attend, be the person who says, “forget about making trade the pariah, let’s get real about technology.”
Eric Johnson
