Proposition 10 subsidizes alternative fuels

by Terence Chea, Associated Press, Daily Breeze

SAN FRANCISCO — T. Boone Pickens, the Texas billionaire oilman who says he wants to break America’s addiction to foreign oil, is betting that Californians are willing to help pay for cars and trucks that don’t run on petroleum.

Pickens’ natural gas fueling company, Clean Energy Fuels Corp., is the chief sponsor of a Nov. 4 ballot initiative that authorizes a $5 billion bond to fund alternative energy development and provide rebates up to $50,000 for buyers of vehicles that run on natural gas and other nonpetroleum fuels.

Backers say the measure would help reduce California’s greenhouse gas emissions blamed for global warming, improve air quality and jump-start the market for alternative-fuel vehicles.

"Proposition 10 will put California on the road to energy independence by lessening our use of petroleum-based fuels for transportation," said Marty Wilson, manager of the Yes on Prop 10 campaign.

But opponents say California can’t afford the bond measure, which would cost $9.8 billion — about $325 million annually — over 30 years.

They say the initiative is designed to mainly subsidize cars and trucks that run on natural gas sold by Pickens’ Seal Beach-based company, which has donated more than $3 million to the Proposition 10 campaign.

"It’s a classic case of a wealthy special interest using the California ballot initiative system to enrich itself," said Richard Holober, who heads the Consumer Federation of California. "California is literally going broke and cannot afford another major cost that will result in reduced public education, public health and public safety."

Proposition 10 is one of two alternative-energy initiatives on the crowded Nov. 4 ballot. The other, Proposition 7, would require utilities to generate half their electricity from renewable sources such as wind and solar by 2025. That measure is opposed by utilities, as well as environmentalists and much of the renewable energy industry.

Proposition 10 appears to fit well with Pickens’ highly publicized plan to end the country’s dependence on foreign oil. The so-called Pickens Plan calls for building more wind farms to replace electricity produced from natural gas, which then could be used to replace petroleum to fuel cars and trucks.

The bond measure would provide $2.5 billion in rebates to buyers of vehicles that run on natural gas, hydrogen, electricity, biomethane and propane.

Another $340 million in rebates would be set aside for high-mileage vehicles such as the Toyota Prius, although detractors say there’s no need to offer incentives to buy them.

The rest of the bond money would be used to fund research and development of alternative energy technologies, as well as for training, education and demonstration projects.

Backers say it would help California reach its goals of cutting its greenhouse gas emissions by 25 percent by 2020, producing more electricity from renewable sources and reducing the "carbon intensity" of transportation fuels.

"This measure is trying to create a market for low-carbon fuel vehicles," said Todd Campbell, public policy director for Clean Energy. "It will create an incentive for companies to pour more capital and apply more risk to create an alternative vehicle system for California drivers."

But critics say most of the rebate money would go to buyers of natural-gas trucks because there are few commercially available vehicles that run on hydrogen, electricity, propane or biomethane.

The market for natural gas vehicles, by contrast, is already well-established. There are more than 150,000 natural gas vehicles in the U.S. and more than 5 million worldwide, according to Natural Gas Vehicles for America. Honda Motor Co. makes a natural gas version of its popular Civic, and there are many fleets of taxis, airport shuttles, transit buses and industrial trucks that run on natural gas.

Increased sales of natural-gas vehicles would lead to business for Clean Energy, which calls itself the "largest provider of natural gas for transportation in North America."

Environmentalists aren’t opposed to natural gas vehicles, which emit fewer greenhouse gases than those powered by petroleum, but they question whether taxpayer money should be used to subsidize them.

Taxpayer groups say California, which faces ongoing budget deficits, simply can’t afford another big bond.

"We’re outrageously in debt. It’s lunacy to even consider taking on even more debt," said Kris Vosburgh, executive direct of the Howard Jarvis Taxpayers Association. "The losers will be state taxpayers with less money for services they value."


What: Proposition 10 authorizes a $5 billion bond that would pay for research in renewable energy and cleaner fuels and provide $2.5 billion in rebates to buyers of cars and trucks that run on certain alternative fuels.

How: Supporters say it would help California jump-start the market for alternative-fuel vehicles, reducing reliance on foreign oil and greenhouse gas emissions. Critics say it is primarily designed to subsidize purchases of vehicles that run on natural gas sold by its main sponsor, Clean Energy Fuels Corp., a California natural-gas fueling company founded by Texas oilman T. Boone Pickens.

Who supports it: Three companies linked to the natural gas-vehicle industry that have donated $4.5 million to the Yes on Prop 10 campaign. Clean Energy Fuels Corp. of Seal Beach has donated $3.7 million. Aubrey McClendon, co-founder of Chesapeake Energy of Oklahoma City, has donated $500,000. Westport Fuel Systems Inc. of Long Beach, has donated $250,000.

Who opposes it: The Consumer Federation of California, Sierra Club, League of Conservation Voters, Howard Jarvis Taxpayers Association and the California Chamber of Commerce. None has donated money.