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CARB Decides on Socialism

2/4/2012

CIOMA News Brief - The Air Resources Board last Friday (Jan. 27) decided to adopt the Clean Fuels Outlet (CFO) regulation with a provision that would require the major oil companies to build and operate retail hydrogen fueling stations based upon auto maker estimates of new hydrogen fuel cell vehicles being shipped into the California market. This was part of a much larger regulation package that primarily dealt with zero-emission vehicle requirements. CIOMA testified at the hearing on Thursday, warning that if the Board persisted in adopting the "backstop" provision that months of hard work by a broad-based set of interests groups would likely go to waste. These efforts, nicknamed the "collaborative agreement", established a detailed work plan to create a ground-breaking and unique effort that would pair subsides and/or loans to retail marketers with actual roll-out of vehicles in the state. This program also provided a new and transparent way in which funding would be allocated based upon loan-interest subsidy to place expensive hydrogen retailing equipment ($2 million per location for one dispenser), rather than the current method of providing an all-installation-cost subsidy. It also provided for a planning and allocation mechanism to allow stations to be built in areas of highest expected demand as autos were purchased. Unfortunately, the "backstop" regulation adopted unanimously by the CARB Board allows CARB to decide which major oil companies will fund the new fueling locations and determine where to place them. Several major oil companies have investigated hydrogen fueling stations independently (including installing new stations) and have determined there is not a business case for their development. CARB decision-makers incorrectly assume that since refiners make hydrogen, they have an interest in selling that commodity. However, refiners use all the hydrogen they make and purchase addition amounts commercially. So the link between hydrogen and major oil companies' interest in retailing the fuel is not there. CARB has decided it can dictate how and when commercial development will occur and that it can force businesses to bend to their whims by building and operating the stations through dictate. Several major oil companies are actively exploring legal remedies to this action. Since the regulation will not be officially adopted until mid-year, legal actions will not take place until after then. As CIOMA predicted, this situation has created the dissolution of the collaborative efforts and the state has lost an important opportunity for a diverse set of interests to work in tandem on setting up the new program. A combined lobbying effort to find scarce dollars in this economy was a cornerstone to advancement of the effort. That, also, has now evaporated in the wake of CARB's action. Editor's Note: More importantly, CARB continues to push its independent, non-elected authority to new limits every time they make a new major decision. At some point either the courts or the legislature will need to pull the reins in on this runaway agency. Or, we will all be living in a future never envisioned in our Constitutions.