$10 billion lemon makes one firm richer

by Richard Holober, Consumer Federation of California, The Reporter

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.

Proposition 10 is a textbook case of a wealthy special interest abusing the initiative process. Mr. Pickens’ Clean Energy Fuel Corp. wrote Proposition 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 Proposition 10 goes to – you guessed it – Mr. Pickens’ Clean Energy Fuel Corp. This company dominates the natural gas fueling business. Proposition 10 earmarks billions in tax giveaways to distort the market to favor natural gas-powered vehicles and to disadvantage cleaner energy technologies.

The initiative is a $5 billion bond with $2.9 billion for rebates to purchasers of "clean" vehicles; $2.5 billion is allocated for so-called "clean" truck purchases. Proposition 10 uses state bonds to fund these handouts. The cost to pay off the bonds is $10 billion, with taxpayers shelling out $335 million a year for 30 years. Vehicles subsidized by Proposition 10 will be rusting away in junkyards long before our grandchildren have finished paying for them.

We’re already struggling with a $15 billion state budget deficit. Adding another $335 million a year to pay for Proposition 10 means more cuts to schools, public safety and health programs.

Anyone who wants cleaner air will be disappointed by Proposition 10.

The initiative does nothing to ratchet up existing clean air requirements. Remarkably, Proposition 10 defines a "clean alternative" vehicle 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.

Proposition 10 requires the state to issue the $50,000 per truck on a first-come, first-served basis. There is no requirement that the truck remain 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.

The initiative’s 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, provides subsidies of up to $50,000 to replace an old dirty truck with a new clean truck. Unlike Proposition 10 ‘s first-come, first-served payouts, the Goods Movement Program ranks applications based on the amount of pollution reduction achieved. Trucks with the highest emissions are replaced first and their owners get funding priority. Unlike Proposition 10 , these dirty trucks are crushed, permanently removing them from our roads.

Under the Goods Movement Program, a trucker getting a rebate must accept a GPS device to track the clean new truck’s movements. If the truck leaves the state, the trucker pays a penalty. Proposition 10 could have included these accountability measures, but it doesn’t. The initiative’s real agenda is to gin up a quick 500 percent increase in California natural gas vehicles sales. Business will boom at Mr. Pickens’ gas stations.

Proposition 10’s corporate authors aren’t dummies. They threw in some funding for alternative energy research. Proponents claim the initiative gives equal rebates to natural gas, electric and hydrogen fuel cell vehicles. This window dressing may help sell the initiative, 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. Proposition 10 was written to exclude hybrids as "clean," even though the hybrid Toyota Prius and the natural gas Honda Civic have identical California clean vehicle ratings, and the Prius is more fuel efficient. Why load the deck to give one competing alternative technology supersized rebates? Simple: T Boone Pickens only makes a killing when more natural gas vehicles fuel up at his gas stations.

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 Proposition 10.