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No on Prop 10 – Stop T. Boone’s Pickpocket Initiative

R.Holober-2005.gif By Richard Holober
Executive Director
Consumer Federation of California

Better hang onto your wallet. Texas oil tycoon T. Boone Pickens is spending a fortune promoting Proposition 10 on the November ballot. His initiative would cost California taxpayers $10 billion.

Prop 10 is textbook case of a wealthy special interest abusing the initiative process. Mr. Pickens’ Clean Energy Fuel Corporation wrote Prop 10 and spent $3 million to place it on the ballot. They’re spending millions more on a TV ad blitz.

The biggest bonanza under Prop 10 goes to – you guessed it – Mr. Pickens’ Clean Energy Fuel Corp. This company dominates the natural gas fueling business. Prop 10 earmarks billions in tax giveaways to manipulate the market to favor natural gas powered vehicles and to disadvantage cleaner energy technologies.

Prop 10 would provide $2.9 billion in rebates to purchasers of “clean” vehicles. $2.5 billion is allocated for so-called “clean” truck purchases.

State bonds fund these handouts. The cost to taxpayers is $335 million a year for 30 years to pay off the bonds. Vehicles subsidized by Prop 10 will be rusting away in junkyards long before our grandchildren have finished paying for Prop 10.

We’re already struggling with a $15 billion state budget deficit. Adding another $335 million a year to pay for Mr. Pickens’ bonds means more cuts to schools, public safety and health programs.

If you want cleaner air, you’ll be disappointed by Prop 10. The initiative does nothing to ratchet up existing clean air requirements. Remarkably, Prop 10 defines “clean alternative” vehicles to exclude hybrids and to include natural gas powered vehicles, provided their emissions are no worse than the maximum pollution levels already required for gasoline or diesel powered vehicles. That’s a neat trick: re-label the status quo as clean and you qualify for a big tax handout – provided, of course, you fill up at Mr. Pickens’ natural gas stations.

Prop 10 requires the state to issue $50,000 per truck on a first come – first served basis. There is no requirement that the truck remains in our state. A trucking company gets the $50,000 “clean” truck rebate even if it is not replacing a “dirty” truck. Interstate trucking companies could collect California tax handouts to subsidize their fleet purchases, relocate the trucks out of state, and sell their used “dirty” trucks to California truckers who will keep on belching fumes on our roads.

Prop 10’s corporate authors could have written language to guarantee clean air improvements. In fact, such a program is already up and running.

California’s Goods Movement Program administered by the Air Resources Board also provides subsidies of up to $50,000 to replace an old dirty truck with a new clean truck. Unlike Prop 10’s first come - first served payouts, the Goods Movement Program has a competitive application process. Applications are ranked based on the amount of pollution reduction achieved. The trucks with the highest emissions are replaced first and their owners get funding priority. Unlike Prop 10, these dirty trucks are crushed, permanently removing them from our roads. To get a rebate under the Goods Movement Program, the trucker must accept a GPS device to track the clean new truck’s movements. If the truck leaves the state, the trucker pays a penalty.

Prop 10 could have included these accountability measures, but it doesn’t. The initiative’s real agenda is to gin up a 500% increase in California natural gas vehicles sales. Business will boom at Mr. Pickens’ gas stations.

The initiative’s corporate authors aren’t dummies. They threw in some funding for alternative energy research. Proponents will tell you the initiative gives equal rebates to natural gas, electric and hydrogen fuel cell vehicles. This window dressing may help sell the measure, but it’s lipstick on a pig. Rebates will be long gone, spent on natural gas vehicles, before affordable hydrogen or electric vehicles are on the market.

Natural gas burns a bit cleaner than gasoline, but it’s a fossil fuel and dead end technology. Hybrids hold greater promise as a transition to all-electric zero emissions vehicles. But Prop 10’s definitions exclude hybrids as “clean” even though the hybrid Prius and the natural gas Honda Civic have identical California clean vehicle ratings.
Why load the deck to give one competing technology more favorable tax rebates? Simple: T Boone Pickens makes a killing when more natural gas vehicles fuel up at his gas stations.

Prop 10 also throws in $200 million to subsidize a liquefied natural gas plant. No surprise to learn that Mr. Pickens’ fuel corporation will be first in line for that handout. It’s building a LNG facility in California.

Prop 10 is the worst kind of corporate raid on the public coffers. We simply cannot afford to cut our schools, our health services and our public safety programs further to enrich a Texas billionaire. Vote No on Prop 10.

Learn more at: www.consumercal.org

The Consumer Federation of California is a non-profit advocacy organization. Since 1960, the Consumer Federation of California has been a powerful voice for consumer rights. CFC campaigns for state and federal laws that place consumer protection ahead of corporate profit. Each year, CFC testifies before the California legislature on dozens of bills that affect millions of our state's consumers. CFC also appears before state agencies in support of consumer regulations.

Posted on August 28, 2008

Comments

It's surprising to read that the Consumer Federation of California's own executive director failed to do his own homework and borrowed his lines from a bitter consultant who was turned down by the proponents of Proposition 10 campaign. It kind of makes you wonder what else the Consumer Federation of California tells others when they attempt to influence public policy for the state of California if their own ED puts forward this kind of poor analysis.

Let me explain. Proposition 10 is a $5 billion dollar bond that will ultimately cost the California taxpayer $10 billion dollars over 30 years. What Holober fails to tell you is that Proposition 10 will displace over 720 milliion gallons of diesel and gasoline annually, saving California consumers over $3.3 billion dollars in fuel savings each year. Multiply that by 10 years and the California consumer saves $33 billion dollars in fuel cost savings alone, assuming gasoline and diesel prices stay where they are today. However, the future price of oil is likely to rise sharply as countries like China and India continue to grow their economies and Russia and the Middle East continue to nationalize their resources and cut off their energy pipelines to the West.

Holober claims that Proposition 10 is solely a natural gas play for vehicles and even goes as far as to state that the measure excludes hybrids. Ironically, consumer passenger car incentives within Proposition 10 heavily favor hyrbid and plug-in hybrid strategies over clean vehicles like natural gas or hydrogen. In fact, there are roughly 112,000 consumer incentives slated for hyrbids and plug-in hybrid vehicles that natural gas vehicles cannot apply for. Unlike hybrids, natural gas vehicles must compete against hydrogen, propane, battery-electric cars, etc., for only 55,000 consumer incentives under Propostion 10. Oh, and did you know Honda only made 1500 natural gas Civic’s last year. That leaves over 53,000 consumer incentives up for grabs. Proposition 10 is hardly a natural gas play.

Holober claims that Proposition 10 does not provide any quantifiable environmental benefits due to a lack of standards, but Proposition 10 clearly states upfront that all vehicles that receive consumer incentives must reduce greenhouse gas emissions by 10% and meet or surpass all prevailing pollution standards. In fact, the environmental protections that Proposition 10 put in place reduce greenhouse gas emissions up to 1.4 million tons annually, smog-formiing pollution by up to 26,000 tons annually, air toxics up to 2,300 tons annually, and harmful soot by up to 1,000 tons annually. Proposition 10 therefore not only provides tens of billions in fuel savings to consumers, it provides public health benefits in the billions for California breathers.

Having a simple understanding of AB 32 (the Global Warming Solutions Act of 2006) and the extensive pollution generated at California's ports, Proposition 10 should help California businesses meet impending tough greenhouse gas regulations established by the California legislature and keep critical jobs alive for California's growing work force. In fact, Proposition 10's support of clean air vehicles and renewable power generation will create “green jobs” and a “green Industry” right here in California. California-based companies like Zap, Tesla, Phoenix Motor Cars, all who make battery-electric vehicles only stand to benefit from Proposition 10. Interestingly enough, Holober chides Clean Energy in his attack – a company that doesn’t make cars or renewable power generation.

Holober then touts the Proposition 1B program managed by the California Air Resources Board that replaces aging diesel trucks on the road with new diesel trucks as a model for clean air programs and consumers. What Holober doesn't tell you is that Proposition 1B, an initiative sold to the public to clean up our ports, actually gives away California taxpayer money to Fortune 500 companies like Coke and Pepsi who already replace their diesel trucks every seven years to avoid maintenance issues and the independent-owner operators who are in dire need of swapping out their 20 year-old diesel trucks don’t have the resources to apply for Proposition 1B funds. Can Holober really be this naive on how Prop. 1B funds are so poorly handed out? What’s worse is that the Prop. 1B program does nothing to reduce California’s dependence on foreign energy, reduce the cost of fuel to the California consumer, or substantially clean the air. In fact, unlike a truck that runs on electricity or liquefied natural gas, a new diesel truck has the fueling infrastructure to leave the state or the country for that matter. That’s why I find it bizarre that Holober criticizes Proposition 10 for providing consumer incentives toward clean, high mileage alternative fuel vehicles that will stay in California due to limited fueling infrastructure and registration and residency requirements.

Unfortunately, Holober’s analysis gets worse folks. Not only is Holober dead wrong on claiming that Proposition 10 excludes hybrids amongst other misstatements, he even claims that Proposition 10 provides $200 million toward the construction of a liquefied natural gas terminal. This is direct evidence that Holober failed to read Proposition 10 and borrowed his bogus arguments from an invalid source. There is no provision in Proposition 10 that provides funds for an LNG terminal or production facility and I challenge him to prove otherwise.

Of course, Holober hopes Californians fall for his demonization of Boone Pickens. Get this. Here's a guy who wants to invest hundreds of millions of dollars in renewable energy, create thousands of green jobs, and decrease our dependence on foreign sources of energy, and Holober rails on Pickens for not being "altruistic." Does Holober think sending $700 billion dollars to foreign countries each year, money that funds both sides of the war on terror, is a better option? Holober insinuates that Pikens wouldn’t be doing this if there wasn’t something in it for him. I say, “who cares?” How many folks can invest hundreds of millions of dollars without an expectation of a return? That’s a bad thing? In spite of all the good that may come from it?

I recently took a look at the Chronicle of Philanthropy and it says that Pickens has donated nearly a half-billion dollars to philanthropic causes over the course of his career, including $7 million to Katrina-related charities. In proportion to their earnings, I’d bet Pickens is a bit more altruistic than Holober, but I’m just guessing here.

This November, I hope California voters join me and other California consumers to vote yes on Proposition 10 as it promotes renewable power generation and clean, efficient vehicles that are clean, affordable and American.

Posted by: David Spencer at August 28, 2008 03:38 PM

What is someone from Texas doing funding and pushing an initiative in California anyway?

Posted by: Question at September 9, 2008 03:44 PM

Who cares if Pickens stands to gain if Prop. 10 passes? Would you rather give your hard earned money to terrorists? I choose to invest mine in California and in America by supporting a plan that harnesses clean fuel from the United States. Further, we need green jobs and Prop. 10 does that right here in California. Those who stand against a Texan with no plan must support foreign oil, plain and simple. Wake up!

Vote yes on 10!

Posted by: Mark Madler at September 29, 2008 03:07 PM

Posted by: 5446wasmy# at September 29, 2008 03:22 PM

Posted by: 5446wasmy# at September 29, 2008 03:22 PM

Posted by: 5446wasmy# at September 29, 2008 03:23 PM

Clean Energy does produce vehicles, they directly fund BAF Technologies. The Port trucks they want funded are converted by one of their very own board members, Westport Innovations. Diesel will be cleaner and less costly in 2010 than Natural Gas will ever be. The incremental cost of the conversion to Natural Gas blows any savings right out the window because the cost of maintenance is astronomical!

Posted by: Concerned Californian at October 28, 2008 07:15 PM

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