Global Trade, Local Impacts, Who Benefits? Who Pays? Jim McGrath Port of Oakland

WHY AM I HERE? The Port of Oakland has completed a marine terminal expansion project with community support The Port of Oakland has completed a marine terminal expansion project with community support That effort included a large community park and an air quality mitigation program That effort included a large community park and an air quality mitigation program The communities were involved in designing the program The communities were involved in designing the program

LIFE IN THE FOOD CHAIN

TRADE AT THE INTERNATIONAL SCALE Emerging economies, e.g. China and India are doing well, growing at 12%/year Emerging economies, e.g. China and India are doing well, growing at 12%/year China is our largest trade partner, 3 times the volume of Japan, and growing at 18% this year China is our largest trade partner, 3 times the volume of Japan, and growing at 18% this year GDP is growing faster than population GDP is growing faster than population Growth by non-participants much lower— 2% for Africa Growth by non-participants much lower— 2% for Africa

TRADE CAN ADD VALUE Primary commodities 38% of value in 1960, 12% in 2001 Primary commodities 38% of value in 1960, 12% in 2001 Manufactured goods 12% of value in 1960, 65% of value in 2001 Manufactured goods 12% of value in 1960, 65% of value in 2001 Income distribution determines the net value to developing countries, but growing GDP faster than population helps Income distribution determines the net value to developing countries, but growing GDP faster than population helps It’s in our interest for our trade partners to have some “skin in the game” It’s in our interest for our trade partners to have some “skin in the game”

NATIONAL TRENDS Shipped goods are increasing in value in GDP— 13% in 1970, 30% in 1996 Shipped goods are increasing in value in GDP— 13% in 1970, 30% in 1996 Value of shipped goods $1.85 trillion in 2002 Value of shipped goods $1.85 trillion in million TEU’s exported in million TEU’s exported in million direct jobs 1.4 million direct jobs Nearly $200 billion in tax revenues Nearly $200 billion in tax revenues The tariff alone generates $20+ billion/year The tariff alone generates $20+ billion/year

CALIFORNIA TRENDS Imports and exports valued at $329 billion in 2003 Imports and exports valued at $329 billion in 2003 Waterborne commerce accounts for 2/3 of that value Waterborne commerce accounts for 2/3 of that value Customs revenue about $6 billion Customs revenue about $6 billion Total container traffic about 11.3 million TEU’s Total container traffic about 11.3 million TEU’s –LA—4.9 million TEU’s –LB—4.6 million TEU’s –Oakland—1.9 million TEU’s

WHAT ABOUT AIR POLLUTION? Diesel emissions really matter—but are regional in nature, both in generation and dispersal Diesel emissions really matter—but are regional in nature, both in generation and dispersal For South Coast, ships are about 3% of anthropogenic PM 2.5 For South Coast, ships are about 3% of anthropogenic PM 2.5 South Coast Port’s account for 10% of truck traffic South Coast Port’s account for 10% of truck traffic Commercial-Industrial sources twice as large as heavy duty trucks Commercial-Industrial sources twice as large as heavy duty trucks Oakland emissions about 0.5% of Bay area’s pm, less than 5% of truck activity Oakland emissions about 0.5% of Bay area’s pm, less than 5% of truck activity

WHAT CAN BE DONE? Technology is here for clean diesel for new power plants Technology is here for clean diesel for new power plants Retrofit is difficult because the best technology relies on integrated, computerized engine controls—but 25% reductions are feasible Retrofit is difficult because the best technology relies on integrated, computerized engine controls—but 25% reductions are feasible Retrofit technology is not here for large marine engines—yet Retrofit technology is not here for large marine engines—yet Accelerated turnover of inventory is the best bet for human health, greenhouse gas benefits Accelerated turnover of inventory is the best bet for human health, greenhouse gas benefits Lower sulfur fuels lower particulate emissions Lower sulfur fuels lower particulate emissions

WHAT SHOULD BE DONE? Require retrofits of existing diesel engines (CARB has a number of regulations in process)—perhaps a $2 billion issue Require retrofits of existing diesel engines (CARB has a number of regulations in process)—perhaps a $2 billion issue Provide incentives for those who go farther and faster (Diesel Collaborative, Port mitigation fees) Provide incentives for those who go farther and faster (Diesel Collaborative, Port mitigation fees) Look at ways to make the logistics more efficient (roll through gates) Look at ways to make the logistics more efficient (roll through gates) Ratify MARPOL, establish a SECA for West Coast or US Ratify MARPOL, establish a SECA for West Coast or US Invest in demonstration projects to push technology Invest in demonstration projects to push technology

SHOULD USER FEES BE TRIED? What do you think the tariff is? What do you think the tariff is? Needs to pass a nexus and reasonableness test Needs to pass a nexus and reasonableness test Fees tied to diesel fuel would represent 85% of the PM source, but would that be feasible politically? Fees tied to diesel fuel would represent 85% of the PM source, but would that be feasible politically?

CONGESTION IS THE NEXT BATTLEGROUND Congested roadways are bad for air quality, and don’t seem to be significant disincentives to travel Congested roadways are bad for air quality, and don’t seem to be significant disincentives to travel Day congestion is costing shippers, and night hours might be the eventual market response Day congestion is costing shippers, and night hours might be the eventual market response Cargo increases cannot continue to go through LA/LB without investment in infrastructure Cargo increases cannot continue to go through LA/LB without investment in infrastructure Infrastructure investment will not happen unless collaborative methods are used and quality of life issues are addressed Infrastructure investment will not happen unless collaborative methods are used and quality of life issues are addressed

TAKE HOME MESSAGES International Trade has resulted in wealth in other countries—they now have an interest in our economic growth—”skin in the game” International Trade has resulted in wealth in other countries—they now have an interest in our economic growth—”skin in the game” There are probably enough taxes generated— the issue is what is done with them There are probably enough taxes generated— the issue is what is done with them No easy fixes for diesel emissions—we have to clean up a lot of engines—but the annual tariff in California is sufficient to do so No easy fixes for diesel emissions—we have to clean up a lot of engines—but the annual tariff in California is sufficient to do so Communities, and shipping companies, are both stakeholders that must be engaged to help craft solutions Communities, and shipping companies, are both stakeholders that must be engaged to help craft solutions