California:

State's EPA chief Alan Lloyd focuses on clean cars, power plants, air quality

California was the first state to require auto pollution controls, and now it's planning tighter controls to address greenhouse gases. And air quality continues to be a major problem as the state struggles to meet federal standards. California Environmental Protection Agency chief Dr. Alan Lloyd joins OnPoint to discuss these issues and Gov. Schwarzenegger's environmental agenda.

Transcript

Darren Samuelsohn: Hello and welcome to OnPoint. I'm Darren Samuelsohn. Joining us today in the E&ETV studios in Washington is Dr. Alan Lloyd, the head of the California Environmental Protection Agency. Also with us today is my colleague Brian Stempeck, a senior reporter from Greenwire and Environment&Energy Daily. Gentlemen, thanks for being here.

Alan Lloyd: Thank you.

Brian Stempeck: Thanks Darren.

Darren Samuelsohn: Dr. Lloyd, you served under Governor Gray Davis and now you're serving under Governor Arnold Schwarzenegger.

Alan Lloyd: Yes.

Darren Samuelsohn: Can you give us a sense the difference in environmental philosophies between these two quite different politicians?

Alan Lloyd: Well, I think again, it's been my pleasure to serve under both of them. I think they're both strongly committed to the environment. I think that if I had to draw any distinction, maybe, it's that Governor Schwarzenegger is very precise. He's committed. He knows exactly what he wants to do. I would say Governor Davis is a little bit more cautious, but still very committed to the environment.

Darren Samuelsohn: Are you worried about crossing Governor Schwarzenegger just because he's the Terminator?

Alan Lloyd: [laughs] Not at all. It's a great pleasure to work with him. I know where he's coming from. He's a great defender of the environment, as well as actually wanting to make sure that we have a strong economy in California.

Brian Stempeck: One of the key programs that you've worked under, under both governors, is the program to reduce greenhouse gas emissions from the tailpipes of cars and trucks. These are rules that you're working on right now and they're actually headed to court. Can you kind of explain, where do you see that headed right now? The auto industry says they think they have a pretty good case to shoot down these rules in court. Do you think that's the situation?

Alan Lloyd: Well, again, I'm not a lawyer so I don't want to speculate on that piece of it. We think that we've got a pretty good case in California, clearly when I was head of the Air Resources Board that is a regulation that we passed. We are confident that we're doing the right thing. Eighty percent of the public in California supported doing something about climate change and doing something about reducing greenhouse gases because transportation is a major source of greenhouse gases in California.

Brian Stempeck: Basically the rules, what they would do is require about 30 percent reduction in greenhouse gases which basically is associated with raising fuel economy. But just last week you had the Canadian government reach a deal with some of the big automakers, saying, "Hey, we can agree on something that we're going to do here." Do you think that might be the best step forward in California, to reach some kind of deal, sell this outside of court and kind of move forward with maybe not as strict as you're proposing, but somewhere, kind of a middle ground?

Alan Lloyd: Yeah, about the 30 percent is what we were looking for in 2016. Let me give you an example of one of the major manufacturers is coming forward with a hybrid, which we'll actually get that right now, you can buy it in a month's time. So I think historically in California we found that, in fact, combination if you like, of the carrot and stick approach worked best. We had worked with the car companies, Secretary Terry Tomlin and myself had offered to meet with them, tried to get them to sit down and work with us through the regulation, throughout we're following up on the legislation proposed by Assemblywoman Fran Pavley and basically we didn't get anywhere.

Brian Stempeck: Do you think there's any room for working with the auto industry now or is it just not possible now that the whole thing has gone to court?

Alan Lloyd: Again, I'm not a lawyer, but I think there's always room to work together. When we see what's happening in the world, when we see what's happening with the gas prices there's always time, I think, to work together. So in California, with this administration, with the governor, we're always willing to do that. But on the other hand, they've got to come forward with some substantive proposals to work together.

Brian Stempeck: Where else do you see California moving forward with action on climate change? Clearly the rules for new cars and trucks are one of the big staples of your area of policy, but where else do you see room for California to reduce its greenhouse gas emissions?

Alan Lloyd: Well, I think we have the California climate registry, which is a voluntary program for people to register their emissions, so that in fact as we move down the line, they can take credit for reductions there. We've got strong programs and renewable portfolio standards. We're looking to that also on the transportation side. We expect the governor to come out by in the next six months, to announce some targets for greenhouse gas reductions. So we have a menu of programs and many options which we feel will in fact propel us to the future.

Darren Samuelsohn: On the electric utility side of things, you don't have a lot of coal burning in California. How does that factor in when coal production is such a large piece of the pie? We're talking about the entire globe. What can California really do just focusing on the transportation side of things?

Alan Lloyd: As indicated, transportation is the biggest piece of the pie in California, but I also recognize, obviously, California is a small piece of the pie globally. Clearly, we're very fortunate that we have on the power generation side, most of it is in fact natural gas, very limited coal, we import a lot obviously. We feel however that the leadership that California's shown, looking at the energy efficiency, if we look at the energy intensity per capita that California has, it's much closer to Europe than it is to the rest of the U.S. So California has been showing that through the energy efficiency programs. On the comments of what California does, does it have an impact? Just last week I was meeting with a colleague who was actually in Europe, they were in fact petitioning the German auto manufacturers and chastising them for joining the lawsuit against California on greenhouse gases.

Brian Stempeck: At the same time though, during the 1990s, California had a program, the zero emissions vehicles program, aiming to really reduce emissions and get some extra vehicles on the road. By all accounts, some people say that program is a failure. The automakers spent huge sums of money, consumers rejected the electric vehicles. What's to say that the new program to reduce emissions from cars is any different from that?

Alan Lloyd: Well I think, a number of issues you mentioned there, I wouldn't say the consumers felt that the electric vehicles were not a success. I think we never were able to get the cost down or the range up, if you like. I'm a strong believer, in fact, we didn't get the ultimate goal, which was to get a full-sized battery electric vehicle. But on the other hand, we now have hybrids out there. We have fuel cells, which are hybrids. We've come much faster along that path to get to zero emission vehicles then we would have done had we not had that program. We've now got super clean cars. We've got hybrids. We have the fuel cell vehicle. We still have some battery electric vehicles and we're looking at plug-in hybrids as well. So I think, to me, that's a success. In fact, the previous head of Honda said they would not have made such rapid progress towards hybrids had they not made the investment in the battery electric program.

Brian Stempeck: What do you make of the automaker's claims though about the new program that this is going to prevent people from buying SUVs? It's going to add significant costs, above $1,000 for a new car purchase, to people who want to buy a bigger car. Do you think those claims are accurate?

Alan Lloyd: Well, I think the point is you've just got to look at the record. In fact, the legislation required us not to ban the sale of any class of vehicle. We complied with the legislation. We cannot do that, so the consumer will have the same choices. The issue of whether it's $3,000 or $1,000 that we estimate, clearly that's an estimation for vehicles that are sold in the period from 2009 to 2016. I would just ask you to look at the track record and measure what in fact the state has said, the staff has calculated in the past, compared to what happened in actuality. I think you'll find that in fact even our staff had overestimated the cost.

Brian Stempeck: One thing you did just mention a little bit earlier was that in six months or so Governor Schwarzenegger's going to have a plan to reduce emissions further from California. Can you give us a little bit of inside information here on what that's going to be? I mean you've already targeted cars. You've already looked at renewable energy. Is that going to be, kind of consumers or buildings or where are we be looking for that?

Alan Lloyd: Well, clearly I work for the governor, and it's up to him to announce the plan. All I was indicating is that he will announce some targets and that we would expect these to cover the full spectrum.

Darren Samuelsohn: Let's just talk about Governor Schwarzenegger and I guess the Bush administration for a second. They're in different camps on climate change issues as a whole. Can you give us a sense, they work together much bigger politically, but on this issue, how does the crossover, has there been some tug and pull with the administration and are you making any gains?

Alan Lloyd: Well, I think the point is that I like to emphasize the positives and that is on the hydrogen program that we're working very closely together and I think the president and the governor, Governor Schwarzenegger, then basically see the vision to the future very, very similarly and we're working very closely and very cooperatively with Department of Energy, with the car companies and with the energy companies.

Darren Samuelsohn: The administration is on the other side though in terms of the auto standards for California. Is Governor Schwarzenegger trying to twist the Bush administration's arm on that and any luck?

Alan Lloyd: I don't know whether he's trying to do that. He's just made it clear that he supports what we're doing and he would defend the regulation in court.

Darren Samuelsohn: OK. One other piece that I guess there's a contrast between the governor and the Bush administration is on the issue of oxygenates in gasoline. This has been a long-fought issue with California trying to get a waiver for ethanol. What's the status of that, and are you going to make any gains, and when do you eventually give up on this long-fought issue where you've had no success with Clinton and Bush?

Alan Lloyd: You captured that very well. I don't think this governor gives up on anything. I've not seen any evidence he gives up on anything at the moment. On the other hand, I think there's some misinformation out there. I think what California's looking for on the waiver is to recognize that they need some flexibility on the gasoline. There's no doubt that the energy companies will need to use ethanol. We like to look at ethanol as a potential for the future and building an ethanol industry in California. In fact as long as we don't degrade air quality, then in fact we think that ethanol is a very useful alternate fuel, which could be utilized even into the '85 vehicles, which now are produced, but they don't see any ethanol and yet they get Cap A credit.

Brian Stempeck: What do you see as kind of the role for ethanol though? I mean, basically this is a program that benefits a lot of farmers in the Midwest and one of the big critiques from lawmakers, on both the East Coast and West Coast, is "this doesn't help out our economy. This doesn't help out our farmers." Is there way to get some of these ethanol plants built in California? You don't have the corn producing, but I know there's talk about using it from other crops as well.

Alan Lloyd: Well I think that's the goal here. Obviously to use some of the low stake ethanol as a way to address climate change as well as to introduce, to support energy independence there. So I think pushing ahead on that way is a very important piece of the pie.

Brian Stempeck: Let's go to where you mentioned also about hydrogen cars. I know Governor Schwarzenegger has a plan to have a hydrogen highway, basically set up about 200 refueling stations. What's the progress of that right now? Has the state started to spend money on actually building these stations yet?

Alan Lloyd: Well, the blueprint plan, which was the culmination of an effort of over 200 people, including all the stakeholders from the car companies, from the energy companies and the public and the private sector, that plan is being submitted to the governor. So we are awaiting action. On the other hand, what we anticipate happening there when he looks at that is that we will be able to move ahead and develop hydrogen stations based on clusters coming out of the major urban areas and then working with the private sector to put hydrogen stations out there, energy stations and get the vehicles, both fuel cell vehicles and hydrogen IC engine vehicles.

Brian Stempeck: There are some people though who are very critical of the move towards hydrogen fuel cell powered cars, saying this is just giving the automakers a way to kind of dodge away from doing some of the hybrids and other things currently. Even the National Commission on Energy Policy, in their report, they said, in the next 10 or 20 years hydrogen cars aren't really the best bet if you're talking about a near term way to get off oil dependence, to get away from some of these greenhouse gas emissions. Do you, how do you take those --

Alan Lloyd: Oh, hydrogen's never intended to be a near-term solution and as I said earlier, we need them all, we need this manual fuels to have the energy, fuel-efficient vehicles, you have the super clean cars, you have the hybrids, you have any plug-in hybrids, you have alt fuel vehicles in there and then you have hydrogen. As the governor stated, if you want to be a doctor you have to train for 10 years and you may become a doctor. If you want to train for the Olympics, you have to train a period of time. Hydrogen is not something you do overnight, in fact, it takes a decade or two decades in order to, in fact, get to the hydrogen vehicles and the infrastructure.

Darren Samuelsohn: Let's switch the subject to air quality in California for a second. California, renowned for its air quality problems and it's not an attainment for the old ozone standards, we now have new standards for ozone and we now have new standards for fine particulate matter. Can California, Southern California specifically, get into compliance in the next 10, 15, 20 years, as they've been designated that they're currently out of compliance?

Alan Lloyd: Well I think, you mentioned this, I think we're still bearing huge costs for air pollution and public health. I think the Governor's fully committed there. That's why in his environment and action plan he asked, in fact, the CalEPA to reduce emissions by, air pollution by 50 percent by 2010. That's a major challenge. On the other hand, we've see ways of getting there. We're on a path to in fact reduce those emissions from existing vehicles, where the governor's committed to $140 million a year to address diesel vehicles on the road, get those off there, because in fact diesel particulate from some of the older vehicles, hopefully we'll get newer diesels which in fact will be clean. Significant health impacts from there. So I think that as we look at that piece of it and then as we look at the cars, the new cars are doing great getting some of the older cars off the road. Then I think we've done a good job on some of the industrial sources. So it's going to be a big challenge. The biggest challenge that we're seeing in Southern California and we're working and working with Secretary McPeak, secretary of Building, Transportation and Housing, to look at port growth and that is, as we are, in fact, outsourcing jobs, we've got significant growth coming back from finished products. So we have this tremendous growth coming through the Port of Los Angeles, Port of Long Beach, which is shipping and then you got trucks coming in that and lesser from locomotives. How do you get those goods towards the East?

Darren Samuelsohn: Do you see California coming into compliance, I guess, in the next 20 years with the federal air quality standards?

Alan Lloyd: Again, I say, I'm an optimist and I'm also a big believer in technology and that's where I'm talking about the zero emission vehicles. I think we have to have that objective there, whether we get there completely, we'll certainly never get there if we don't pull out all the stops to get there. So I think we'll look to the public will, but we've also got to get the federal government to do its critical share. You have to get the international, for example you look at shipping, if we look at aircraft and then in fact a lot of these are out of the control the California. So this has to be a true partnership. Now it's spread internationally not just nationally.

Darren Samuelsohn: You lost in the Supreme Court last year, the Southern California Air Quality Management District in a specific case dealing with, I think, it was the fleet --

Alan Lloyd: Fleet fuel, yes.

Darren Samuelsohn: What's the reaction after that? I think it was an 8 to 1 decision from the Supreme Court striking down Southern California's ability to regulate diesel fleets, the garbage trucks, the aircraft -- I'm sorry, the airport and transportation sector. What's your reaction to that and how are you being able to respond to this court decision?

Alan Lloyd: Well part of that, what's happening now is that the air resources above the state level, they're taking up that issue to see how they can be controlled. I think part of the issue there is can a local district set those standards? I think the local district was looking, how do we in fact get cleaner technology as soon as possible? It got caught up into the battle between natural gas and diesel. The nice thing is they're now competing for clean diesel and clean natural gas, a wonderful debate to have when you get, both of those are getting cleaner and cleaner.

Darren Samuelsohn: Another Supreme Court decision last year had to do with Mexican trucks coming across the border and whether or not the highway Board should do an air quality assessment. When are we going to start seeing Mexican trucks going into California, do you have any sense and what kind of air quality affects that's going to have?

Alan Lloyd: Well, in fact, there's some legislation in California last year just to make sure that the trucks coming across were basically similar to the tracks which would meet California, U.S. standards going across there. We, the California Air Resources Board, does have checks going ahead at the border and the highway patrol take a look at these trucks there. So it is certainly an area for concern. I think there are safeguards in there and clearly that's not something we want to encourage, but we would hope then, with our Mexican neighbors that in fact they would also recognize that they can be sending some of the cleanest trucks across the border, the same way as we're looking at the railroads where in fact the federal government has control of new railroads. In fact, the railroads send the cleanest burning locomotives to Los Angeles.

Darren Samuelsohn: Let me keep you one other question in terms of, in 2001 we were watching an energy crisis "unfold" in California. There was a lot of talk about new energy transmission. It was our new energy construction in California and would the permitting be expedited, how is the California energy situation expanding? I mean, are we seeing new plants being developed and how is that going to affect air quality?

Alan Lloyd: Well, you're right. Having lived through that and being there with Governor Davis, I think lessons were learned. Of course, we learned some of the lessons the hard way in terms of how in fact the situation was gamed. I think it's still something that we have to keep an eye on because there is growth there, but I'm pleased to say that in fact there's an energy task force at the Cabinet level that the governor has going and so they meet regularly and looking at the transmission opportunities, the demands and the power plants citing, and of course we're getting clean technology. So we're in a much better position than we were at that time. Although I'd say if you look historically, and then maybe we weren't getting the whole truth at that time.

Brian Stempeck: Last question for you Dr. Lloyd. We're really seeing California take the lead on a whole range of issues from climate change to some of these cars, renewable fuels, all sorts of things like that. Where do you see the CalEPA going in the next year? What's next in terms of California's really landmark environmental rules?

Alan Lloyd: Well, again, I think some of these you've got to bring them to fruition, management of the greenhouse gases, talking about renewable fuels, trying to impact, make sure that we have some diversity of fuels. I think it's critical that in fact we look at some of the alt fuel sides so we have a major importation of finished gasoline and diesel, particularly gasoline. As you look what's happening on the global scene and look in the growth and the demand from China, I think it's very critical that California looks at this in terms of energy diversity, energy security, as well as looking at the impact on public health and the economy and I think that's where one of the issues is. We continue to push to the super clean cars, hopefully we'll get to the cleaner diesels, get the hybrids, if we've got plug-in hybrids, the alt fuels and then for the next 10 or 20 years, getting hydrogen out there which we can get from a variety of sources. We need all those things. It's not one silver bullet, but all of those are needed to protect the health of California, to protect the natural resources and two, in fact, make sure the economy continues to grow.

Darren Samuelsohn: Dr. Lloyd thank you very much for being here. We appreciate it. Until next time, I'm Darren Samuelsohn. This is OnPoint.

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