Tuesday, January 07, 2014

Cap-and-trade money for high-speed rail?

Damian Dovarganes/Associated Press

But the use of cap-and-trade money for high-speed rail could be problematic. The nonpartisan Legislative Analyst’s Office said in 2012[below in italics] that while the rail project could eventually help reduce greenhouse gas emissions, benefits would not be seen until after 2020, the year by which California is seeking to meet its greenhouse gas reduction goals.

From the excellent California High-Speed Rail: An Updated Due Diligence Reportby Joseph Vranich and Wendell Cox:

CHSRA’s April 2012 Business Plan fails to provide any new information on greenhouse gas emission impacts and the Authority continues to use outdated and exaggerated data. The CHSRA website indicates that a single trip between San Francisco and Los Angeles on high speed rail would reduce GHG emissions by 714 kilograms, or 324 pounds. This is in stark contrast to the midpoint data developed in the University of California research, which found that greenhouse gas emissions on a trip between Los Angeles and San Francisco would be reduced by 8 kilograms compared to travel by airline and 38 kilograms compared to travel by car. The CHSRA claim is thus an exaggeration of between nearly 20 and 90 times.

The New York Times provides this misinformation in both a photo caption and in the text of their story on the cap-and-trade idea: "If completed, the train line would take travelers from Los Angeles to San Francisco in 2 hours 40 minutes. By car, the trip takes close to six hours."

The real competition for high-speed rail---in the unlikely event it's ever built---would be air travel, which takes only an hour from San Francisco, not the trip by car. And, as Quentin Kopp and others have pointed out, now that the project is supposed to be "blended" and sharing tracks with local rail systems, like Caltrain, it won't be able to make the trip in 2 hours and 40 minutes.

The credulous NY Times reporter provides more baloney:

Rod Diridon, a former member of the rail authority who is now the executive director of the Mineta Transportation Institute, a California-based research organization, said the obstacles were hardly surprising for a project of this magnitude. “We’ve talked about the Golden Gate Bridge having 2,300 different lawsuits against it at one time,” Mr. Diridon said. “Big projects tend to have problems. I think it’s going to go. It may not even be delayed."

But the Golden Gate Bridge sold bonds to pay for the project before construction began, and the bonds were paid off in 1971, with $35 million in principal and nearly $39 million in interest raised from bridge tolls. The high-speed rail project doesn't even have enough money for its first segment in the Central Valley and little prospect of getting more, even if, as is also unlikely, the cap-and-trade idea makes it through the legislature and survives court challenges.

From the Legislative Analyst:

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.


Read more here: http://www.sacbee.com/2014/01/06/6048504/jerry-brown-eyes-cap-and-trade.html#storylink=cpyFrom the Legislative Analyst: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[Greehouse Gas] emissions statewide to 1990 levels by 2020. Under the revised draft business plan, the IOS[initial operating segment] 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.

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1 Comments:

At 7:27 AM, Anonymous Gregski said...

Very informative and well-presented, Rob.

Here's an example of why some of us reflexively resist the whatever the political class' latest scheme is for sucking more revenue into their treasuries.

As surely as the sun rises in the east politicians will attempt, and often succeed, in diverting the revenue away from the purposes the public was formally promised it would underwrite. In this case, towards a 20-year, hole-in-the-ground, make-work project whose value can be measured only by lies and religious faith.

 

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