CO2 Glut Threatens High-Speed Train

Jerry Brown’s brilliant plan to fund the California high-speed rail line out of greenhouse gas emissions allowances appears to be coming to a screeching halt. California’s most-recent sale of such allowances was expected to bring in at least $600 million; instead, it earned just $8.2 million. At the projected average cost of $200 million per mile, that’s enough to build about 200 feet of rail line.

The problem is that there is a “glut of emission allowances on the market” because so many entities, including various European nations and, in California, various public utilities, are trying to earn money selling them. On the other hand, potential buyers are unsure about whether the program will continue; if it is cancelled, the allowances they buy will be worthless. The California law is supposed to sunset at the end of 2020, and if revenues remain so law the legislature is not likely to renew it.

The other problem is that Brown was counting on emissions sales to fund projects the state can’t really afford. While the efficiency benefits of cap-and-trade are proven, it is far from efficient to use permit revenues to fund boondoggles. Even the Pope questions the morality of selling the right to pollute.

A couple of weeks ago, Republican members of California’s Congressional delegation asked Secretary of Transportation Elaine Chao to not fund the planned electrification of the Caltrain line between San Francisco and San Jose, and she agreed to at least postpone her decision on the question. Such electrification would have trivial benefits for commuters riding the train but would be a prerequisite for running high-speed train on the same tracks, and the opponents hope that stopping the electrification will help stop the high-speed rail project.

As approved by voters in 2008, the San Francisco-to-Los Angeles line was supposed to have its own right-of-way for the entire route. But costs quickly rose well above the 2008 estimates, so the High-Speed Rail Authority decided to build an abridged system that would operate at high speeds for part of its route and conventional speeds for other parts, including the section from San Francisco to San Jose. Even with these adjustments, the line is expected to cost $68 billion, about 50 percent more than the $44 billion promised in 2008; a true high-speed line the entire length is now expected to cost at least $100 billion.

As the Antiplanner has noted before, back in 1996 the high-speed line was supposed to cost less than $10 billion and even at that price it would have cost more to take the train from L.A. to the Bay Area than to fly or drive. If the project was marginal at $10 billion, how can it make sense at $100 billion?

Brown’s answer to that question was that cap-and-trade revenues were free money that would pay for the line (which supposedly would save on greenhouse gas emissions but, when emissions during construction are counted, probably won’t). But if there are no cap-and-trade revenues, then the only choice may be to stop the train.

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4 thoughts on “CO2 Glut Threatens High-Speed Train

  1. Sandy Teal

    The global warming CO2 emissions trading is an embarrassment to economists who postured a government “market” that would fix such problems. The estimates have been ridiculously wrong and the real world effects of Hollywood millionaires and Al Gore flying in private jets around the world and claiming to be enviro friendly because the purchased “offsets” is such a joke, and so reminiscent of Martin Luther’s reformation demands.

    I am glad the Antiplanner has led in showing how transit often/usually is not more efficient than cars and that transit has little room to be more efficient. The use of the 80% empty seats in cars was always the easiest way to efficiency, be it by carpooling or driverless cars or slug lines.

  2. paul

    Any spending of cap and trade money should only be spent on the most cost effective way of reducing CO2 production. If there is no cost per tonne of CO2 reduction then there should be no money spent.

  3. prk166

    What are these pollution allowances for? Is it for emissions within the state of California? If it is, I’m not sure how much if at all the world market is affecting it.

    I would also question given the ginormous gap if the politicians didn’t push estimates in very unrealistic direction. These things happen. We saw RTD make unrealistic sales tax projections for their Fastracks program ( no accounting for recessions, assuming near record high growth for decades, et al. ).

    One of the problems that California is facing is that they’re not hooked into the oil and natural gas network. One of the ideas of these emissions allowances is that companies would buy them instead of moving. The problem is that before Fracking 2.0 ( we’re in the middle of great mashups of technology ), California already had the highest energy prices in the nation. Throw in the lure of natural gas that’s been sold at record lows; put those together and I have a hard time seeing how California’s going to make any money off this scheme. The temptation to move those operations will just be too much.

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