San Bernardino Associated GovernmentsTy Schuiling, Director of Planning & ProgrammingMay 14, 2010

INTERRELATED CHALLENGES:- Growth and Congestion- Freight Movement- Air Quality & Environment- Energy, Fuels, and Prices- Transportation Finance- Economics and Institutions

33

SCAG Region 2035 Forecast SCAG Region 2035 Forecast Population & Employment Growth Population & Employment Growth (Millions)(Millions)

20082008 2035 Increase2035 Increase

PopulationPopulation 18.6 18.6 23.8 23.8 2828%%EmploymentEmployment 7.8 7.8 9.9 9.9 27%27%

SCAG RegionSCAG Region……forecast growth like adding the forecast growth like adding the cities of Chicago and Houston in the next 25 yearscities of Chicago and Houston in the next 25 years

More Diverse…

-0.5

0.2

0.6

3.7

-1

0

1

2

3

4

NH White Black Asian Hispanic

(Mill

ions

)

Demographic data and analysis provided courtesy Frank Wen, SCAG

Who will they be??Who will they be??

0.4 0.5

0.8

2.4

0

1

2

3

0-14 15-34 35-54 55+

(Mill

ions

)

SCAG Region Population Growth 2005-2025

Older…

Added households will be much older!Added households will be much older!SCAG Region Households Growth Age 2005-2025

0.2

1.2

0.1

0

0.5

1

1.5

15-34 35-54 55+

(Mill

ions

)

Demographic data and analysis provided courtesy Frank Wen, SCAG

And household composition is changing:And household composition is changing:Household Type 1960 2005 2040HH with Children 48% 32% 26%HH without Children 52% 68% 74%Single/Other HH 13% 31% 34%

Source: Arthur C. Nelson, Presidential Professor & Director of Metropolitan Research, University of Utah

Under 20 21-64 65+

27.5% 61.4% 11.1%

1975 -2000

31.4% 38.9%

Income Earners & Taxpayers

29.7%

2000 -2025 Under 20 21-64 65+

Demographic data and analysis provided courtesy Frank Wen, SCAG

Huge Shift in Age of Population:Huge Shift in Age of Population:From wage-earners to retirees

Growth in 65+ cohort, Growth in 65+ cohort, 1970 1970 -- 2040 2040

y y

0100,000200,000300,000400,000500,000600,000700,000800,000900,000

1,000,0001,100,0001,200,0001,300,0001,400,000

70-75 75-80 80-85 85-90 90-95 95-00 00-05 05-10 10-15 15-20 20-25 25-30 30-35 35-40

SCAG Region California Demographic data and analysis provided courtesy Frank Wen, SCAG

27.5%28.9%

19.6%

11.7% 12.3%

22.0%

33.8%

25.7%

12.3%

6.2%

0%

5%

10%

15%

20%

25%

30%

35%

40%

25-34 35-44 45-54 55-64 65 & Above$400

$600

$800

$1,000

$1,200

$1,400

$1,600

$1,800

$2,000% of CaliforniaPopulation

% of CaliforniaPIT

Average TaxPaidWe are hereWe are here

Source: California State Controller

Personal Income Taxes PaidPersonal Income Taxes PaidBy Californians By Californians –– by ageby age

$44,649

$19,744

$45,498

$56,500$58,889

$48,108

$25,220

$29,349

$20,563

$10,000

$15,000

$20,000

$25,000

$30,000

$35,000

$40,000

$45,000

$50,000

$55,000

$60,000

$65,000

All Under 25 25-34 35-44 45-54 55-64 65 andOver

65-74 75 andOver

Source: 2000 Consumer Expenditure Survey

$38,045

$22,543

$38,945

$45,149 $46,160

$39,340

$26,533

$30,782

$21,908

$0

$5,000

$10,000

$15,000

$20,000

$25,000

$30,000

$35,000

$40,000

$45,000

$50,000

All Under 25 25-34 35-44 45-54 55-64 65 andOver

65-74 75 andOver

IncomesIncomes

ExpendituresExpenditures(think sales tax)(think sales tax)

Average households by age group:Average households by age group:

$0

$2,000

$4,000

$6,000

$8,000

$10,000

$12,000

$14,000

$16,000

$18,000

0‐19 20‐34 35‐44 45‐54 55‐64 65‐74 75‐84 85 andAboveOther Retirement All Other Public Transfers

Public Education

Social Security

Health Care

D r iv e r F a t a l i t y R a t e s , 1 9 9 6 ( P e r 1 0 0 M i l l io n V M T )

0

2

4

6

8

1 0

1 2

16 -

17 18 19 20-24

25-29

30-34

35-39

40-44

45-49

50-54

55-59

60-64

65-69

70-74

75-79

80-84

85 +

Total

M a le D r iv e r s F e m a le D r iv e r s A l l D r iv e r s

Planning for Planning for an aging an aging

populationpopulation

Average Government Service Expenses by age

Indications from the demography:Indications from the demography:

•• Reduction in per capita income tax and sales tax revenues Reduction in per capita income tax and sales tax revenues (principal sources of state, local, transportation funding)(principal sources of state, local, transportation funding)

•• Increasing demand for government servicesIncreasing demand for government services

•• Increased demand for small lot detached and attached Increased demand for small lot detached and attached residences, but a surplus of lresidences, but a surplus of largearge--lot (7,000 sq ft+) homes lot (7,000 sq ft+) homes

•• Increasing need for safer alternatives to the auto for our Increasing need for safer alternatives to the auto for our aging populationaging population

Source: California Travels – Legislative Analyst, 2007

TransportationTransportation……

State gasoline tax State gasoline tax has not kept pace has not kept pace

with travelwith travel

System capacity has not System capacity has not kept pace with growthkept pace with growth

13

Estimated Trade Value Estimated Trade Value by Congressional by Congressional

DistrictDistrict

Freight: Freight:

WeWe’’re No. 1!re No. 1!

Source: US Department of Transportation

14

Containers at West Coast PortsContainers at West Coast Ports

0 5 10 15

LA-Long BeachPorts

Port of Oakland

TEUs in (millions)

Local

Out-of-region

Share, west coast ports

New San Pedro Bay New San Pedro Bay Forecast:Forecast:

More intact movement of goods via the Panama Canal.

Development of multiple import supply chains using ports on all three coasts.

Growth in trade with regions such as Europe and Latin America that favor the East or Gulf Coast ports.

Increased competition from West Coast ports

Should Consider:Should Consider:• Transport cost increases related to fuel price• Narrowing of labor cost disparities

Modal Market Segments (MCGMAP)

Transloading of weekly shipments from Asia Transloading of weekly shipments from Asia affords large retailers an 18affords large retailers an 18--20% reduction in 20% reduction in their total pipeline plus safety stock inventory their total pipeline plus safety stock inventory compared to direct shipping.compared to direct shipping.

The Transloading AdvantageThe Transloading Advantage

Cross-dockTransloaders

Cross-dockTransloaders

Regional & National DCsRegional & National DCs

1 billion sq ft of 1 billion sq ft of warehouses todaywarehouses today

Where will the next ½billion sq. ft. go?

The Port and Modal Elasticity Study found:The Port and Modal Elasticity Study found:1.1. Inadequate landside freight capacity will strangle port Inadequate landside freight capacity will strangle port

growth absent major improvementsgrowth absent major improvements2.2. Failure to address landside congestion will cause Failure to address landside congestion will cause

diversion/loss of market share, and loss of logistics jobsdiversion/loss of market share, and loss of logistics jobs3.3. Phase II analysis suggests imposition of local fees willPhase II analysis suggests imposition of local fees will

cause diversioncause diversionSource: Gill V. Hicks

YearYear Train TypeTrain Type Average DelayAverage Delay

BNSF Freight 206.3 minutes206.3 minutes

UP Freight 196.9 minutes196.9 minutes2016?2016?

Community Impacts of Freight: Community Impacts of Freight:

South Coast Air BasinSouth Coast Air Basin52%52%

Rest of NationRest of Nation48%48% Extreme PM2.5 ExposureExtreme PM2.5 Exposure

Grade crossing delay and noise Carcinogenic air toxics

SCAB Cases/Year due to PM2.5SCAB Cases/Year due to PM2.5 **

Premature Deaths Premature Deaths 5,4005,400Hospitalizations Hospitalizations 2,4002,400Asthma & Lower RespiratoryAsthma & Lower Respiratory 140,000140,000

SymptomsSymptomsLost Work Days Lost Work Days 980,000980,000Minor Restricted Activity DaysMinor Restricted Activity Days 5,000,0005,000,000

••19991999--2000 Air Quality Data2000 Air Quality Data

Source: California Air Resources Board

CARB Assessment CARB Assessment of PM Health Effectsof PM Health Effects

We are not on trajectory for timely attainment of We are not on trajectory for timely attainment of federal AQ standards (ozone and PM2.5)federal AQ standards (ozone and PM2.5)

also contributes to:• Increased invasive plant density and production• Increased fuel load• Increased threat of fire frequency and intensity• Loss of habitat for native species• Groundwater nitrate pollution

University of California, Riverside

Invasive grasses carry fire

Exceedence of critical loads of nitrogen

deposition in red, where negative impacts to

ecosystems occur due to excess N inputs

NOx pollution in Southern California and San Joaquin Valley

Data and graphic courtesy Dr. Michael Allen, Professor and Chair, Plant Pathology and Microbiology, University of California, Riverside

What must be done to achieve those further NOx reductions?What must be done to achieve those further NOx reductions?

Attain federal standards with ship and airplane emissions?Attain federal standards with ship and airplane emissions?

Need for Zero/Near Zero Emission TechnologiesNeed for Zero/Near Zero Emission Technologies

• Plans to date include insufficient measures to actually attain federal clean air standards

• Even full fleet turnover to 2010 truck standards and to the Tier 4 locomotive standards proposed by USEPA (per the RTP) will not provide sufficient reductions

• This air basin must achieve zero and near-zero emission vehicle penetration far beyond levels assumed in ARB’s EMFAC model (which is also used for SB375 GHG calculations) to attain federal health standards.

Do we attack the air quality problem in effective ways?

SB 375 – 3-5% (?) reduction in GHG from changed land use patterns, new urban

design, and enhanced transit

From Rodier (2008), UC Berkeley for the 2009 TRB

% VMT Reduction by Individual Measures, 10 yr, 20 yr, 30 yr, 40 yr

But is our approach to air quality effective? SB 375 calls for But is our approach to air quality effective? SB 375 calls for a 3a 3--5% (?) reduction 5% (?) reduction in GHG from changed land use patterns and enhanced transitin GHG from changed land use patterns and enhanced transit

“So now we know: The price point is $4. At $3 a gallon, Americans just grin and bear it, suck it up, and, while complaining profusely, keep driving like crazy. At $4, it is a world transformed. Americans become rational creatures. Mass transit ridership is at a 50-year high. Driving is down 4 percent…

Hybrids and compacts are flying off the lots. SUV sales are in free fall.”

CHARLES KRAUTHAMMER, Pulitzer Prize-winning syndicated columnist, June 7, 2008

"Right now we have enough information to officially call it a trend," said Federal Highway Administration spokesman Doug Hecox. According to the survey, drivers started staying off the roads in droves last November. In March, the miles driven on U.S. highways fell 4.3% from March 2007.

Steve Chawkins and Martin Zimmerman, Los Angeles Times Staff Writers, May 24, 2008 

SB375 – 3-5% VMT reduction in 10 years?

2004 Chevrolet Malibu 2004 Toyota Prius Savings Percent

Reduction

EPA Emission Standard Tier 2 Bin 8 SULEV II

Non-Methane Organic Gases (grams) 2 1,527 122 1,405 92%

Carbon Monoxide (grams) 2 51,303 12,215 39,088 76%

Nitrogen Oxides (grams)2 2,443 244 2,199 90%

Particulate Matter (grams)2 244 122 122 50%

Carbon Dioxide (lbs)3 10,470 5,330 5,140 49%

EPA Fuel Economy (city/hwy)4 24/34 60/51

EPA Fuel Economy (combined)5 28 55 27

Fuel Consumed Annually (gallons) 436 222 214 49%

Notes1. Based on 12,215 annual mileage.2. Data obtained from Smog Forming Pollutants Chart, EPA Green Vehicle Guide: www.epa.gov/autoemissions/0-10chart.htm3. Calculated using (12,215 miles / Combined MPG) x (24 pounds CO2/gallon). Includes upstream CO2 emissions and end-user CO2emissions. David Friedman, Senior Engineer, Union of Concerned Scientists. Personal communication 7/25/2003.4. Fuel economy rating for automatic/continuously variable transmission.5. Assumes 55% city driving and 45% highway driving.Emission Standard Key: Vehicles meeting the Federal Tier 2 Bin 8 standard produce: 4.2 g/mi of CO, 0.02 g/mi of particulate matter, 0.2 g/miof NOx, and 0.125 g/mi of non-methane organic gases. Vehicles meeting California’s SULEV II (Super Ultra Low Emissions Vehicle) standardproduce: 1 0 g/mi of CO 0 01 g/mi of particulate matter 0 02 g/mi of NOx and 0 01 g/mi of non methane organic gases

Technology?Technology?

AIR QUALITY STRATEGIESfor transportation sources

More effective

Less effective

Clean technologies (EVs, plug-in hybrids): 90%+ reductions in emissions per vehicle

Pricing (increased gas tax, VMT fees, congestion pricing): 10%+ reductions in VMT in < 5 years

Land use change: possibly 4% in VMT over 20 years (per Rodier)

Transit: 3%(?) in VMT over 20 years (per Rodier)

Infrastructure investment: little, but critical for mobility

Note: Less effective strategies (e.g. land use and transit) can be more effective if combined with pricing and clean technologies

Mathematical relations involved in the complete cycle of production of any exhaustible resource

from Hubbert, M. King (1956), Pub. No. 95,

Shell Development Co. Exploration and Production Research Division

ENERGY – an Economy Powered by Fossil Fuels

Source: New York Times (2007) from US Energy Administration

Upstream cost of oil productionOur energy Our energy outlook: outlook: petroleumpetroleum

Hubbert linearization of world production

Source: The Oil Drum, Discussions About Energy and Our Future athttp://www.theoildrum.com/ story/2006/1/20/193723/259

Chevron advertisements, 2005 & 2006Chevron advertisements, 2005 & 2006

Oil producing countries past peak production, 2007

Oil production from the Majors, 1997 to 2007

Compilation by Energy Watch Group 2007

Research to Overcome the Energy Challenge?

Graph courtesy of Kei Koizumi, White House Office of Science and Technology Policy

Energy EfficiencyEnergy EfficiencyEnergy produced (kinetic) per Energy produced (kinetic) per

energy input (chemical or electrical)energy input (chemical or electrical)

Upper efficiency limits of various technologies:

Steam/external combustion: 10% single expansion, 25% multiple

Gasoline (internal combustion): 37%

Diesel (internal combustion): 50%+

Electric: 80 – 90%+, higher horsepowers more efficient

Electric generation: 50%+ simple, 90% with cogeneration

Various sources

Sources: Environmental Protection Agency; Energy Information Administration

Hor

sepo

wer

1975

1976

1977

1978

1979

1980

1997 19961995

1994 19931992 19911990 1989

1988

19871986

19851984

19831982

1981

1998

2004

2003200220012000

1999

230

210

190170

150

130110

00 12 14 16 18 20 22 24

Miles per Gallon

59 percent more energy performance

52 percentmore output

U.S. Fuel Economy for New Light-Duty VehiclesU.S. Fuel Economy for New Light-Duty Vehicles

1975–2004 Model Years Sales-Weighted Horsepower and MPG

International Fuel Economy Comparison

Comparison of fleet average fuel economy and GHG emission standards for new-sale light-duty vehicles

Sour

ce:

UC

Berk

eley

Mary Peters Secretary of Transportation — ChairpersonJack Schenendorf Of Counsel, Covington & Burling — Vice Chair

Frank Busalacchi Wisconsin Secretary of TransportationMaria Cino Deputy Secretary of TransportationRick Geddes Director of Undergraduate Studies, Cornell UniversitySteve Heminger Executive Director, Metropolitan Transportation CommissionFrank McArdle General Contractors Association of New YorkSteve Odland Chairman and CEO, Office DepotPatrick Quinn Chairman, American Trucking AssociationMatt Rose CEO, Burlington Northern Santa Fe RailroadTom Skancke CEO, The Skancke CompanyPaul Weyrich Chairman and CEO, Free Congress Foundation

Findings of the Federal 1909 CommissionFindings of the Federal 1909 Commission

0

50

100

150

200

250

Cons

tant

200

5 D

olla

rs (

in B

illio

ns)

Current Spending(2006)

Cost to Maintain(2055)

Cost to Improve(2055)

• Public trans spending <$100B

• Should be spending $225B to meet long-term needs

• Federal share should be historic 40% (currently 17% of $225B)

• But failure to maintain fee-for-use financing (eg. gas tax) will increase cost to improve to >$300B

Transportation(Moving People)

Land Use(Urban Form)

Education

Jobs/Economy

Water(Supply/Quality)

ClimateChange

Freight Movement Air Quality

(PM, Air Toxics,Ozone)

Housing

Energy

What is this information in combination telling us, and What is this information in combination telling us, and how can it best be used to craft public policy?how can it best be used to craft public policy?

TAKEAWAYS:TAKEAWAYS:Demography:

Reduction in average per capita income tax and sales tax revenues, increasing demand for services

Smaller labor force supporting large aging and very young populations

Need for safer transport alternatives for the aging population

Increased demand for small lot detached and attached residences, little demand for new large lot

Energy:Petroleum production may be 60% of today’s by 2040, natural gas will decline more slowly

Significant near-term reductions in EROI from limitations on fossil fuel production

Need intense focus on development of energy alternatives

Near-term need for energy-efficient (not just fuel efficient) technologies to reduce demand

Trend toward compaction of non-residential uses driven by increasing transport costs

Transport: (people and goods)5 million more people to move, yet most (90%+) of our ‘future’ infrastructure is here today

Still expecting a doubling of freight in 20 years, need dedicated clean technology freight corridors

Need to maximize utility of existing infrastructure

TAKEAWAYS #2TAKEAWAYS #2Air Quality:

Reductions from transport sector are key, attainment requires zero/near zero technologies,

all modes, in 1-2 decades

Fuel tax increases would help incentivize transformation

Transparency essential, no more “black boxes”

Greenhouse Gases:Technologic transformation needed for clean air is also most direct path to reduce GHG’s

Gas tax increase and pricing measures would provide far most significant near- term result

Demographic factors and energy constraints will drive land use compaction consistent with SB375.

Transportation Finance:Need to double annual nationwide transportation investment if only to operate and preserve system

Need to more than triple investment if fee-for-use not re-established

Gas tax increase the most obvious and technically easy first step. Would: pay to preserve , operate, improve system; reduce demand (VMT reduction = GHG & pollutant reduction); incentivize fuel efficiency and fleet transformation; promote energy independence; continue to be a viable revenue source for 10-20 years

VMT fee or similar revenue source needed within 10 years, container fees needed to fund freight

Are our plans aligned with Are our plans aligned with these factors?these factors?

The good news:The good news:Responses to the various challenges are Responses to the various challenges are

remarkably synergistic remarkably synergistic