California Air Resources Board Inventory Shows Need to Rethink New “Retrofit” Requirements as Industry, Economy Combine to Cut Current and Forecast Emissions

Contractors and other operators of off-road diesel equipment will exceed ambitious new emissions targets set by California officials according to new state figures released today by the Associated General Contractors of America.  New data from the California Air Resources Board indicates there is no need to impose costly new “diesel retrofit” rules forcing contractors to purchase new equipment before 2014, the association noted.

“Builders and contractors won’t have to retrofit, repower or replace a single piece of functional, modern and paid-for construction equipment to meet the state’s emissions targets for years to come,” said Mike Kennedy, chief counsel for the association.  “The state’s contractors, with help from the economy, are far more effective at cutting emissions than state officials ever anticipated.”

The new data, which was provided to the association by the air resources board, was compiled as part of an exhaustive inventory conducted this year of construction equipment currently in use statewide.  The new inventory found, for example, that the Board’s original 2000 estimate overstated the levels of nitrogen oxide and particulate matter emissions from the state’s off-road diesel engines in 2009 by close to 40 percent.

Based on those erroneous estimates, air resources board officials expected off-road diesel equipment operators would need to reduce nitrogen oxide emissions by 5,200 tons in 2010 and 182,000 tons by 2025.  They also expected equipment operators to reduce particulate matter emissions by 910 tons in 2010 and 29,530 tons by 2025.

The new inventory data shows, however, operators of off-road diesel equipment will be 58,400 tons below the state’s target levels for nitrogen oxide from 2010 and 173,000 tons below the state’s target by 2025.  Meanwhile, equipment operators will be 2,480 tons below particulate matter target levels in 2010 and will stay below target levels in 2011, 2012 and 2013.

After that, the industry will need to make far smaller cuts than originally estimated, the association added.  For example, in 2025 operators will only need to cut 11,560 tons of particulate matter, less than half as deep a cut as previously estimated.

“The implementation of this regulation is coming at a time when the contractors can ill afford to fork out millions of dollars to retrofit a fleet of vehicles that has an expected life span of over 30 years,” said Thomas Holsman, chief executive officer of the Associated General Contractors of California.  “Considering that CARB’s goals have already been met, enforcing the regulation at a time when the majority of these vehicles have already been shut down due to the economy will only exasperate the ability to create jobs and that’s what this state needs right now.”

The association noted state officials failed to anticipate the significant impact of the economic downturn on the construction industry.  When state officials wrote their rule, for example, they estimated construction employment would grow by 8,000 jobs a year between 2006 and 2014.  They also estimated that construction valuation would increase by $10 billion between 2007 and 2009.

In reality, the state has actually lost 330,000 construction jobs since 2006, a 35 percent decline, while real GDP originating from California’s construction industry has dropped by $13 billion.  In addition, a new analysis conducted by the Transportation Construction Coalition found that 68 percent of California’s highway and transit builders expect the state’s construction market to decline in 2010.

The analysis also concluded that over 44 percent of the state’s transportation construction companies plan to lay off year-round employees next year.  Significant for diesel emissions, less than one-third of the state’s transportation construction companies say they expect to be able to purchase new construction equipment next year.

“Looking at the economic picture, it is clear the state’s construction industry has little capacity to absorb the cost of replacing otherwise fully functional equipment,” said Ken Simonson, the trade association’s chief economist.  “Just because the economy is doing CARB’s work in cutting diesel emissions doesn’t mean the state needs to do the economy’s work in cutting construction employment.”

In light of the new inventory data and the bleak economic forecast for the state’s construction industry, association officials urged the members of the California Air Resources Board to reconsider their plan to require costly retrofits and equipment replacements next year.

“This new data raises an important question, will California’s Air Resources Board let the data drive the final decision, or simply drive the data to conform to its earlier conclusions,” the association’s Mike Kennedy said.  “The answer should be clear, state officials must rethink their current approach to regulating off-road diesel emissions.”

View data from the new state off-road diesel equipment inventory.

View the results of the Transportation Construction Coalition Survey for California.

View the remarks from the media conference call.

View AGC’s letter to the California Air Resources Board.