California’s Supply Chains Pursue “Green” Agenda with SB1338

Having introduced into the California State Senate a new bill designed to give an exemption from sales and use tax for port terminal operators purchasing zero or “near zero-emission” equipment, Lara is trying to advance two agendas.

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Greater reliance on mechanized advances in seaport technology is being championed by California Senator Ricardo Lara and The Pacific Merchant Shipping Association (PMSA) an independent, not-for-profit trade association.

Having introduced into the California State Senate a new bill designed to give an exemption from sales and use tax for port terminal operators purchasing zero or “near zero-emission” equipment, Lara is trying to advance two agendas.

“California has a vision for its public ports to be both an economic lifeline for our state, supporting millions of jobs, while working on the cutting edge of environmental improvement, investing billions to decrease greenhouse gas emissions and support California's global leadership on climate change,” says Lara.

He says that Senate Bill 1338 will accelerate these efforts by reducing the cost to install zero and near-zero emission equipment at the ports.

Lara's district includes the Port of Long Beach, and he recognizes that ports provide critical economic benefits for San Pedro Bay. Economic activity at the Port of Los Angeles, for example, translates into over $5 billion in state tax revenue annually, or approximately $125 for every state resident.

For every dollar spent by port industries in Southern California, 97 cents in additional indirect and induced sales is generated in the region, he adds.

At the same time, however, he notes that shippers and terminal operators have made significant investments in “green” technology:

The containerized supply chain has already spent over $5 billion since 2006 to reduce emissions at ports from ships, trucks, trains, cargo handling equipment, and harbor craft.

As a result of industry investments, emissions from the Port of Long Beach have dropped dramatically: diesel particulate down 85%, NOx down 52%, and SOx down 97% from 2005.

To help promote more environmental improvements, California's ports will need more investment:

Global infrastructure advisor Moffat & Nichol found that to fully replace equipment in use at the ports today with zero-emission equipment will cost $49 billion to $61 billion through 2045.

To help promote the purchase of zero or near-zero emission equipment, SB 1338 (Lara) would exempt zero-emission and a near-zero-emission port equipment from state sales tax.

Because SB 1338 provides air quality benefits, it is supported by a diverse coalition of environmental groups, including:

*Bay Area Air Quality Management District
*Breathe California
*California Electric Transportation Coalition
*California League of Conservation Voters
*Coalition for Clean Air
*Environment California
*Environmental Defense Fund
*MoveLA
*Natural Resources Defense Council

Conspicuous by its absence, however, is organized labor who may regard the legislation as a threat.

According to PMSA representative, Mike Jacob, talks are underway “off line” with the International Longshore and Warehouse Union to assure them that jobs are not at risk.

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About the Author

Patrick Burnson, Executive Editor
Patrick Burnson

Patrick is a widely-published writer and editor specializing in international trade, global logistics, and supply chain management. He is based in San Francisco, where he provides a Pacific Rim perspective on industry trends and forecasts. He may be reached at his downtown office: [email protected].

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