Cap-and-Trade: Port Environmental Initiatives

The AB 32 Scoping Plan identifies the cap-and-trade program as one of the strategies California will employ to reduce the greenhouse gas (GHG) emissions that contribute to climate change. This program will help put California on the path to meet its goal of reducing GHG emissions to 1990 levels by the year 2020, and ultimately achieving an 80% reduction from 1990 levels by 2050. Under cap-and-trade, an overall limit on GHG emissions from capped sectors will be established and facilities subject to the cap will be able to trade permits (allowances) to emit GHGs.

The California Air Resources Board (ARB) has designed a California cap-and-trade program that is enforceable and meets the requirements of AB 32. The development of this program included a multi-year stakeholder process and consideration of potential impacts on disproportionately impacted communities. The program started on January 1, 2012, with an enforceable compliance obligation beginning with the 2013 GHG emissions.  (Source: California Air Resources Board)

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Administered by the California Air Resources Board (ARB), the cap-and-trade program is one of the primary strategies employed in California to reduce greenhouse gas GHG emissions. The program is exceedingly ambitious calling for a goal of reducing GHG emissions to 1990 levels by the year 2020, and achieving an 80% reduction from those levels by 2050.

The market-based directive regulates GHGs from sources by limiting the amount of GHGs an entity is allowed to emit and requiring a purchase of credits from quarterly auctions and reserve sales to offset excessive emissions. The Administration and Legislature allocate proceeds from the sale of state-owned allowances for projects that support the goals of AB 32 and invests those proceeds to advance AB 32 objectives by lowering GHG emissions, providing net GHG sequestration, and supporting the long-term, transformative efforts necessary for enhancement of public and environmental health while developing a clean energy economy.

Recent estimates assume that more than $1 billion in Cap-and-Trade auction proceeds could be available in the coming Fiscal Year for expenditure to reduce GHGs and as much as $3-$5 billion in auction proceeds could be available annually from the Cap-and-Trade program after 2015, when the fuels component of the program is included.

CAPA has testified before the budget committees strongly encouraging a significant increase in funding for the low carbon transportation element of the program, assurance that the freight component remains included, and that funding be allocated on a continual and annual basis.  California ports are hopeful to benefit from state investment of cap and trade funds which could support development of greener drayage trucks, demonstrate emission reductions for ocean-going vessels and harbor craft, and aid in operational inefficiencies; which all play a role in port GHG emissions reductions efforts.

Examples of potential projects with additional Cap-and-Trade Revenue

Truck Demonstration Projects

Funds could be used to test the emission benefits and performance of zero- and near-zero emission drayage trucks. The Ports of Long Beach and Los Angeles are currently demonstrating several promising technologies, including:

  • International Rectifier – Converting a Class 8 truck to hybrid-electric capability. The truck would run in an all-electric, zero-emissions mode in the ports, resulting in no tailpipe emissions;
  • Transpower – Building seven new electric drayage trucks with zero tailpipe emissions;
  • California’s ports are also interested in funds for electric infrastructure and system-wide demonstrations, such as the South Coast Air Quality Management District’s overhead catenary system demonstration, which would install overhead power lines to help power zero- and near-zero emission trucks in transit. It is estimated that this 1-year demonstration project could help support electric vehicles with zero tailpipe emissions by extending the range of truck travel through a given significant use corridor;

Vessel Emission Reduction Technologies and Programs

  • Funds could be used to demonstrate emission reduction technologies for ships, such as scrubbers and the use of alternative fuel. Projects could include Krystallon seawater scrubbers on container ships. Appropriate scrubbers could reduce sulfur oxides by 99% and diesel particulate matter by as much as 70%.
  • Funds could be used to demonstrate and deploy emission reduction technologies for harbor craft, including tug boats. Examples of projects could include Foss Maritime’s Carolyn Dorothy hybrid tugboat (new build). Building of a new hybrid tugboat could generate 70% less diesel particulate matter emissions, 50% fewer NOx emissions, and a 25% reduction in GHG emissions. Other promising projects include the Hug Filter Systems Tug Retrofit. Retrofitting of diesel tugs with a diesel particulate matter filter/diesel oxidation catalyst and selective catalytic reduction technologies would bring tugs to Level 3 verification.

Operational Efficiency Strategies

Operational efficiency strategies include the deployment of intelligent transportation systems (ITS) that collect, integrate and disseminate real-time information about the conditions of transportation infrastructure, facilities, and vehicles. This information can be used to facilitate and optimize transport decisions and to manage demand more efficiently. Funding could be used to augment existing ITS programs, to expand ITS systems to larger geographic areas, and to fund new programs such as the Freight Advanced Traveler Information System (FRATIS) and other efforts that include the exchange of real-time information to guide adaptive decision-making regarding routes, scheduling and dispatch.  Important ITS information exchange could include port terminal truck queue time measurements, incident alerts, automated truck arrival time messaging to terminals, direct messaging to trucks by terminal operators, optimizing deliveries based on current constraints, and user interfaces including web applications for truck dispatchers, mobile applications for drivers, and messaging alerts for terminal operators.

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Assembly Bill 32 Overview | California Air Resources Board

Overview of ARB Emissions Trading Program | California Air Resources Board

Auction Proceeds Funded Programs and Events | California Air Resource Board

Cap-and-Trade: August Auction Results | August 25, 2015

Cap-and-Trade: Budget Conference Issues | Legislative Analyst Office | June 4, 2015

Cap and Trade Expenditure Plan: The 2015-16 Budget

May Revision: Cap-and-Trade Revenue | Legislative Analyst Office – May 18, 2015

Cap-and-Trade Revenue | Legislative Analyst Office – February 26, 2015

Cap-and-Trade Auction Revenue Expenditure Plan: The 2014-15 Budget | Legislative Analyst Office