As a result of the devastating wildfires experienced throughout California this year, California Governor Gavin Newsom has announced a couple of ground breaking reforms to address climate change. As a result, he may be getting ready to burn up the California economy in return. In late September, Governor Newsom issued Executive Order N-79-20, which set forth very ambitious goals to mandate that all sales of new cars and trucks will be zero emissions by 2035 and that all operating medium and heavy-duty trucks will be zero emissions by 2045. Further, all drayage trucks will be zero emissions by 2035 and all off-road equipment, including agricultural tractors and harvesters, will be zero emissions by 2035. In his press release that accompanied the Executive Order, the Governor stated, “This is the most impactful step our state can take to fight climate change.”
What Does It All Mean?
The governor is right on one thing. This will be by far the most impactful step ever taken on climate change. The question is who will be left standing when it is over? To understand the full impact of this Executive Order, one must know all that is going on with air quality requirements asked for in this proclamation, especially those intended for agriculture. Look no further than the California Air Resources Board’s Proposed 2020 Mobile Source Strategy (2020 MSS) and you’ll see. The 2020 MSS was released only weeks after the Executive Order was issued, and is without a doubt the most ambitious and all-encompassing, take-no-prisoners approach to address both greenhouse gas and criteria pollutant emissions ever attempted.
The 2020 MSS is a multi-pollutant planning approach to determine the pathways forward for the various mobile source sectors CARB feels are necessary in order to achieve California’s numerous goals and targets over the next 25 years. The plan addresses the full spectrum of mobile sources, including trucks, tractors and harvesters, forklifts, transportation refrigeration units (TRUs) and cars. Statewide, the concepts in the 2020 MSS could achieve criteria pollutant NOx reductions of over 600 tons per day in 2037, and reduce mobile source fuel consumption by 9.5 billion gallons of gasoline and 3.0 billion gallons of diesel equivalent in 2045.
Those are big numbers that will have big impacts, and agriculture should be very concerned. First, what about the impact on the current and highly successful effort to replace diesel-fired agricultural equipment with new clean burning diesel-fired Tier 4F equipment due to the fact that this new equipment will again be forced to be replaced with electric tractors in less than 10 years to meet these new goals? No one is going to buy a new tractor now.
Second, the industry should be concerned with the proposed goals that are not yet demonstrated and, at this point, not anywhere near as cost effective. If a Tier 4 final tractor costs tens of thousands of dollars more than a Tier 3 does, what will an electric tractor cost? And is there an electric tractor that will work?
Lastly, all of agriculture should be concerned with the overwhelming “cumulative impact” the proposed strategy will have on agriculture with all of the strategies laid out in the proposed plan including trucks, agricultural equipment, TRUs and large spark ignited (LSI) equipment (i.e. forklifts). These regulations will be implemented in roughly the same time period, causing significant economic harm to an industry which does not have the ability to pass along any increased cost due to being subject to a world market price.
Price and Reliability
As we transition our energy source towards electricity, two things come to mind: price and reliability. Electricity prices continue to escalate, and as we transition to renewable energy sources like wind and solar, and away from traditional stable energy sources including nuclear, natural gas and coal, we have found ourselves subject to rolling blackouts. This is due to the inability to provide power at the times as the sun is going down and the wind is stopping.
In fact, in a recent state agency report, the state’s own California Independent System Operator (ISO) commented, “In transitioning to a reliable, clean and affordable resource mix, resource planning targets have not kept pace to lead to sufficient resources that can be relied upon to meet demand in the early evening hours…”.
This is a serious problem that must be overcome if this state is going to migrate to an all-electric energy economy. Couple that with cost increases and the industry faces a major dilemma. In PG&E’s current General Rate Case (GRC), they had a 15% increase across the board in Phase 1, and are proposing a 7% increase just for agriculture in Phase 2 by 2022. They are also proposing an additional 13% increase for agriculture by 2025. Similarly, Southern California Edison (SCE) is proposing a 36% increase in rates by the end of 2023 in their current GRC. How can agriculture afford those increases and be forced to consume even more electricity by converting to all electric vehicles and equipment? Simply put, the agricultural industry cannot. Our electricity rates are higher than any other state and twice the national average. This will only serve to exacerbate that economic disparity.
That last point is the big one, and the most important. Make no mistake, we all want clean air. But if California is the only one doing it, how do we survive? One recent example is the purchase by an almond huller in California who spent $360,000 for a new Tier 4 final loader, while a similar operation in Australia spent only $60,000 for the same model loader, but equipped with a Tier 0 engine.
This is simply not sustainable for California agriculture. Taking it one step further and looking at electric, what is that cost going to be? By comparison, we have looked at electric yard trucks at a cost of $285,000 plus the cost of the charging station as compared to a new compliant diesel-powered yard truck at a cost of $150,000. There is no comparison.
Finally, we come back to the cumulative impact of all this. For a farmer, a huller or a processor, the costs to replace every tractor, harvester, forklift, front end loader, truck and TRU within the next 14 years will be astronomical, if not simply impossible. And for what? To address worldwide climate change, especially when California is the only one seriously doing anything about it? Worldwide greenhouse gas emissions are on the increase, led by the industrialized nations of India and China; increases that far outweigh any reductions in California. It’s a grand idea, but one that needs a lot more thought and a whole lot more participation from others outside of California.