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

Jim McGrathJim McGrath

Port of OaklandPort of Oakland

WHY AM I HERE?WHY AM I HERE?

• The Port of Oakland has completed a The Port of Oakland has completed a marine terminal expansion project marine terminal expansion project with community supportwith community support

• That effort included a large That effort included a large community park and an air quality community park and an air quality mitigation programmitigation program

• The communities were involved in The communities were involved in designing the programdesigning the program

LIFE IN THE FOOD CHAINLIFE IN THE FOOD CHAIN

TRADE AT THE INTERNATIONAL TRADE AT THE INTERNATIONAL SCALESCALE

• Emerging economies, e.g. China and Emerging economies, e.g. China and India are doing well, growing at India are doing well, growing at 12%/year12%/year

• China is our largest trade partner, 3 China is our largest trade partner, 3 times the volume of Japan, and growing times the volume of Japan, and growing at 18% this yearat 18% this year

• GDP is growing faster than populationGDP is growing faster than population• Growth by non-participants much lowerGrowth by non-participants much lower

—2% for Africa—2% for Africa

TRADE CAN ADD VALUE TRADE CAN ADD VALUE

• Primary commodities 38% of value in Primary commodities 38% of value in 1960, 12% in 20011960, 12% in 2001

• Manufactured goods 12% of value in 1960, Manufactured goods 12% of value in 1960, 65% of value in 200165% of value in 2001

• Income distribution determines the net Income distribution determines the net value to developing countries, but growing value to developing countries, but growing GDP faster than population helpsGDP faster than population helps

• It’s in our interest for our trade partners to It’s in our interest for our trade partners to have some “skin in the game”have some “skin in the game”

NATIONAL TRENDSNATIONAL TRENDS

• Shipped goods are increasing in value in Shipped goods are increasing in value in GDP—13% in 1970, 30% in 1996GDP—13% in 1970, 30% in 1996

• Value of shipped goods $1.85 trillion in Value of shipped goods $1.85 trillion in 20022002

• 19.7 million TEU’s exported in 200219.7 million TEU’s exported in 2002

• 1.4 million direct jobs1.4 million direct jobs

• Nearly $200 billion in tax revenuesNearly $200 billion in tax revenues

• The tariff alone generates $20+ billion/yearThe tariff alone generates $20+ billion/year

CALIFORNIA TRENDSCALIFORNIA TRENDS

• Imports and exports valued at $329 billion Imports and exports valued at $329 billion in 2003in 2003

• Waterborne commerce accounts for 2/3 of Waterborne commerce accounts for 2/3 of that valuethat value

• Customs revenue about $6 billionCustoms revenue about $6 billion• Total container traffic about 11.3 million Total container traffic about 11.3 million

TEU’sTEU’s– LA—4.9 million TEU’sLA—4.9 million TEU’s– LB—4.6 million TEU’sLB—4.6 million TEU’s– Oakland—1.9 million TEU’sOakland—1.9 million TEU’s

WHAT ABOUT AIR WHAT ABOUT AIR POLLUTION?POLLUTION?• Diesel emissions really matter—but are Diesel emissions really matter—but are

regional in nature, both in generation and regional in nature, both in generation and dispersaldispersal

• For South Coast, ships are about 3% of For South Coast, ships are about 3% of anthropogenic PM 2.5anthropogenic PM 2.5

• South Coast Port’s account for 10% of South Coast Port’s account for 10% of truck traffictruck traffic

• Commercial-Industrial sources twice as Commercial-Industrial sources twice as large as heavy duty truckslarge as heavy duty trucks

• Oakland emissions about 0.5% of Bay Oakland emissions about 0.5% of Bay area’s pm, less than 5% of truck activityarea’s pm, less than 5% of truck activity

WHAT CAN BE DONE?WHAT CAN BE DONE?

• Technology is here for clean diesel for Technology is here for clean diesel for newnew power plantspower plants

• Retrofit is difficult because the best Retrofit is difficult because the best technology relies on integrated, computerized technology relies on integrated, computerized engine controls—but 25% reductions are engine controls—but 25% reductions are feasiblefeasible

• Retrofit technology is not here for large Retrofit technology is not here for large marine engines—yetmarine engines—yet

• Accelerated turnover of inventory is the best Accelerated turnover of inventory is the best bet for human health, greenhouse gas bet for human health, greenhouse gas benefitsbenefits

• Lower sulfur fuels lower particulate emissionsLower sulfur fuels lower particulate emissions

WHAT SHOULD BE DONE?WHAT SHOULD BE DONE?

• Require retrofits of existing diesel engines (CARB Require retrofits of existing diesel engines (CARB has a number of regulations in process)—perhaps has a number of regulations in process)—perhaps a $2 billion issuea $2 billion issue

• Provide incentives for those who go farther and Provide incentives for those who go farther and faster (Diesel Collaborative, Port mitigation fees)faster (Diesel Collaborative, Port mitigation fees)

• Look at ways to make the logistics more efficient Look at ways to make the logistics more efficient (roll through gates)(roll through gates)

• Ratify MARPOL, establish a SECA for West Coast Ratify MARPOL, establish a SECA for West Coast or USor US

• Invest in demonstration projects to push Invest in demonstration projects to push technologytechnology

SHOULD USER FEES BE SHOULD USER FEES BE TRIED?TRIED?

• What do you think the tariff is?What do you think the tariff is?

• Needs to pass a nexus and Needs to pass a nexus and reasonableness testreasonableness test

• Fees tied to diesel fuel would Fees tied to diesel fuel would represent 85% of the PM source, but represent 85% of the PM source, but would that be feasible politically?would that be feasible politically?

CONGESTION IS THE NEXT CONGESTION IS THE NEXT BATTLEGROUNDBATTLEGROUND• Congested roadways are bad for air quality, Congested roadways are bad for air quality,

and don’t seem to be significant and don’t seem to be significant disincentives to traveldisincentives to travel

• Day congestion is costing shippers, and Day congestion is costing shippers, and night hours might be the eventual market night hours might be the eventual market responseresponse

• Cargo increases cannot continue to go Cargo increases cannot continue to go through LA/LB without investment in through LA/LB without investment in infrastructureinfrastructure

• Infrastructure investment will not happen Infrastructure investment will not happen unless collaborative methods are used and unless collaborative methods are used and quality of life issues are addressedquality of life issues are addressed

TAKE HOME MESSAGESTAKE HOME MESSAGES

• International Trade has resulted in wealth in International Trade has resulted in wealth in other countries—they now have an interest other countries—they now have an interest in our economic growth—”skin in the game”in our economic growth—”skin in the game”

• There are probably enough taxes generatedThere are probably enough taxes generated—the issue is what is done with them—the issue is what is done with them

• No easy fixes for diesel emissions—we have No easy fixes for diesel emissions—we have to clean up a to clean up a lotlot of engines—but the annual of engines—but the annual tariff in California is sufficient to do sotariff in California is sufficient to do so

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