Nov 4, 2008 (From the CalCars-News archive)
Read carefully if you live in California. If not, we encourage you to forward this posting, or its URL, or a link to http://www.calcars.org/news-archive.html to voting Californians. This matchup will be close.
$22,000,000 for Prop 10; $150,000 against -- that's 180 to 1. Though it's opposed by practically every environmental group and newspaper editorial board, all the TV ads are on one side. The October CA Field poll showed 49% for, 39% against, 12% undecided. The name, "Alternative Fuel Vehicles And Renewable Energy," makes it sound great! Who will win?
We've posted information several times about the initiative. But until we read Scott Doggett's column at Edmunds Green Car Advisor, we weren't fully aware of all the ins and outs, and we didn't fully realize the implications if it passes. Check it out for yourself. For a non-partisan view with links, try to get through to http://ballotpedia.org/wiki/index.php?title=California_Proposition_10_(2008) For both sides see http://prop10yes.com and http://www.noonproposition10.org . Here's Doggett's column, posted Sunday.
Pickens' Proposition Would Cost Taxpayers Billions, but Benefit Very Few
You can't always get what you want, but if you've got a big pot of money and a sweet-sounding environmental pitch, chances are you can get a proposition on a state ballot. In California, anyway.
And if there's enough money left in the pot to pay for volleys of TV ads after you've paid the people who gathered the signatures needed to put the proposition on the ballot, odds are it will become state law. In California, anyway.
And, because California is such a trendsetting state, if your proposition becomes law there, it stands a good chance of becoming law in other states as well.
Oil tycoon T. Boone Pickens knows this. It's why the Texas billionaire is bankrolling a proposition -- one that ostensibly would advance renewable energy and alternative fuels -- on California's November 4 general election ballot.
In truth, what it advances most is Picken's fortune -- while costing the state's taxpayers $10 billion.
To give you an idea of how little California can afford Pickens' proposition, consider that officials in Sacramento are expected to announce this coming week that the state's budget deficit has reached at least $10 billion.
The budget crisis is why Governor Arnold Schwarzenegger wrote to Treasury Secretary Henry Paulson last month informing him that "California may need to turn to the Federal Treasury for short-term financing." A bailout, in other words.
At a time when the locomotive that drives America's economic train can least afford it, Pickens' initiative would nearly double California's deficit.
And despite the crushing cost the proposition would levy on all of the state's taxpayers, the ballot measure would benefit very few while throwing a tremendous amount of money behind an automotive fuel that isn't very green compared to other alternative fuels that could benefit from that kind of spending.
"Alternative Fuel Vehicles And Renewable Energy"
That's the formal name of the measure. The informal? Prop 10, because it's the tenth proposition on Tuesday's California general election ballot.
Directly beneath the formal name voters will see the following 68 words:
"Authorizes $5 billion in bonds paid from state's General Fund, to help consumers and others purchase certain vehicles, and to fund research in renewable energy and alternative fuel vehicles. Fiscal Impact: State cost of about $10 billion over 30 years to repay bonds. Increased state and local revenues, potentially totaling several tens of millions of dollars through 2019. Potential state administrative costs up to about $10 million annually."
There's not another word about Prop 10 on the ballot. "Certain vehicles," "research in renewable energy" and "alternative fuel vehicles" are not defined. Voters who'd like to know exactly what they are being asked to vote on won't get any more help from the ballot than what you just read in the previous paragraph.
The couple of obvious things we can deduce from the measure is that the $5 billion taken from the General Fund would cost taxpayers $10 billion to repay ($5 billion in principal and $5 billion in interest). They'd have 30 years to do it in, which breaks down to $335 million a year for three decades. Because it's General Fund money, it would be taken from the same pot from which public schools and hospitals receive their funding.
What's more, new taxes would have to be levied or existing ones raised to make up at least some the losses the schools, hospitals and other public institutions would incur during the 30 years Californians paid for Prop 10. "Increased state and local revenues" is bureaucratic code for increased taxes.
Voters can learn more about Prop 10 online. Details can be found in the 22-page law that passage of the proposition would create, as well as a 5-page analysis of the law prepared by the state Legislative Analyst's Office.
But finding those documents takes skillful Internet sleuthing, and deciphering them requires substantial brainwork. Few of California's 23 million eligible voters will have read either of the docs when they go to the polls on Tuesday to cast a vote that could negatively affect their lives for decades.
A Hail of TV Commercials
Most Californians who vote for or against Prop 10 will do so in reaction to TV commercials that have been pelting them for months.
The pro-Prop 10 commercials have been relentless, not surprising given the deep pockets of the measure's chief contributors: Clean Energy Fuels Corp., a company Pickens controls that operates natural gas filling stations throughout the U.S.; Chesapeake Energy Corp., the largest producer of natural gas in the country; and, Aubrey K. McClendon, Chesapeake Energy's chairman and CEO.
As of Friday, Clean Energy had invested at least $18 million in Prop 10's passage, Chesapeake Energy had pitched in with $3 million and McClendon had anted-up $500,000.
The most frequent of the pro-Prop 10 commercials features a middle-aged white man in working-class duds fueling a pickup truck, a Latina plugging in a battery-electric car, a little blonde girl in a pink shirt holding a daisy, an Asian man in a lab coat beside a microscope, and an African-American man looking very corporate in a smart suit and corner office.
Together, the actors state that Prop 10 "will help break our addiction to expensive foreign oil by giving Californians rebates to purchase vehicles that run on alternative fuels produced in America. Proposition 10 will generate more energy from the sun and the wind, and fund research and development for cleaner alternative energy to reduce pollution, with performance audits, with strict accountability, and no new taxes. For energy independence, for clean air, for California's future, vote yes on Proposition 10."
In those few lines, the commercial exploits popular sentiments for clean, efficient, secure energy and no new taxes. On the face of it, the 30-second ad is very agreeable.
As for TV commercials opposing Prop 10, there aren't any.
Opponents say they simply don't have the funds. As of Friday, the No On Prop 10 campaign had raised exactly $125,000, $50,000 of which came from the California School Employees Assn. and $40,000 from the California Nurses Assn.
By comparison, the Yes On Prop 10 campaign had raised $22,499,750.
A young woman answering the phone for the No On Prop 10 campaign last week told us "all of the money this year is going to fight Prop 8," a measure primarily bankrolled by church groups to ban gay marriages in California. "We might have a radio spot, but it would be limited to the San Francisco area."
Legislative-Analysts-Office.jpgRebates To Grow the Nat-Gas Industry
As with so many propositions, political and otherwise, the Devil is in the details. The pro-Prop 10 campaign -- let's be real, it's just Pickens, McClendon, their companies and a few others in the natural-gas business -- has made some strong claims.
The most important is that Prop 10 will "help break our addiction to expensive foreign oil by giving Californians rebates to purchase vehicles that run on alternative fuels produced in America."
If you read the 22-page law that passage of Prop 10 would create, you'd see that the rebates are structured in such a way that only a fraction of the rebate money would go toward the purchase of the greenest vehicles. The vast majority would reward buyers of -- surprise! -- natural-gas vehicles.
Exactly $2.85 billion of the $5 billion allocated by Prop 10 would go toward rebates. Here's the breakdown of them as pertains to cars and trucks weighing less than 8,500 pounds:
- Owners of "clean alternative fuel vehicles" (defined as vehicles powered by "natural gas and any fuel that achieves a reduction of at least 10 percent carbon intensity of California's transportation fuels" as outlined by Governor Arnold Schwarzenegger in January 2007) will be eligible for $10,000 rebates, with $550 million allocated for this purpose.
- Owners of "very high fuel economy vehicles" (a vehicle achieving no less than 60 miles per gallon) will be eligible for $4,000 rebates, with $230 million allocated for this purpose.
- Owners of "high fuel economy vehicles" (a vehicle achieving no less than 45 miles per gallon) will be eligible for $2,000 rebates, with $110 million allocated for this purpose.
What's sad about the above is that people who buy a car that runs on natural gas or a fuel that emits only 10 percent less carbon dioxide than gasoline would be eligible for a $10,000 rebate. The Honda GX Civic, the only natural-gas car available in North America made by a major automaker, only gets about 24 miles per gallon around town and 36 mpg on the highway when its consumption is converted to gasoline equivalent mpg.
Yet a person who buys a car that gets at least 60 mpg is eligible for only a $4,000 rebate, and someone who buys a car getting at least 45 mpg would be eligible for only a $2,000 rebate. Clearly, the system is heavily skewed toward the purchase of natural-gas vehicles, which Honda is making very few of for the U.S. market (1,000 during the 2008 model year and 2,000 for the 2009 model year, compared to 200,000 gas-powered Civics).
The remaining $1.96 billion in rebates would be made available to owners of "new or repowered" trucks, meaning trucks that run on a "clean alternative fuel," which as you read above was defined as "natural gas...."
Recall that Clean Energy Fuels Corp., which Pickens founded and holds a controlling interest in, owns natural-gas service stations across the U.S., and Chesapeake Energy owns a lot of natural gas. Because there are few cars on the road powered by natural gas, Pickens et al are trying to get taxpayers to subsidize natural-gas vehicles to grow their customer base. It's a smart move -- for them.
Rebates or tax incentives need to be offered to popularize natural gas as an automotive fuel. That's because the vehicles that use it are pricey (Honda's Civic GX costs $7,000 more than a standard Civic). And because there aren't many natural-gas stations around, most Civic GX owners purchase a home fueling station (about $5,000); Prop 10 would provide a $2,000 rebate to buyers of such stations.
A Natural Climate-Changing Gas
Pickens' plan to grow the nat-gas-for-autos industry in the most populous state in the union on the backs of taxpayers wouldn't be so foul if natural gas was more environmentally friendly. It's true that for an equivalent amount of heat, burning natural gas produces about 30 percent less carbon dioxide than burning gasoline and about 45 percent less than burning coal.
However, natural gas itself is a powerful, climate-altering greenhouse gas. Indeed, it is much more effective than carbon dioxide at trapping heat in the atmosphere -- 58 times more effective on a pound-for-pound basis, according to the Union of Concerned Scientists.
While natural gas has a lower carbon-to-hydrogen ratio than other petroleum fuels (and therefore emits less carbon dioxide), when leakage from discovery, extraction and transportation of the gaseous fossil fuel are taken into account, natural gas is every bit the contributor to global warming that gasoline is.
But, because natural gas is carbon-cleaner than coal, it makes sense to try to use it instead of coal in the generation of electricity.
In fact, the higher efficiency of state-of-the-art natural gas turbines over older coal-fired power plants could reduce carbon-dioxide emissions by an additional 30 percent. That's why it's reasonable to replace coal, but not gasoline, with natural gas as a power-plant fuel.
Pickens should be pressing for that -- in states that burn coal in their power generating plants. And California isn't one of them.
Among the other problems with pouring so many resources into natural gas for automobiles is the fact that even if it were 30 percent cleaner in greenhouse-gas emissions than gasoline, it is no more nonrenewable than gasoline. Neither can be replenished on a human time frame and both may be peaking.
Solar Wind Research, Performance Audits, and "No New Taxes"
If Proposition 10 passes, $1.25 billion would be spent on solar and wind research, design and construction. That's not necessarily a bad thing, because solar and wind energy are renewable and there's lots of sun and windy corridors in California. Pickens has personally sunk $58 million into wind energy and would no doubt like to receive some of this incentive money to cut his investment risk.
On the other hand, should California taxpayers subsidize his and other businesses when there's already a ton of venture capital going into solar- and wind-energy projects?
The idea that the taxpayer ought to bail out greedy Wall Street firms and Detroit's competent-debatable carmakers and assume a chunk of the risk of energy companies -- it's too much for the middle class to bear. What's next? A taxpayer bailout every time any business doesn't succeed?
In addition to stating that Proposition 10 would "generate more energy from the sun and the wind and fund research and development for cleaner alternative energy to reduce pollution," the yes-on-10 commercials state there would be "performance audits, with strict accountability, and no new taxes."
Liars. In contrast to present California alternative fuel subsidy programs, Prop 10 would require no accountability in terms of measuring tailpipe-emissions or petroleum-usage reductions. It doesn't even require that taxpayer-subsidized natural-gas-powered trucks and cars stay in California.
And as for "no new taxes," there is no way California's lawmakers would slash programs by $10 billion to offset the cost of Prop 10. The Legislature is already unable to balance the state budget, and tax-hating Schwarzenegger has said recently that he might have to raise taxes to bring the budget under control.
Gotta Stop Behaving Like Americans
There was a terrific Frontline documentary on PBS the other night titled "Heat" that investigated how the world's largest corporations and governments are responding to Earth's looming environmental disaster.
The documentary opens with Sunita Narain of the Center for Science and Environment in New Delhi saying, "We're standing at the precipice of hell. If everybody else was to live like an American, then the planet is doomed."
For the next two hours Frontline correspondent Martin Smith introduced viewers to climate scientists the world over who, one after another, said the only way to avoid unimaginable disasters is for mankind to reduce its emissions of greenhouse gases by 60 to 80 percent by mid-century.
When you consider that we Americans represent only 5 percent of the Earth's human population but generate 25 percent of its greenhouse gases, something deep inside every one of us ought to feel guilty.
Right now there are 36 million Californians. If Prop 10 passes, the $10 billion cost if averaged across the state's residents would cost each one $277. That's $9.23 per person per year over the bonds' 30-year lifespan.
It's a cheap price to pay for the polluting we've been doing, and if Pickens' proposition was a major step in the right direction, then the people of the Golden State, where the automobile and its CO2 emissions are a major part of the social fabric, ought to be willing to pay the piper without complaint.
But in the pantheon of egregious California ballot measures, this one is one of the worst.
A recent poll by The Sacramento Bee found that while Prop 10 was garnering more support than opposition among likely voters, there were enough undecided voters that it didn't quite have the 50 percent-plus-one margin needed for passage. We sincerely hope those undecideds see the light and that this continues to be the case.