Global Trade, Local Impacts, Who Benefits? Who Pays?

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

2. WHY AM I HERE? • 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 • The communities were involved in designing the program

3. LIFE IN THE FOOD CHAIN

4. TRADE AT THE INTERNATIONAL SCALE • 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 • GDP is growing faster than population • Growth by non-participants much lower—2% for Africa

5. TRADE CAN ADD VALUE • Primary commodities 38% of value in 1960, 12% 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 • It’s in our interest for our trade partners to have some “skin in the game”

6. NATIONAL TRENDS • Shipped goods are increasing in value in GDP—13% in 1970, 30% in 1996 • Value of shipped goods $1.85 trillion in 2002 • 19.7 million TEU’s exported in 2002 • 1.4 million direct jobs • Nearly $200 billion in tax revenues • The tariff alone generates $20+ billion/year

7. CALIFORNIA TRENDS • Imports and exports valued at $329 billion in 2003 • Waterborne commerce accounts for 2/3 of that value • Customs revenue about $6 billion • 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

8. WHAT ABOUT AIR POLLUTION? • 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 • South Coast Port’s account for 10% of truck traffic • 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

9. WHAT CAN BE DONE? • 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 technology is not here for large marine engines—yet • Accelerated turnover of inventory is the best bet for human health, greenhouse gas benefits • Lower sulfur fuels lower particulate emissions

10. WHAT SHOULD BE DONE? • 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) • Look at ways to make the logistics more efficient (roll through gates) • Ratify MARPOL, establish a SECA for West Coast or US • Invest in demonstration projects to push technology

11. SHOULD USER FEES BE TRIED? • What do you think the tariff is? • 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?

12. CONGESTION IS THE NEXT BATTLEGROUND • 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 • 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

13. 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” • 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 • Communities, and shipping companies, are both stakeholders that must be engaged to help craft solutions