Tuesday, November 27, 2012

No cap-and-trade money for high-speed rail


Governor Brown signs the high-speed rail boondoggle
Photo by Marcio Jose Sanchez, Associated Press         
 
Even True Believers---like the folks at Transform---are worried that California's high-speed rail system will never happen. They are right to worry, since there's still no money to build the system, not to mention all the litigation now underway to stop the ruinous boondoggle. 

Some bad news for high-speed rail was tucked deep inside yesterday's story in the Chronicle about how California will spend the income from its new cap-and-trade system:
 
Some at the Capitol have wondered whether the cost of building the state's $68 billion high-speed rail system would qualify. Legislative Analyst Mac Taylor said he didn't think so. He noted that construction of the project will actually increase carbon emissions and that reducing greenhouse gases is not the main purpose of high-speed rail. "It's a little hard for us to justify how you can use huge sums of money to pay the large capital costs when that's a relatively small reason of why you're doing it," Taylor said.
 
State Senator Yee, who thinks the state's high-speed rail project is dumb, cast the deciding vote for it anyhow after intense pressure from Democratic Party bigshots. Yee understood that when he made his inevitable run for higher office, voting against the high-speed rail boondoggle would have cost him the future support of the Democratic Party and, just as important, the labor unions, since even dumb projects create jobs.
 
The Legislative Analyst's Office explained the point Taylor made at greater length below in its report on high-speed rail earlier this year:
 
Use of Cap-and-Trade Auction Revenues Very Speculative. As discussed earlier, the plan proposes to use revenue from the state's quarterly cap-and-trade auctions, which are scheduled to begin in November of this year, to backstop any shortfall in anticipated funding from the federal government. These auctions involve the selling of carbon allowances as a way to regulate and limit the state's GHG emissions in accordance with Chapter 488, Statutes of 2006 (AB 32, Núñez/Pavley). As we discussed in our recent brief, The 2012-13 Budget: Cap-and-Trade Auction Revenues, the use of cap-and-trade revenues are subject to legal constraints. Based on an opinion we received from Legislative Counsel, the revenues generated from the cap-and-trade auctions would constitute "mitigation fee" revenues. Therefore, in order for their use to be valid as mitigation fees, these revenues must be used to mitigate GHG emissions. Given these considerations, the administration's proposal to possibly use cap-and-trade auction revenues for the construction of high-speed rail raises three primary concerns.
  • Would Not Help Achieve AB 32's Primary Goal. The primary goal of AB 32 is to reduce California's GHG emissions statewide to 1990 levels by 2020. Under the revised draft business plan, the IOS would not be completed until 2021 and Phase 1 Blended would not be completed until 2028.Thus, while the high-speed rail project could eventually help reduce GHG emissions somewhat in the very long run, given the project's timeline, it would not help achieve AB 32's primary goal of reducing GHG emissions by 2020. As a result, there could be serious legal concerns regarding this potential use of cap-and-trade revenues. It would be important for the Legislature to seek the advice of Legislative Counsel and consider any potential legal risks.
  • High–Speed Rail Would Initially Increase GHG Emissions for Many Years. As mentioned above, in order to be a valid use of cap–and–trade revenues, programs will need to reduce GHG emissions. While the HSRA has not conducted an analysis to determine the impact that the high–speed rail system will have on GHG emissions in the state, an independent study found that, if the high-speed rail system met its ridership targets and renewable electricity commitments, construction and operation of the system would emit more GHG emissions than it would reduce for approximately the first 30 years. While high-speed rail could reduce GHG emissions in the very long run, given the previously mentioned legal constraints, the fact that it would initially be a net emitter of GHG emissions could raise legal risks.
  • Other GHG Reduction Strategies Likely to Be More Cost Effective. As we discussed in our recent brief on cap–and–trade, in allocating auction revenues we recommend that the Legislature prioritize GHG mitigation programs that have the greatest potential return on investment in terms of emission reductions per dollar invested. Considering the cost of a high-speed rail system relative to other GHG reduction strategies (such as green building codes and energy efficiency standards), a thorough cost-benefit analysis of all possible strategies is likely to reveal that the state has a number of other more cost–effective options. In other words, rather than allocate billions of dollars in cap-and-trade auctions revenues for the construction of a new transportation system that would not reduce GHG emissions for many years, the state could make targeted investments in programs that are actually designed to reduce GHG emissions and would do so at a much faster rate and at a significantly lower cost.
If you're new to the issue, this document is a good place to start.
 
And some in-depth analysis can be found here.

Of course Supervisor Wiener supports high-speed rail.
 
 

Labels: ,

0 Comments:

Post a Comment

Links to this post:

Create a Link

<< Home