Assembly Standing Committee on Jobs, Economic Development, and the Economy

Good afternoon. Thank you again so much for coming to our Committee Hearing. This is a joint informational hearing for the Jobs, Economic Development and Economy Committee, as well as our Select Committee on Asia / California Trade and Investment. This Committee--it's time to really tee up the major APEC conference that is coming.

We are so honored in San Francisco, not just San Francisco but really California to be hosting APEC where we welcome the Asian leaders and all their economic ministers and teams to really be talking about how the region of Asia and our country can be working more closely together at a time when unfortunately, things have become inflamed with certain countries in Asia. I think it's absolutely very critical to remind ourselves how important Asia is to our state in California.

This is a reminder that China and Japan are our third and fourth largest trading partners, that the Asia Pacific Region, again, is a huge, huge economic engine in terms of population, but also in terms of GDP. Today we wanted to focus on the larger issue of trade, but then also focus on in particular, two areas where we can share in advances in agriculture in particular, around agricultural technology, and then again also around clean transportation.

These are areas that our region and our state have already been working very, very closely with Asia on and the panelists are going to talk about some of the history, but also more important, where they see the future is coming and talk about really the critical importance. Leaving the politics aside, really the critical economic importance. Obviously we are a major importer. California is of goods from Asia as well. So that really should go without saying.

Let me again--I said this earlier when I was talking to the President--let me again thank our partners. Our GO-Biz Department is here. I know Ms. Li is coming in remotely, but GO-Biz was extraordinarily helpful in helping this panel get together.

I do want to thank our partners at the Bay Area Council as well as GlobalSF in particular for really not their longtime friendship for me personally, but just really their partnership and really staying the course and reminding us how important this region is economically to the Bay Area, to San Francisco, to California. So with that, let me turn it over to my great colleague from Stockton who chairs our Committee on Jobs, Assembly Member Villapudua.

Thank you, Assembly Member Ting, for your partnership and for hosting this joint hearing here in your district. I look forward to this robust conversation regarding economic developments and global markets. To ensure members of the media and the public have access to our proceedings today, this joint hearing will be streamed on the Assembly website and members of the public can provide testimony in person at the California Public Utilities Commission auditorium.

During the public comments period, we will call you up and you can form a line and approach the microphone. Once at that time, each person has the maximum of two minutes per comments. To preserve the safety of everyone here, to ensure the public access to the decisions, please follow the directions of the sergeants--which they're right here--and then let us begin. Our first panel conversation will discuss trade between California and Asia. The panelists, as you can see, please come forward.

All of you guys are here, and we're going to start off with joining us virtually is Ms. Henan Li, Trade Investments Representative at GO-Biz. Ms. Li, when you're ready, you can start.

Thank you so much, Chair Villapudua and Chair Ting for the opportunity to join today's joint hearing virtually. My name is Henan Li. I'm the Trade and Investment Representative for Asia at California Governor's Office of Business and Economic Development, or GO-Biz. GO-Biz serves as a state leading agency for job growth, economic development, and business assistance efforts.

The International Affairs and Trade Unit, which I'm part of, advise the state leadership on international affairs and trade issues, implements strategies to develop and grow international relationships and engaging with foreign partners, and provide recommendations to promote and expand California's export and FDI.

Our work has three pillars: export promotion: supporting small business in accessing global markets through California Trade Expansion Program or STEP grant, FDI attraction: bringing foreign investment and creating jobs in California by providing one on one consultation and complementary investment service and resources, engaging in subnational diplomacy and business engagement.

This includes supporting the Governor and Lieutenant Governor's Office, as well as California International Affairs and Trade Development Interagency Committee on international trade missions and delegation visits, international collaboration agreements, and assisting California regional economic development organizations and local governments on international affairs and trade request. California plays an outsized role on global stage, whether it's our shared border with country's most significant trading partner or our strategic position on the Pacific Rim. We are a national leader in two way trade and top state exporters in 26 industries.

About five million California jobs are supported by trade and FDI. In 2022, California exports nine percent of U.S. total exports and import about 16 percent of total U.S. imports. Among these, 55 percent of all of California's two way trade is with East Asian countries with a total value of 386,000,000,000 dollars. I'd like to share how we support California exporters to expand to global markets by participating in trade promotion activities through the California STEP Grant.

GO-Biz is the sole administrator of the California State Trade Expansion Program, or STEP grant under the collaborative agreement with US Small Business Administration, SBA. This grant program aims to increase the number of small business exporters as well as increase the volume of goods and service they export. Last year, we received 600,000 in grant funding from SBA which increased to 700,000 this federal fiscal year. The growth of the award demonstrate SBA's recognition and confidence in California's work.

On average year, our team supports over 150 California small business with funding which effectively micro grants largely in between 1,000 to 5,000 range. To participate in international trade shows and trade missions, US Commercial Service export products such as Gold Key Service, compliance testing and IP protection, sample shipping, international marketing material translation, website globalization, e-commerce, exam export credit insurance, and export search tools. Here are some examples of our export activities that were supported in Asian Pacific Rim.

In March this year, the California STEP Grant support the California Pavilion at World Smart Energy Week Exhibition in Tokyo in conjunction with the Japan Trade Mission led by our Lieutenant Governor Eleni Kounalakis and GO-Biz Director Dee Dee Myers. The Pavilion highlights six California small business exporters ranging from hydrogen, hydropower, smart grid, offshore wind, and other clean energy sectors, and provided a valuable opportunity for these companies to promote their products and solutions to buyers, distributors, and potential partners in Japan and beyond.

The six small business generated 24 sales leads and 75 business leads at the Business Trade Show with a total value of 1.4 billion in anticipated sales. Meanwhile, California officials deliver Keynote session to an audience of more than 500 people on the state strategies for decarbonization and climate resilience, a fantastic example of the way how the state is advancing its clean tech sector.

Also this year, California STEP Grant support 12 California small business to participate in the China Clean Beauty Showcase and Seminar host by US Commercial Service. This is a pilot program supported by U.S. Secretary of Commerce Gina Raimondo. During this program, there were 130 business matchmaking meetings facilitated with participating U.S. brands. These type of programs are very important. They deepen our trade ties and provide new revenue and business opportunity for California small business in very important markets overseas.

A few other examples: the STEP grant also support eight California small business to participate in Trade Winds Mission to ASEAN countries organized by Department of Commerce this March. We will be supporting five California small business to exhibit at Cosmoprof-Asia trade show in Hong Kong next month and we're aiming to support 10 California small business to exhibit at Singapore Air Show next February.

We are committed to continue to support more California small business to start exporting and expand their sales to broader global markets with future opportunities. We're always seeking recommendations for small business to work with that program and work collaboratively within other GO-Biz units such as our Business Investment Service team and California Competes Tax Credit program to recruit business participation. Thank you again for this valuable opportunity to share our work and we look forward to continue engage with the region and further serving California business community. Thank you.

Thank you. Thank you, Ms. Li. Thank you for participating in your commitment and your partnership today. Next we have in person is Sean Randolph, Senior Director, Bay Area Council Institute.

Is the mic on? There it goes. You want to hit the green button? The button? Make sure it's green.

Oh, it's greener than it was. Good. So thanks very much. I want to thank both committees and the Chairman for the opportunity to be here. It's especially timely with APEC coming up in less than three weeks. 21 Asia Pacific economies represented by heads of government, ministers, senior officials, media and corporate leaders. An amazing opportunity to showcase California, showcase its innovation, what it can do, reinforce current trade and investment relationships and hopefully build some new ones.

So the region covered by APEC, as we all know, is our leading trade partner in the world. And the meeting comes at a particularly important moment in time for trade. So there's just three sort of high level, overarching thoughts I'd like to share, knowing you'll get into more detail with later presenters. One is that although California's trade is diverse, it's led by technology in terms of value. That's especially the case for Northern California, but it's the state as well.

And That's rooted in very high levels of investment in both directions. And many Asia Pacific economies, most of them are deeply embedded here physically in our economy, with actual presences in Silicon Valley, San Francisco and throughout the state. And That's based on California's reputation, well deserved reputation, as the world's number one Center for technology, for innovation and for entrepreneurship. So this is a major asset for the state to leverage as it builds its trade relationships and its investment relationships in the region.

So my Institute has counted at least 350 overseas headquartered entities. So these are different kinds of government offices primarily related to trade and investment. Overseas based corporations with R and D centers with innovation, offices with corporate venture arms, other venture arms accelerators incubators, overseas headquartered universities, overseas headquartered scientific offices that are all here with a presence in offices in California around these same themes investment, trade, technology, innovation, entrepreneurship. And that includes many city and state and provincial level entities being here as well.

So this focus on technology and innovation uniquely defines California in the minds of most of the world. It's an important asset that we have, and this is really unparalleled anywhere else in the United States.

The second thought I'd like to put on the table as this hearing begins is that our competitiveness as a state, although it's very strong, is undermined really by, I'd say, the failure of our national government to consider new agreements that would further open trade for American companies in the Asia Pacific region and globally. So this really began with the US withdrawal from the Trans Pacific Partnership in early 2020. We haven't returned as the national government to that table since then.

However, that agreement, the TPP, was repackaged as the comprehensive and progressive TPP led by Canada and Japan, and it continued without us. And since then, the United Kingdom joined this year. So the United Kingdom from Europe. But we are not Members, and China has asked to join, which would certainly shake things up a lot. So the business community, the International Trade Committee, are very supportive of these kinds of agreements. And the feeling is, if we choose not to participate, we're losing out.

But it does make it all the more important that we focus on APEC, because APEC is here and now and many of those economies, all of them are represented. The third and last thought I would like to plant on the table concerns global supply chains, where we're seeing important and really strategic changes. Now, this is coming in response to developments in China, changes in US China relations that stems from a variety of reasons.

I Think we're all familiar with concerns about security relations with China Chinese intentions globally, the future Of US. Business with China, but especially dual use technologies that could have civil and military applications both and overall, a concern with potential over dependence of the United States and United States companies on China in particular, but really on any one country in the world for such a large share of our sourcing and our critical supplies across many, many industries.

Because, as we know, China really is kind of the manufacturing heartland of much of the world now. So with those concerns, the US government has taken a variety of steps in recent years to, in one way or the other, restrict exports, restrict imports with tariffs, restrict investment inbound investment, in particular from China, but outbound investment potentially. We see a lot of examples, but certainly semiconductors pops out right away.

And the other thing that affected things were China's COVID lockdowns, which really shut down key parts of the country for extended periods. And whether you're a US company or you're another company from elsewhere in the world, they found their supply chains within China hugely disrupted. They couldn't get their people to work. They couldn't get them in and out. It was very disruptive. So, politics aside, a lot of overseas companies there said, we can't allow this to happen again. We need to diversify.

So, bottom line is, what we're seeing is an intentional diversification by many, many global companies, including many from California and the US that have a large presence in China or might have a presence in China in the future to spread that around to other countries, not to be so dependent on one. And in different industries, different fields. They may look at different countries, but where are they looking to? They're looking primarily to, you know, especially Vietnam.

They're looking, in some cases to India, and they're looking in some cases to Mexico. And when we look at recent surveys done by the US China business Council and the American Chamber of Commerce in Shanghai, we see basically a decline in optimism about their longer term future and a very significant percentage having already moved some investment out of China to other places or diverted investment that might have gone to China to other places, even though they're not leaving China.

So I think the importance of this is that as this happens, and it'll be happening over certainly the next several years, at least, as businesses make their decisions about where to source, where to invest, where to import from. We're going to see really significant changes in sourcing patterns that'll relate to changes in export patterns, changes in regional trade, logistics and overall to trade and investment flows.

So I think it's important that as California thinks about its trade in the next several years, it keep in mind these changing patterns around global production, global supply chains that may, over time, decrease the centrality of China, even though it will remain central in so many ways and also strengthen the flows of trade and investment with other countries. Thank you.

Thank you, Mr. Randolph, for your presentation. Can you elaborate just a little bit on the sourcing patterns? I mean, what does that yeah.

Zero, so I think we saw during COVID and this had to do, for example, with the personal protection equipment, that so much of this was coming from China. And for a variety of reasons, when we needed it right away, it was very hard to get. I think companies here have invested in China over decades now. Very effectively 75% of US companies in China are making a profit. So That's great. But they've invested there initially in China as an export platform for the world.

They would move production there, or they would locate it there so they could export back to the US. Into other countries. And then over time, they expanded what they were looking at. So they were producing in China for the China market as that market grew. So I think what we're seeing today is the companies producing for the China market are still producing for the China market.

They wanted they need to be there for that market, the companies that are producing there to bring that product back to the United States or to sell it elsewhere in the world. They're the ones that are reconsidering because we have tariff issues between the US. And China, because there are concerns about the politics on either side of that equation. They're concerned about just Chinese policy, in other words.

So during the Pandemic, it was the decision of the Chinese Communist Party to shut the country in certain cities at various that was the decision was there and it happened. There was no debate about it. Not very transparent, but hugely affected these companies. And so I think they're seeing it from the standpoint of they need to get components and parts in. They need to get their workers to work, and they couldn't do that.

And so when you talk about the sourcing, if we are depending in the US. And other countries are on imports of a lot of components, a lot of final products the simple answer is if it's largely coming from one country or very heavily from one country, do you want to be that dependent? Do you want it to be that concentrated? If you need to produce something in the US.

Say you're a manufacturer and your ability to produce that product depends in part on one widget or several widgets that come from China or from anywhere, and you can't get that in, you can't have your product. And so I think it's a calculation on the part of many of these companies.

So what's the balance of risk and security and profitability in terms of where they put their sourcing so they're less vulnerable to possible disruptions for political reasons, for trade reasons, whatever reasons, from China, because they feel they're so dependent there? And how can they spread that around so they're less vulnerable to supply chain disruptions for any purpose? So it's both finished products, but it's also all these different components that cross borders back and forth many, many times that go in to make a finished product. And if you can't get those in, you actually can't have the final product.

Thank you, sir. Okay, next we have Bruce Pickering, Vice President of global program at Asia society.

Thank you very much. And yes, I'm actually now more engaged with a project initiated in the University of California system. And it's designed to really look at, in a way, how to improve worker productivity and competitiveness by harnessing innovation and kind of policies that will transform or help transform the central valley.

And one of the interesting things that as state Assembly Members, you better than anyone will know that California has essentially two aspects generally prosperous, innovative, and knowledge based economy in the coastal regions, and the less prosperous and mostly agricultural inland counties of the state, particularly in the central valley and the Inland Empire. The data from the US. Census bureau bears this out. In the San Joaquin valley, incomes are far below the coastal average.

Median family incomes in tahema county are $42,369, which is roughly in line with Mississippi, and the same is true in Tulare county and Merced counties, which are more in line with Alabama and West Virginia. So this is both an opportunity and a challenge for us. Alameda County, I might add, which is not the Wealthiest County in California. The average income is $90,822. This is from the US. Census bureau. But the interesting thing about this is that it creates an opportunity for the state.

The biggest bang for the buck, for future investment in many ways will be the inland regions of California. Not so much the coast. Coast, obviously, is the driver of the California economy. As Sean mentioned, technology is critical, but also entertainment, industry, media, things like that. In a portrait of California by the social science research council noted that more than 30% of California's population was classified as either struggling or disenfranchised. The overwhelming majority, again living in the state's interior.

And more importantly, as we look at these issues, houses are a lot less expensive in Mississippi, Alabama and West Virginia, which I now know because my wife watches home improvement programs and they're always getting houses for like $30,000 and fixing them up, which you couldn't do in California. The difference between the coastal and regions is so dire that the Economist magazine warned that Inland California was in danger of becoming the appalachia of the west. So the question is what to do about it?

And again, I think this is both an opportunity and a danger for the state. So the Inland California project, which I am the Director of, along with Tom Harmon, who is here today and actually is the real godfather of this, and and John Zeissman at Berkeley, is a project and it's a product. Of four UC campuses Berkeley, Merced, Riverside and Davis with the support of various think tanks, nonprofit organizations including the Central Valley Community Foundation and the Carnegie Foundation.

And at the state level, GoBiz and the California Department of Food and Agriculture have also been involved. And I can mention Tom Harmon is one of the key people and he's here today and you'll hear from him shortly. But the core concept is that three countries Japan, Israel and Denmark have confronted issues in their rural agricultural areas quite similar to those confronting California. And each has adopted systems and policies designed to arrest, decline and encourage growth and productivity in their rural regions.

So we set out to look at those three areas to see what policies could actually be adopted in California with some likelihood of success. The first test case we adopted was Japan. And in June at UC Merced, Kenji Kushida of the Carnegie Foundation, but also Stanford and got his PhD at UC Berkeley, gave a presentation focused on how Japan is coping with an aging and declining rural workforce.

And then identified a number of areas where California might consider adopting policies and incentives designed to encourage innovation and upskill the workforce to do more with less. Among Kenji's findings was that Japan has adopted three models for dealing with its demographic challenges replacement, that is, the use of machines to replace humans augmentation the use of machines to enhance human productivity and repurposing the use of machines previously designed for another purpose to be reused in the agricultural sphere.

And one of the things that we clearly resonate most strongly is that augmentation, that is to say the upskilling of the workforce is indeed the most likely one for California to be successful. Another thing is that the Japanese government has created a set of incentives to innovate for their companies as well as policies designed to force change. So it's not all regulation. A lot of it is now kind of internalized by giving awards and opportunities to companies who actually make this transition effectively.

A key area for Japan which almost as I mentioned, has potential application for California is in the category of upskilling, that is to say, augmentation of the workforce or the ability to enhance worker productivity through innovation. There are a number of new technologies and some of the ones he listed were included artificial intelligence and machine learning, the integration of drones, for example, when creating new digging, creating new fields, working on mapping for productivity of things.

And so one of the outcomes of this is that the idea is not to replace workers so much as to make them more productive and not to be underestimated, make them happier in their jobs. One of the things that came through from I think he's going to be the new Director of California Forward was present in one of the discussions we had. And his point is that farm workers don't want their kids to be farm workers.

They see it as a tough, unrelenting job and no fun. They want their kids to get out and make their money, make their mark in the world outside of the agricultural industry. So if you're going to keep workers on the ground, they need to be happier and feel fulfilled. And this is one of the areas that we're actually actively looking at and Japan has actually done that actually somewhat effectively. So kenji also noted there are significant differences between California and Japan.

He asserted that civic and physical infrastructure in California, which is civic and physical infrastructure prevalent in Japan is frequently lacking in California. And you noted the Japanese government and the population are fully behind the use of innovation and automation, which is not the case in California, and that there are multiple political challenges in our state that Japan used to have. When the country policies were highly restrictive but no longer faced as public support has swung in favor of these new technologies.

And the integration of these new technologies. He also noted that the healthcare safety net is very well developed in Japan, including its rural areas. Telehealth is already heavily utilized to support physical and mental health and well being for the rural population, keeping them healthy and productive even into their 80s as they work these farms, these small farms in Japan.

And he also said that Japan has broadband internet readily available, which is not always the case in California and is vital to the taking advantage of the new technologies that are emerging in the agricultural sphere. Finally, he concluded by noting that how we frame these issues is really vital for California. I think an implied criticism he was making is that we haven't actually come up with a unified story internally to tell that will actually encourage people to start moving in the right direction.

Upskilling, augmentation not so much the replacement side. The next discussion point will be Denmark, which we'll probably do sometime in February. And like California is an advanced agricultural economy. We expect also many similar insights when we get to Israel, which will be the next one down the line. But one point about Denmark, and we haven't had this conversation yet with the Danes, who are actually quite excited about it, is that they have adopted a triple helix approach, which is a combination of business, government, and academia.

So they've created these nodes where business, government and academia actually collaborate and have created a whole set of policies and opportunities for Denmark. It actually punches way above its weight when you consider it's a country of essentially 4.4 million people and one of the largest agricultural producers in the world, exporters in the world. So one of the points he made, again, a somewhat implied contrast with California is that we frequently don't collaborate effectively across business, government and academia.

And so That's something he strongly urged that we consider. Israel is slated probably for May or June, a roundtable then. And the focus there will be moving further how California moves itself even further up the value chain while at the same time okay, accounting for water scarcity. And I think That's something that we'll find coming down the line eventually is how to work all these things together in a unified approach. Anyway, happy to talk about this further down the line.

Very interesting because I went to AG Expo, so this is my second year. So from the first year that I went to the next year, what a tremendous change. You see, I mean, it's like from day and night of all the new technology, but it'd be interesting to hear what especially like Denmark and all these other countries, what they're doing and how we can learn from them.

I would love to tell you.

So just quick question, Bruce. So I know the easy road would be just to extend the Bay Area into San Joaquin and just make San Joaquin look more like the Bay Area, right? I don't know that That's the right approach. And so can you talk about how do you grow that economy? Because there's going to be financial pressure on the areas closest to LA, the Bay Area, to just kind of morph into those regions.

So how do you be able to move toward this evolution and grow these economies while still maintaining an agricultural base?

That, I think, is the $1.0 million question. It's one we've talked a lot about, and I'm pretty sure if we do nothing That's what's going to happen is over time. But I think one of the things that now it seems clear to me, I think you see, Mer said, for example, and Tom obviously is a Professor there, but I've been down more times in the last year than I've been ever, and it has had a transformative impact on the town.

And I think one of the key things is by creating this model that incorporates academic, business and policy together, you can come up with a set of policies and potentially build on the indigenous. I would say the indigenous skill sets that are there. So you have Fresno State, you have Stanislaw State, you have Sacramento State. These are Valley schools and you have UC, Mercedes that have created a kind of little networks.

And I think one of the things to look at is how you expand those networks to build and include and attract investment that is now seen as kind of safer on the coast. But if you can make those communities attractive through a set of policies and also like the Japanese create an environment that encourages investment you'll encourage a kind of separate stream of development that is complementary but not the same as the Bay Area.

Could I possibly add something to Bruce's remarks that connects the two conversations and That's about semiconductors which I briefly mentioned before. So this is where supply chains are changing a lot and the US passed earlier this year that the Chips Act $52 billion to stimulate domestic manufacturing primarily of semiconductors in the US.

Concerned again with that production should be for us in countries and economies that are secure and reliable and friendly and really concerned that so much of our dependence is focused on one company in one country, which is TSMC in Taiwan. So how can we be more secure than we are today? And so the act tries to get manufacturing more in the US now but also in other friendly countries that we know that we can count on.

So we did an analysis earlier this year for the governor's office about what's a California strategy for this. And I think the bottom line at least our recommendation was that it's pretty unlikely that California is going to get any big fabs. They're going to Ohio or New York or Arizona but for a number of reasons not to California.

But there is a huge opportunity aside from design in component inputs and in packaging which is a huge part of the industry and testing That's a huge part of the there. You know, we've got the world's best R D on semiconductors in the coast, Bay Area and elsewhere. But there's a huge opportunity if we manage it right to locate semiconductor, testing semiconductor packaging components from the semiconductor world which is a large world in the Central Valley because it is cheaper there. The land is there.

And if you do the right things that Bruce was talking about in terms of the kind of trained workforce available then That's a sector with this federal money That's a big incentive now that could direct more high value, high paid production into the Central Valley.

Anything else? Okay, well, great discussion. I mean I love to carry this even further mean a person from the Central Valley I hear from my AG community day in, day out yelling at me of what's going it's, it's tough for them. And lots of times I try to figure out is this being my third year, is this something that I'm going to continue to hear the labor has been a big issue. I'm hearing more and more. Our local farmers are just that their kids.

They don't want to take this on anymore because of regulations over and over and the costs and then sometimes literally doesn't pencil out. I mean, I got guys are calling me on walnuts right now that being sold. They're usually sold for $0.65. Now it's at 35. They're losing out. Right? So I think the technology is going to be something that the Central Valley is listening, our AG community is listening to try to figure out how to get around labor.

But I think that we're going to continue to always have folks that come from other parts of the country and being part of our labor market, we're seeing now folks that they were laborers, now being owners, right? But not every owner owns the land. They lease the land. And That's like the question too. That maybe for another further discussion, but interest rates are expensive. They were first at 3%, now at 10%. How does that pencil out for them? Thank you so much for being here today.

And next, civil Member Ting, you're going to introduce panel 2 and 3.

Very excited to welcome our second panel, which is really going to focus on technological advances in agriculture and its impacts on trade. So we have Professor Harmon from UC Merced, who's the Director of Sierra Nevada Research Institute. We have Darlene Chu Bryant, who is the founder of Global SF. And then we have Steve Schultz, who's the VP of Global Supply from Blue Diamond Growers. And I believe we're going to start with Mr. Harmon and then go to Ms. Chu Bryant and then Mr. Schultz.

So, Professor Harmon, if you want to start.

Thank you, Assembly Members. It's a pleasure to come up and visit you today from Merced, and I hope to offer some good perspective from in the heart of the Central Valley. I'm a Professor and I brought some slides. Rest assured, I only have three slides, so I hope the conversation can encompass California's agri food system and adaptation to climate change. We're getting new lessons in it every year, it seems.

We came out of one of the deepest droughts that we've ever had with one of the wettest winters we've ever had. Most of the state's citizens have become very familiar with the term atmospheric river and how it locally discharges huge volumes of water, whereas nearby it might not discharge as much at all. So we need to learn to cope with that. We're coming to grips with sustainable groundwater problems long overdue. We passed that law in 2014 and we're trying to get a handle on it.

Creative remedies like the Multi Benefit Land Repurposing program is starting to ask questions about just how much land should we be farming, where's the optimal place to farm, how do we get more water back in the ground, and how do we get back on a sustainable path? We have very ambitious greenhouse gas emissions goals for our state, as we should. California usually leads the way in environmental matters. Agricultural processes have emissions. Farmers will be one day probably keeping track of those emissions.

Yet another job for a grower already has a very long day. How do we manage this? So agricultural technology is something I think about a lot in the last six or seven years. My background is civil and environmental engineering, but I've begun to think more broadly because I've been at UC Merced for this, my 21st year now, and I've become very engaged in the agricultural sector. What I like to think of Bruce mentioned the Triple Helix. I'll give you another three.

I like to think of it as a three legged race that we need to be in lockstep together for a secure water and food system, desirable elevated work conditions that make people want to farm, and environmental health for all. We need to have good conditions in the farming area so that people want to live there, that doctors want to be there, everybody wants to be there. So Bruce mentioned Inland California. I won't dwell much more on that. We can certainly turn back to that.

This is a project That's in the context of a bigger project called labor and Automation in California agriculture. And this is a really nice program that the University of California Office of the President funds. It gives us an opportunity to build an all star team with our colleagues at our sister campuses and think about interdisciplinary disciplinary problems like this. So how do you elevate labor?

I've had the same conversation many times with students at UC Merced who've been sent by their families to get a degree in mechanical engineering, computer science, environmental engineering. I dig a little deeper. They're farm kids. They have a little bit of a heartache because they would really like to be back in their community and helping out.

And my goal in labor and Automation in California, Laca is to create a pathway where they can come back to an elevated work experience, still be with their families, but still work on the farms. So should we consider the sustainability of California agriculture as a national security issue? It's the biggest producing monetarily agricultural system in the world, so I would say yes. Health care, as Bruce mentioned, is important.

I've seen it over the years at Ucmer said, it's a microcosm of development in the valley where people come, people are excited, they face health challenges and they leave. So making sure that health care is there is important. What we can learn from other countries is important, as Bruce mentioned. And how can policymakers like yourselves catalyze positive change in the area? Just, for example, automation equipment? It will be at least another generation before we have autonomous robots collecting, harvesting.

It's just too much fine work, fine tactile skills. It'll. Take a while to get there. The next phase is robotic human collaboration. Thinking of that Orchard manager who's got 20 years of experience. That person who knows exactly when that peach is the right level of ripeness is going to be pointing to the robot with a laser pointer or something like that.

And that robot will undertake the risk, the climbing, the strain on the back, and that will give that person who's managing the Orchard a longer, more productive career. So this is the way we like to think about it, as an elevated collaborative experience. There are risks of humans working with machines. We see it in the city with self driving cars, taxi services, these sorts of things.

We need to think of how to legislate the development of these technologies in a safe way, but not overly conservative, that constrains the development.

Finally, where--oh, sorry--so finally, a little plug for the system, I think we need to build places and establish places where we can think more holistically and build the next generation of people, thinkers, planners, actors, in the Cal States, the UCs, the community colleges, agriculture and natural resources. These people would remain true to the three goals: food and water security, elevated work experience, and a healthy environment.

And a little imagery there is the conceptual view of the Experimental Smart Farm, which the Assembly Members helped seed a couple of years ago with a nice SEED grant. We're hoping to build that place at UC Merced in partnership with our sisters campuses in Fresno State and Cal Stanislaus. Thank you.

Great. Thank you. We'll move on to Ms. Chiu Bryant.

Thank you. Thank you, Chair Philip Ting and Chair Carlos Villapudua for the opportunity to come and speak before you today and to this joint hearing. From background, so, for more than a decade now, GlobalSF, formerly known as ChinaSF, has been focused on cross border trade and investment now, and we were started actually after a trip to China by our current governor when his first trip to China, and he came back and he said, 'I have to start a China desk to attract all the companies and investment from China.'

By 2013, because of the impact of the work that ChinaSF had created, we had already attracted more than 3 billion in foreign direct investment from China. We had set the national bar for work in economic development and foreign direct investment work here in the U.S. Today, I'm here to make a case for food and agtech for export, not just of Ag products, but also of Ag technology as well, and primarily this is because of climate change what's going on that we know is real.

Agriculture, as you know, is one of California's biggest exports, next to tech. In 2021, it reached 22 billion dollars which increased by 20 percent since 2012 and according to the California Department of Food and AG, being the largest economy in the union, California grows more than 400 products in our state alone. Understandably, from an economic perspective, our growers tend to focus on high value commodities, and some of the products being exported have been almonds, as we all know, dairy, and dairy products.

Those are the top three. As this is the Select Committee on Asia, I am also happy to shed some light on some Asian countries that we export to. Some of the countries that we export primarily to include China--no surprise--Hong Kong, South Korea, Japan, Taiwan, and the Philippines. In the countries with a growing middle class, and as my colleagues had mentioned earlier, younger generations are eager to leave the family farms and move into the cities where they can earn more and raise their quality of life.

The number of farmers decrease and resulting in decreasing the amounts of agriculture product that can be available to feed the growing city populations. This is definitely the trend for Asian countries and case in point, since we talk about China being definitely one of the largest markets in the world, in 1980, 19 percent of the population in China lived in cities. By 2022, more than 65 percent of the total population live in urban areas.

So they've all moved from the west to the east coast of China. China is now the biggest market for rice, grains, meat, including poultry, beef, and pork, and depending on the geopolitical situation, China will play off Brazil to the USA and even Australia, depending on who they're arguing with, right? They'll increase the purchases from a certain country if we have a good relationship, and I dare say that we have. Of course it has hurt the USA, I would say probably in 2017, but now it's actually rebounded.

And the impact of China imports of Ag from the USA nationally--and I would love to give some numbers here--China was the largest number of U.S. Ag products at amount of 36.4 billion dollars. This was in 2022. The U.S. has seen an increase in demand for the following products: namely soy, which is not a surprise, corn, chicken meat, beef, tree nuts, and sorghum, and even a rebound in cotton. As we all know, we buy a lot of clothing from China that's made of cotton. And as an FYI, China buys half of the U.S. production of soybean, even though terrorists had impacted the export of products like beef in 2019, the demand has actually gone back up to close to 2014 numbers.

So it definitely has returned, I'm glad to hear and see. I remember back in 2013, when President Obama was in office, I attended the annual SelectUSA Summit in Washington, D.C., and he said, 'Foreign policy is trade. Trade is foreign policy. When people are prosperous and have food to eat and a house to live in, they are happy and the leadership can govern in peace. This is where we should consider the impact of trade on our economy. Many California residents do not realize that California is a very international state.

'People do not just come for Disneyland and Hollywood, but also because of our rich agricultural resources and also our tech and innovation. I understand that for national security reasons, we must be intentional and considerate on what areas we collaborate with other countries. However, to address areas where we can make a positive impact, there are ways to support countries in Asia, such as Indonesia and China, which have growing middle classes through which they don't export, but they are also collaborating with countries looking for ways to feed their people.'

So, for example, Indonesia, because it's actually the third largest democracy in the world, they have over 200 million people living on islands and where because of the rising middle class, less people are now actually farming and when I talk to them about climate change, we says, 'Darlene, we have to feed our people. We're not going to think about climate change.' So just case in point about where their mind is at, they want to feed their people.

So which brings me to my next item: climate change, and as a state and a nation, I believe we are in a--blah blah, blah, okay. We believe that intentional and committed to climate change, as is the State of California, and I know that, Chair Ting, that you're very committed to climate change. When sea level rise is eminent, the weather is changing and warming up. What is happening in San Francisco and now with the State of California is really exciting because of all the investment that we're making in climate change.

So let me start by sharing that even though GlobalSF has been traditionally been focused on attraction of foreign direct investment and recruiting of companies to land in San Francisco, since 2019, we have been spending a lot of time on export. Because of the growth of the bio and life sector in San Francisco, now the largest hub in the USA producing more than 100 billion in economic input, according to Axios, many verticals have grown in this space, namely in the food and agrotech space.

As a result of the need to address climate change, market demand for plant-based products and alternative meat sources, we have been working with many food tech companies and in the past years, pre and post-pandemic, we have led delegations to countries such as Singapore, Hong Kong, Denmark, Sweden, and Japan. These delegations were organized in a way that we would include corporate stakeholders. We would include food tech producers, exporters, venture capitalists, and even chefs.

We wanted these combinations to actually network, identify partners and opportunities for market entry. Examples of some of the companies are Minus, which is a beanless coffee company, and they are focused on using less water to make coffee. Another company has been KARANA Foods and KARANA Food is actually a company that is using jackfruit as a source of meat alternative. So it's not fake meat. It really is a fruit. It's natural, but you can prepare it so it tastes like chicken, for example.

There's a company we're working with called Impact Foods and what they do is they're making cell-based tuna. It's not fake meat, it really is tuna made from cells, but it's fermented, right? It's not grown, it's not farmed. And last but not least, I also want to mention Orbillion Bio. They're a cell-based company, again working on fermentation, but they're making wagyu beef. So I just wanted to share that these are all the companies that we have worked with, not all of them.

A sample of the companies that are looking at climate change, looking at what is going on, especially when we're looking at water, we're looking at land, locked areas. What can we do to actually help feed the people of the world? So I'll end my comments here. Thank you.

Thank you. Now we'll have Mr. Schult from Blue Diamond growers and represents one of the largest almond companies in not just the state, but probably in the entire world.

Thank you very much. Yeah, we are actually the largest nut processor in the world and we are the largest handler within California. I do have a presentation, but I'll just get started and I'll start with the challenge ahead of us that we face as it was laid out by the Governor. By 2035, Driedge trucks will have to be off of fuel--and there it is.

And so California does lead in setting the standards and as such, it's going to, as we've heard earlier today, I'm delighted to hear agricultural technology and so much of an emphasis on the Central Valley and the farming families within California, and so, as we face the new challenges, and we'll probably hear from Matt coming up later on on the trucking challenges, we'll have to prepare the state for what is inevitably a new way of farming in California.

So I won't drain all of the data on the slide, but as pointed out, California almonds specifically, there are 7,600 farms in California. Blue Diamond represents around half of those farms, 3,000 of those farms. 90 percent of them are family-owned and over 90 percent of them, then many of them are less than 50 acres. So it is not a large farming practice, it's small family farms.

Many are third and fourth generation family farms and as you noted earlier, the kids are not growing up to be farmers and so we are facing a challenge both with labor, but also with generational farming and if you are watching, the valley is already there and private equity is already on the floor and so the hottest bed of technology isn't no longer Silicon Valley, it's the Central Valley, and it is technology, as you noted earlier at the Ag Tech Expo, drones, technology, automated farming equipment, AI, water usage, all of the dollars are being spent, and so we are seeing that growth in it.

So while almonds lead in the world--70 percent of the almonds are exported across the world from California to other parts of the world. 30 percent stay domestically and are used domestically in our products. I will say that 30 percent of the exports do go to Asia and so over 700 million pounds are sent over to Asia, China, Japan, Korea, and many other of the Asian communities and they are substance. They're used over there as protein.

28 almonds a day in many cultures will suffice to help carry folks over, and so on the next slide, just a note of how farming happens. It's not just the trucks, but it's the orchard floors. The equipment that are using are currently diesel-based. The huller shellers were reprocessed. The trucks that are receiving and the storage and the transformation of that product all will have to be re-engineered.

All of it, from the farming equipment on the floor to the trucks that are being utilized, to the ports that we're utilizing through Oakland, Los Angeles, Houston, and now Norfolk as a part of the Pandemic where we're shipping product across the United States. So the gap as we see it today, the red dots on the map represent the Blue Diamond facilities in Salida, Sacramento, and Turlock.

The green dots represent the hundred or so almond handlers that are represented from Redding to Bakersfield that are the ones who process the almonds, hull and shell the almonds and then export the almonds. The orange dots, those represent the hydrogen stations, and then the blue dots, those represent the electricity charging stations.

So, as you note, there is a lack of infrastructure that is going to be there to support farming, not only on the orchard, on the orchard floor, but also getting those almonds and other agricultural products to ports and to exports. We say what's good for Blue Diamond is good for agriculture. We're a 113-year-old cooperative. We've been farming in the valley for that long and the halo effect of--as almonds are the number one gross product from revenue in terms of farming.

We represent--almonds represent 11 billion dollars worth of tax revenue for the State of California. Farming represents 51 billion dollars worth of revenue for this state and so the challenge that we face in the next 10 years is to prepare for what's ahead and so what I'm excited about today, and an honor to be on the panel, is that we have to prepare for the future. Many of those best practices are carried forward.

I was noted earlier, the delegation that--the trade delegation that went over to Asia, the ports in Japan and China that are already on hydrogen, the ships that are already moving there, and so we have to leverage the key learnings and Bruce was up here earlier leveraging the CSUs, the UCs. UC Davis is another where we're leveraging 'farming is cool, farming is fun, and farming is about family' and we have to leverage those best practices in order to kind of sustain. We have 10 years.

It's not really a long time to sustain the future. By 2035, we will need to have diesel outside of our drainage system. We will not be able to move our crop exported out to the countries and farming in California will come to a halt if we have no solutions and so sharing the best practices, as we noted earlier, are key. Monarch Tractors is one that started on an EV tractor. That's already started.

John Deere has already started with an ammonia tractor and so we're starting to see the technology move towards alternative fuels, not just hydrogen, but other areas that will create sustainable transactions or ability to move. Ports that we can follow are in Japan and in China that are already moving towards hydrogen and then the inland port infrastructure that we're working with in partnership. So I heard it earlier, states not going to answer this. Federal government's not going to help us.

This has got to be a combination of private business, state, and federal funding working in partnership along with the education. So I would say it's a four-legged stool and not just a three-legged helix. We need to pull in federal, state, and the schools and private business in order to start this.

So U.S. trade corridor, which is underway now in the Central Valley, starting in Bakersfield, Fresno, and looking for parts of Northern California, partnering with the UP, the Union Pacific, BNSF, the Port of LA, and Oakland to create a sustainable environment for transportation and then focusing on the valley floor. So technology is already here. We're already using satellites, some map imagery on water irrigation. Farmers have already implemented drip irrigation in almonds. We use 30 percent less water than we did in the 90s.

We have a goal to use 25 percent by 2025, and we're already a third of the way there and so using sensors on the ground to monitor soil and then AI. So when we talk about technology solely being focused in Silicon Valley, they got to use the software somewhere and so there's no better place than farming in Central Valley. So look forward to working with you all to sustain the future of California.

Thank you. Appreciate that. Quick question for Mr. Schult. So outside of hydrogen and electricity, do you see other fuels that maybe could be used especially for fleets? The other part of it is, as you are looking to replace your fleets, you mentioned John Deere and Monarch. Do you see any other manufacturers really taking the lead in this area?

Not as of yet. I think the ammonia is an interesting one because the amount of fertilizer used in agriculture and ammonia going into agriculture is I think an emerging technology that will continue to evolve, but I would expect that if we attend the same trade show next year, there'll probably be 15 new vendors.

Great. Thank you.

No, I just want to thank Mr. Schult for speaking. Last month we had a poor Committee in Long Beach, and there's a lot of questions still not answered. We're trying to figure out--because it's so layered, right? Like, who do we turn to? Who do we ask these questions to? And a lot of us think that we have the answers, and we sometimes are not marching the same with our federal partners, right?

Even though we're putting a lot of investments, we put, like, between Riverside and UC Merced, we put 160,000,000 right into these schools. We're making the investments but I think what we're getting back a lot from folks is saying, 'hey, give us time. Give us time to get to where we need to get,' because it needs to be kind of like--not that we don't want to move forward, we do. We're moving and we're doing the investments, but when you talk to the Ag community, they need to be involved. They need to be at the table too. So thank you for being here today. I really do appreciate that.

Thanks, and I think that's why I think Bruce's point about really having collaboration between government, academia, business, I think makes a lot of sense. Long overdue and I think you saw that in part around biotech and you saw what happened in biotech in California but that was a very key relationship. That was very academic, very government, and then it grew a business. So you can see really and we see that over. We saw that with technology, too.

So again, if Ag is going to get to the next evolution, it's going to have to be a partnership. There's no question.

No question because as Bruce mentioned--I'm sorry--as Steve mentioned today, the investments of farmers and what they're being asked to put in is a lot, right? There's a lot of like mom-and-pop businesses that they know they're going to have to close down. It's the bigger companies that are already thinking ahead. They're already investing.

Obviously we're going to have someone come up and talk about trucking, but there's a collaboration, there's a domino effect of how they are trying to catch up and invest because it is a humongous investment.

Well, I think that's--go ahead, Professor.

Just real quick to comment on the energy issue, one potential other source, and the Danes will mention this is biogas and I say potential because we do have these emissions goals, so you're still going to be burning something, but the argument is it's going to end up in a landfill and become a gas anyway, so maybe get another cycle out of it--

You mean like methane in particular? Any particular--okay.

We're trying to have those discussions and I'm part of a group called the Problem Solvers. We're trying to figure out what is that middle game right there before we get all the way down? They're asking those questions and somehow we have to figure out that. How do we get to the end game?

I would highlight Director Meyer--excuse me--and GO-Biz as well, they put together a supply chain led by Tre Bradley. He was working on putting together kind of the strategy and we are working together with them as well. It's like, how do we bring Ag forward as a leading think tank to help provide direction to the government?

Well, I think that's the challenge with--also, since we're going first, we can't just say, 'hey, there's somebody else. We can just follow the boilerplate.' We know it's not going to be linear, there's going to be fits and starts, but I think it's important to get it right and looking at this, I think it's a mix. When I look at what we've done around passenger vehicles, part of it was the automakers, part of it was us forcing the automakers hands.

So I think it's being able to push, but not too hard, but make sure that like anything else, that you have to nudge at the right time and with the right tools and so I think we're still learning, so I really appreciate, I think, your great comments, your very thoughtful comments and wisdom and really appreciate that. We're going to move to the very next panel. I think it's a perfect segue into our Clean Transportation panel.

We have Scott Hardman from UC Davis with the Electric Vehicle Research Center and again the transportation institute at Berkeley as well as Davis are funded by the state, so we're really--I think this shows exactly where the state and academic collaboration work. We have John Boesel, who's the CEO, President of CALSTART. Really appreciate really the leading coalition of corporations and companies really on the spearhead of sort of clean technology for vehicles, and then we have Matt Schrap, who's the CEO of the Harbor Trucking Association.

So really appreciate all of you being here and we're going to go with Dr. Hardman first, and then Mr. Boesel and then Mr. Schrap.

Good afternoon. Thank you, Chair Ting and Chair Villapudua. So I was asked today to give sort of an academic perspective on this transition to zero-emission vehicles. I think I'll start by saying I think we're in a really good spot. So far this year, globally, there's been about 1 million electric vehicles sold every single month. In the U.S, we look like we might sell about a million electric vehicles this year just in California alone, one in four. Every vehicle sold is electric.

There's almost 100 different vehicles people can choose from now, and all of that is up from effectively zero just over 10 years ago, so I think we're in a really good spot. As I was trying to decide what I would talk about today, I decided I would sort of see what's trending in the news and you would not think that those numbers were the case. So in my search of the media, I learned that there's a lack of demand of electric vehicles.

They're expensive and difficult to make, they cost too much, no one wants to buy them, and they're difficult to sell. So I think I've been doing this for 10 years now. There's people who have been doing EV research for far longer than I have, and those are exactly the same things we've heard every single year for 10 years and I think every year that goes on, those things are sort of proven to be false.

So I think that's a lesson of maybe we shouldn't always believe what we read in the media. But based on that, I wanted to talk about two things, and Chair Ting mentioned this, the sort of the push and the pull. So I want to talk a little bit about the role of zero-emission vehicle sales regulations, and then secondly, talk about the sort of role of incentives.

And both of those things are important for encouraging automakers to make good decisions, giving people choice, and also helping people choose this sort of new technology. So yeah, as I said, the demand question; time and time again we hear there's no demand yet there's record sales and I think supply regulations like California's zero-emission vehicle regulation--there's also many other of these around the world now, a lot of them modeled off California's. There's one in China, there's one in Korea, there's one in the UK.

We were just in Australia. They're also considering adopting something that would encourage electric vehicles and I tend to think about these regulations having a few roles. So one is obviously climate. I think that's clear. Two is giving people the availability and the choice of vehicles that they genuinely want because the demand does exist, but I think the third thing we should think about is giving automakers a clear path of where they need to go so they have much more certainty, and I think that's like a really important role of these regulations.

We don't talk about much and so it maps out a clear path they need to follow. It's sort of us saying, 'this is where we need to go to meet our climate goals. This is what you need to do and also this is effectively what you need to do to be competitive.'

Time and time again, when we have transitions from one technology to a new technology, incumbent firms can struggle to innovate and often end up being casualties and we don't want that with any automakers. Obviously, they're very important contributors to the economy. They employ tons of people.

So I think we should think about these regulations as helping guide automakers make decisions that are very difficult right now to make because if you take a short term perspective, perhaps it doesn't make sense to make an electric vehicle right now or next year, but if we get to 2035, looking back, I think they will all thank us because they'll exist and they'll have figured out how to make these vehicles profitable, and I think the second thing I want to talk about is incentives. These have always been a very important tool in growing the market.

I think I do recognize that electric vehicles, they are a new technology unfamiliar to people, they're new products that automakers have to learn to sell and they are a little bit more expensive than conventional vehicles. So I think incentives are very important. I think we were fortunate with the Inflation Reduction Act sort of expanding federal incentives for another 10 years that I think is really great and also that regulation encourages manufacturing in the U.S. and also countries friendly to the U.S., but I also think the changes they've made to that which will start next year also will allow people to claim the incentive when they buy the car rather than when they file their taxes.

So that's good, and I think from a California perspective, it's a little bit more mixed, maybe. So we've always had the Clean Vehicle Rebate Program. About 500 million of those were given out. That's now been replaced with a sort of equity focused program, CleanCast rule and the Clean Vehicle Assistance Program, which I think is absolutely the right step.

That's obviously what we need to do. I tend to see a gap in the market now, though. So that program, if you're a household of two, to be eligible, you have to earn about 60,000 dollars. So those people we obviously have to support. Then there's people who are wealthy enough to afford electric vehicle. They don't need support.

But maybe there's a gap between these households that earn sort of 60,000 dollars and households that earn like over 150 or 200. I do think we've got to think a little bit about how do we support that sort of gap between the people who can afford it and the people who can get the incentives. So that's sort of one more thing I think we should think about. Yeah, I think I'll leave it there. I'll say, of course there are challenges.

Despite what we read in the media, I think we're in a really great place. A lot of that thanks to the zero-emission vehicle sales regulation. The market is growing. It looks like we're on track to meet 100 percent zero-emission vehicle sales by 2035 and I think the final sort of closing thought that I have in terms of sort of this relationship with APEC is I often think about California as an exporter of policy.

Maybe there's not an economic case for that, but I think there also is but we were just in Australia, and I think people really have a desire to learn about what we're doing and see what policies we have and figure out how they can also implement them in their countries. So I think that's the last thing I'll say. Thank you.

I would just add, just as you monitor that income limit, I think it'd be good for you and your center to kind of monitor if that's the right cut off. I mean, that's the current cut off, but we'll see how many people actually qualify and how many folks can use those incentives. I think clearly the time was ripe now that the Model 3 and the Model Y are the top two selling cars in the entire state.

Clearly, they don't need any help anymore, but it is clear whether you are going for the used car market or whether you're going for other sort of more economically priced vehicles, I think we need to focus on there, too. So I think your institute could play a critical role to really help us identify what the proper cut off is, whether it's 60,000 or 80,000 or 100,000 or 150. That'd be helpful.

Okay. I'm John Bozell, President and CEO of CALSTART. Assemblymen Via Padua and Assemblyman Ting. Very honored to be here, really appreciate it. I think it's already been a super thoughtful, forward looking hearing and this is kind of thought leadership that we really need here in the State of California. Mr. Ting, I just want to say I really appreciate your leadership on electric vehicle policy over the years. You make a good argument why maybe the current term limits are a little too restrictive.

So just want to say that CALSTART, we're an industry organization focused on the decarbonization and cleaning up of the transportation sector. We very much believe that we can have a healthy environment, address the climate threat and create jobs and have a thriving economy. We have offices in Pasadena, Berkeley and Merced as well as in four other states and now an office in Europe. We were formed in 1993 when the defense and aerospace industry was really in a major State of decline.

And the state leaders at the time said we've got an electric vehicle mandate, so let's take those laid off aerospace workers, put them back to work building the electric vehicles and the industry of the future and at the know, agriculture. I'm very honored actually to be here with agriculture because I went to UC Davis as an undergrad. I always thought of AG as like the big industry in California along with motion picture Silicon Valley and oil. But really the big industry, particularly out in Valley.

I'm really honored also to be here and say that over my lifetime now, we've seen the clean transportation industry grow and we have 70,000 direct jobs producing electric vehicles components, building out the infrastructure here in the state. And the fact that we're talking about these two sectors together, I feel really good about that. We think there are huge opportunities with what's going on here in California and then also with APEC.

And I'm actually hoping to go to the APEC conference and talk to you a little bit about what I'm hoping to get done there in a bit. But just want to give you a few examples of some of the activity. Already we saw that BYD this large battery manufacturer in China with investment by Warren Buffett looked across the United States and was deterring where were they going to build their first plant?

And they ended up building it here in California, in Lancaster, because this is where the market is. You don't normally think of regulations driving business, but in this case with Azeri mission vehicle regulation, the policies and then the incentives that Scott talked about, this is really where the electric vehicle market has taken off. We produce more electric vehicles, motorcycles, cars, trucks, buses in this state than in any other state.

And a lot of people say when we started, you can't manufacture things in California, it's too high cost. Well, it's happening. And in 2020, EVs were our largest export, $5.6 billion worth of export. So BYD did that search came here. Tesla continues to export cars, maybe not as many now that they've got the Shanghai plant, but continuing the export. And then out in Lathrop. Near your district, they are building the megapacks for the stationary storage, the large amount of batteries for utility scale storage.

Some really interesting things are going a out in the southeastern part of the country, the state there's the Mountain Pass Mine, where rare earth materials exist. And right now, in a company that is partially 8% ownership by a Chinese company, that material is developed, is mined in California, brought back to China and processed and then sold as rare earth materials. That's an opportunity perhaps for California.

We have the Lithium Valley, which is a lot of interest and a lot of potential, developed out of the Salton sea and the surrounding area, lithium here in California. So we're building the EV industry, and I think there's a huge opportunity for us to be a responsible developer and provider of the strategic critical minerals that are needed in that industry. So I think there's a great opportunity. I want to just talk about the commercial vehicle sector in particular and California's leadership.

I know it's not always easy implementing it. We'll hear about it from some of the truckers, and we heard about it from Blue Diamond. This is going to be a challenging, but I think ultimately a doable transition to get to zero emission trucks. Based on all the work we did here in California, we are able to help set the stage for California to be the first government in the world to say that it's time to go to zero emissions in the bus and truck world.

So we're now on a path. By 2036, all the trucks will have to be zero emission, and buses get to zero emission earlier by I think it's 2029 or 28. So based on that, then we created something at the Governor Brown's Summit here in San Francisco in 2018, we launched a global commercial vehicle drive to zero program. And we now have 27 nations have signed up to the California targets to get to 30% zero emission commercial vehicles by 2030 and 100% by 2040.

At cop 27, the United States was joined up. So the US. Is now committed to those targets. We hope the Biden Administration will back that up in the current EPA regulation that is pending. I think this is a great opportunity in APEC to get more Asia Pacific countries to sign up to participate. Right now, Chile is part of APEC, so they're on board. So is New Zealand. We think Vietnam is a great opportunity to participate.

VinFast, a conglomerate that is making electric cars in Vietnam and has now a plant in South Carolina, is in Vietnam, and we hope to be working with them to develop that. So I think there's a big opportunity there with APEC and to develop more trade with APEC through the commercial vehicle sector. And just want to say point out one example of a really shrewd use of California resources was in a pilot and demonstration program with Frito Lay.

They were able to receive $13 million in state money from the California Air Resources Board. They were able to replace every diesel engine at their chip making facility, not semiconductors but the other kind of chips in Modesto. And they have box trucks made by Kenworth running around doing local deliveries BYD yard tractors moving product around the facility. The plant then the Tesla semis, they were the first location where the Tesla semis were deployed. And then they had Volvo trucks running on renewable natural gas.

So they were able to replace all the diesel engines there. And they now have said that every one of the Pepsi Frito Lay facilities across the country, they're going to do the same thing. So this is doable it's happening Modesto really. That plant was the first plant really to do that in the country, right in the heart of the valley. So I think it's a huge and exciting opportunity. California is really leading the world in this area and very happy to be part of it.

Great. Thank you.

Thank you for the opportunity. Hello. Good afternoon, Chair Villapdua and Chair Ting. I really appreciate the opportunity and like John to echo his comments, I'm honored to be up here with such a great platform for exchanging ideas and trying to get to the bottom of some of the challenges that we have. My name is Matt Schrapp. I am the Chief Executive Officer of the Harbor Trucking Association. HTA is the nation's largest drainage trade Association Representing Motor Carriers doing business at ports on the US west coast.

We have a particular focus in California for obvious reasons. Our Members range from the 12 small truck operator all the way through the largest fleets doing business in North America. We are moving the majority of freight That's coming into California and going out and we have our partners in export, especially in AG whom we rely upon for a symbiotic relationship to help get their goods to market. Just a quick wanted to allude to one thing.

I haven't been flanked by two aggies in quite some time since I went to Cal State Sacramento many many years ago. So maybe we can bet the outcome on the next causeway classic on some of these policy items. But I think it's important to note that while there's a lot of exciting things happening in the passenger car market, there are tremendous challenges in the commercial heavy duty, class eight battery, electric or hydrogen marketplace. We need more research.

I think that that is what it boils down to. We need to understand truly what these impacts of producing these vehicles, mining the rare earth minerals, the cost, et cetera. I think it's critical to understand that as these battery packs can be five to 10 times the size of battery packs that are in electric passenger vehicles. To that end, we are no stranger to regulatory policy that govern our engine or fuel choices.

Right as of today, our industry has just over nine weeks before the most aggressive truck standards in the world under the California Air Resources Board Advanced Clean Fleets rule kick in. It's not 2035 that we're worried about. Our industry is seriously concerned about 2024 as That's when we are first cut off. And as you likely know, on that date, all internal combustion engine powered equipment will no longer be able to register for port service.

And come 1125, very likely we will see 2000 trucks remove port service across the state due to the useful life provisions outlined in Health and Safety Code Four 300:21. While the useful life provision is a welcome safeguard, there is zero consideration in ACF that can touts for potential capacity constraints that may hinder the ability of shippers to bring their goods to market through our California gateways.

Further complicating this is the fact that under the drage provisions in ACF, there is a tremendous amount of lack of flexibility to account for the real world realities of limited fueling opportunities as well as the restrictions that go along with battery, electric or hydrogen powered zero emission vehicles. This becomes especially challenging for an industry that is accustomed to ubiquitous fueling opportunities. A major flaw in the ACF, unfortunately, is a total lack of recognition for fleets that will be relying exclusively on public facing charging infrastructure.

While there are many other efforts underway to fill this gap, the regulatory construct does not account for the deployment timelines that fueling providers are up against. This is important to note as California as said today, sets the tone across all corners of the globe when it comes to environmental regulatory policy. While no doubt many others will follow suit, it is important to lead by example with sound and sustainable policy measures to put this fueling perspective challenge into perspective. Excuse me.

The California Energy Commission has estimated 157,000 chargers will be needed across the state to support medium and heavy duty demand by 2030. This amounts to over 400 chargers per day or excuse me, per week that need to come online to meet this projection. Starting today, a different number that has been used to describe the amount of additional grid capacity needed to support the rollout is around 6000 additional megawatts.

To put that into perspective, that equals about three Diablo Canyons at our single source of largest energy producer. Single source producer with about 2200 capacity. Of course, much smarter folks than myself are working to solve this conundrum and no one in our industry has said that we cannot get to the zero emissions future and vision for the transportation industry.

However, in the interim, real world life changing impacts of the ACF standards are already being felt with many small businesses reevaluating their future place in our critical industry. Today, Dreidge is in the middle of a perfect storm. Margins are down, revenues are down, and as you alluded to Assembly Member of Villapatilla, interest rates are up.

Fleets, knowing there will be an absolute moratorium on adding additional internal combustion engine equipment at the end of this year, are stocking up on diesel and natural gas equipment to get ahead of the deadlines to ensure they have ample capacity to service their customers and keep the lights on. While some of the largest fleets in the world have taken small steps towards deploying battery, electric or hydrogen equipment, it is being supplemented with internal combustion purchases to, as previously mentioned, ensure ample capacity to service customer needs.

However, it may not be enough to make up for the thousands of trucks that will be removed from service over the next few years, since the only option for additional capacity after 1124 is zero emissions.

For better or worse, fleets are not clambering to deploy this zero emissions equipment despite potential incentives that may significantly reduce the purchase price down from the outdoor costs of over half $1.0 million to a little bit more acceptable amount, depending on programs such as the hybrid Voucher incentive program That's actually administered by John's Organization.

One need to look no further than the ports of Elliot Long Beach, who is currently sitting on about $100 million for truck turnover, incentives with no takers, limited operational range, and increased weight of the energy storage platforms that reduces overall truck carrying capacity. The extended fueling times for battery electric trucks that confound already high detention costs and the total lack of fueling infrastructure, especially public facing, are but a handful of reasons why fleets, especially small fleets, are wondering how they are going to survive this transition.

For context, today in the ports of LA and Long Beach, our nation's large or our state's largest maritime gateway, there are 20,000 trucks registered to do business. Over 14,000 are considered regular or in service trucks. There are less than 150 confirmed zero emission vehicles handling less than 1% of all container volume at this gateway. Yet we're looking at a mandate starting in, again, nine weeks if we see a increased attrition due to regulatory challenges.

The industry cannot deploy, nor can the OEMs build, nor can the utilities produce enough trucks and energies and energy in this restricted timelines to meet potential shipper demand for capacity. If we're unable to meet shipper needs, or if costs for Dreid services are so high to offset the much higher capital investment, cargo like water will find the path of least resistance and will likely begin an increased flow away from the California gateways. Diversion is real. The ports are a massive economic engine of the Golden State.

It has been said that for every four containers, you equal one job. One in nine jobs here in the States are directly related to goods movement with 30% of working Californians working in transportation. If costs increase or if demand cannot be met, cargo will leave it's happening and will continue to happen unless we can balance the need for stable economic growth with the desire to decrease. GHGs. Houston, New York, New Jersey, Savannah, Norfolk and others are accepting this import and export cargo with open arms.

As cargo goes, so goes the jobs. This is not hyperbole. These are the unfortunate facts that can be seen in the declining market share of the unit. US. West Coast gateways in the San Pedro Bay port complex from 2006 to 2022, a 1.3% year over year growth in total container volume was realized. This is compared to annual growth as high as 10% at other gateways across the nation.

The impacts of diversion are not just economic when looking at overall GHGs, a recent study by the Pacific Maritime Merchant Shipping Association has shown that moving cargo away from the US. West Coast will actually increase 19% on average emissions which as high as 92% depending on the route used to avoid the West Coast.

Overall, we all need to be cognizant of how policies, no matter how well intentioned, may have profound impacts on the future economic health of our state and the climate change reduction goals of this world. Thank you and I look forward to further discussion and again, it's truly an honor to be here today.

Yeah, thank you. Questions?

Thank you. Thank you for this information. This is as chair of Jetty and as putting my hat as a problem solver too and being on the Poor Commission, right? I mean, these are questions that is very we thank you to Scott and John for talking about what they're doing. But one question I keep hearing is that as much as we want to go and move to electrifying is that they're not building them fast enough. We keep hearing that, right?

You shared some numbers of how many is being sold, but I keep hearing a different side of the story. We're trying to go that way, but if we put our order in today for new trucks, we're not going to see them for a year. And you just heard Matt talk about the problem that we're going to have in nine weeks. How are we going to get into our ports?

And again, talking about movements of goods, we may lose those jobs and we already know we're going to lose those jobs to other ports in other states and at the end of the day, those equal jobs. So we need to figure out that. We need to provide a support to meet the regulatory standards by providing more than just technical assistance but and the financial resource behind it. These are some really tough questions that we keep asking. How do we get there?

You mentioned, John, that the good stories about these corporate companies, right. But I'm also thinking about the Dave Silva trucking company in my district. Right. They're going to get there, but they're asking for us to help out, right. They're looking 50 years out, not just for him, but for his workers, his family business and he feels sorry for the smaller businesses. That not going to make it. They can't afford the $450,000 truck.

They're used to spending 80 to 100 grand, but the 450 and then trying to figure out how do they get from the Central Valley to the Bay Area. They do this day in, day out, right? How are they going to get there? Because it may take longer, they may need a turnaround. They may not be able to take on contracts like that because of either being in traffic. There's so many different layers. Something Member of how we're trying to answer this and save these jobs.

So I really do appreciate all of you guys and if you guys wanted to answer this question, I'm ready for an answer here. So I'm trying to figure out what do we do, how do we save our jobs here in California?

Yeah, I think it does really require a lot of dialogue and we're leading the world in many ways in this transition and I think us working with Scott and his stakeholders and the manufacturers, the utilities, I really think we can get there. The advanced clean truck rule, one of the key things to note is it's a 30% target by 2030. When you look at the commercial vehicle market, there are so many different kinds of trucks and vehicles that contribute to that 30%.

There are already about 3000 Amazon electric vans running around the country or the state in California and there are so many trucks. A lot of the trucks had delivered to supermarkets, Us Foods, FritoLay and others. Those are class eight day tractors. They don't go more than 200 miles per day. So you don't immediately go after that big rig That's going to pick up at the Port of LA and go to Texas. That's not your first target there's.

Lots of Low hanging fruit is a little bit of an exaggeration, but there are a lot of easier targets, a lot of vehicles that do less than 200 miles. And so we can build up the ecosystem and get there. I do think that we've seen, as Assemblyman Ting said earlier, the manufacturers, particularly the legacy manufacturers, are often reluctant and they get sort of pulled in. But once they finally really make the commitment, then they start producing and I think we're going to see that.

There's definitely some pushback from some of the legacy firms right now. But I think we can get there. And I think we've also by the way, we've got a big working group of folks addressing the issue about bringing the power to where it needs to be in a timely manner. I think That's all manageable. There's no great new technology needed. It is going to be a lot of electricity, but it can't be managed throughout the day and it doesn't have to happen all at once.

So over time, I think we can.

Meet the challenge just to piggyback on that issue. Right, so we saw CARB started their regulation and then what we got were, what I would say, kind of imperfect compliance cars. You had cars that qualified the letter of the law, but in my opinion, really did not move technology very far. Meaning like you had battery plug in vehicles that the battery would be, you could go 15 miles on the battery and then it would go to a gas. Right.

So really, I don't think really did a whole lot, but moved the needle a teeny bit. I think really what moved the needle the most in the industry was Tesla just demonstrating that people would pay $120,000 for an electric car. And the rest of the industry realizing that if they did not evolve, eventually, Teslas and other startups like that, like, you see Rivian coming out, were just going to take over and if they didn't adapt, they were going to go the way of the telegraph company.

Right? I mean, at 1.0 the telegraph company was the most dominant company. They're going to go the way of the steel industry. Right. I guess my question is who's doing that in the heavy duty space? I see who's doing it in the bus space? I'm a little more familiar with the bus space, but who's doing that in the heavy duty space?

And the other thing I asked earlier, I think, unlike passenger vehicles, where it's very difficult to have multiple technologies, I actually think you can actually, with fleets, and maybe Mr. Schrapp will correct me, somebody can correct me, but it seems to me with fleets, you could actually have different technologies, because they don't need to fuel every 5 miles. They're dropping their load, they know where they're going. You can find very strategic places to have fueling. And you don't need 5000, you just need certain number. Right?

I was asking what other technology is really doing it, but who's pushing the industry? Because to me, if there's no company pushing the industry, I don't think the industry is going to get there. It's too difficult. The one thing you can be sure of, people hate change. You ask a Ford driver to go get a Chevy truck, they will kill you. And you ask a Chevy truck, right?

If you drive a Silverado and you want to give them a free F 150, they won't even take it. They won't take it. They'd rather pay for the Silverado. You know this is true, right. And so change is very hard, I guess. Who's pushing the industry?

Well, I think Scott can talk to some of the research about how white people did change to electric cars. And they stay there, they don't go back to ICS, but on the trucks. I want to say we have not had quite the impact of a disruptor like Tesla yet in the truck market. However, Rivian is having a bigger impact in that smaller class, and I think they will continue to grow and have an impact there. There's another company, Exos Trucks, based here.

In California that also, I think, for consumers. We're mean, this is moving. I can see where we're going for consumers. I'm talking about heavy duty, because I don't know that market. I don't even know who makes if you ask me to name, well, it's.

Daimler and Volvo Peterbilt Kenworth. But I will just say that the amazing thing about this Modesto project was it was the first time the Tesla Semis were put into use. They are getting carrying it, whether it's Pepsi bottles or FritoLay chips. They're getting 400 miles plus on a charge. So That's not chump change. I mean, that is double what the other OEMs are doing. And then in 45 minutes, they can get an additional 400 miles of charge of range.

Now unfortunately, they are much later to actually bringing that truck to market than I wish. I wish it was available today. It may not be till 25, so it will be there in time to meet the full force of the regulation, but not as fast as I wish.

So I have a much different perspective than my colleague. And Calstrift does great work, hands down, great organization. We've partnered with them to throw four different ride and drives across the state, which are tremendous feedback from the folks who are doing it. We cannot use the Tesla Semi as a representative example of heavy duty class eight transportation. A, it's a larger battery pack. B, it's a proprietary so far charger that has a much higher output than what's commercially available today.

Not to mention that we're still wondering how much that truck weighs and whether the bottles of Pepsi are full or empty. Potato chips don't weigh that much either. But let's compare the Nikola tray. Bev Nikola, another name that we're familiar with. They just recalled all of their battery electric trucks, but those trucks weighed 29,000 pounds on the curb. A diesel daycab, fully fueled, weighs about 16,000 pounds. So we're talking a 13,000 pound weight differentiation. You have mileage challenges, we hear 200.

I have Members who operate these trucks, who operate Ecascadias, who operate VNRs, who operated the Nicolas until they took them all back, who have exos vehicles. They're not getting 250 miles. They're not. And I'm not saying that the technology will not evolve and we'll get there. As I said, there's very smart people who are working on this, and this is human ingenuity at its finest. I'm excited for the future. The timelines do not line up with the technology.

It takes you a year to get your truck, you get your truck. Then they maybe recall it again. The OEMs are also limited in how much power they can take from those chargers. 350 kilowatt hour is a DC fast charger. That's kind of the top end, besides what Tesla is using, which isn't commercially available. And also to mention, I have a lot of Members who gave Tesla a lot of money years ago waiting for this Tesla semi to show up. So we have that issue.

But the OEMs like Daimler and Volvo, for instance, can only take a certain amount of charge on their trucks. 270 with dual port for the Ecascadia, That's your Max Kilowatt Hour that you can take. 250 on the VNR, That's not 350. So using 350 kilowatt hour, even as the benchmark for how long it would take you to get to a certain State of charge where you'd be able to continue on your way.

And there's been some good data coming out of the North American Council for Freight Efficiency, but it's on the Tesla truck. You look at the drainage truck that the Ecascadia performance is vastly different.

What other technologies are out there?

Unfortunately for us, for the drainage industry, there's only two. It's battery, electric or hydrogen. That's it. No internal combustion? No. Ammonia? No. Methanol?

No who's making hydrogen? Because hydrogen seems like to me a viable alternative for heavy duty.

If we can get the price down below $25 a kilogram for hydrogen, then it's probably definitely viable. You have longer range, about 500 miles, but you have Nicola, who's working. They've been a pioneer in this space, as well as Hyundai. And then you have partnerships between Volvo and Daimler. It's kind of one of those Ford Chevy things, the Unholy Alliance, I guess you could say, between those two manufacturers. They're working on it. You also have Kenworth and Toyota.

The trucks are very expensive, though the Nikola is probably the only one that we would call commercially available. That is on the HFIP approved vehicle list so far for class eight heavy duty hydrogen. But then we only have two pathways assemblymen so far.

Got it.

Okay, I will just say that there are people who have a different perspective. So I think we should balance this expectation of how difficult will be. And I agree it will be difficult. We recently interviewed 100 fleets operating heavy duty trucks, and there are real challenges. But I think we need to remember that there's also huge health and economic benefits that happen with this. So it's going to be very difficult, just as the transition to light duty vehicles is.

But I think it's something which is worth pursuing because we'll have healthier, air, healthier communities, and ultimately it will save these companies money eventually because they have big operating cost savings. But I 100% agree there are challenges that we do need to address.

Again, our industry has never said that we can't get there. It's these timelines, they do not work. And you talk again, we have fleets who have been running these trucks since the first generation of the BYD.

And have you put out an alternative timeline that you think does work?

I think that the best analogy that I heard today was by Dr. Harmon about the three legged race, academia, business and government.

Right.

This is a one sided yes, I apologize for interrupting, Assembly Member, but the Air Resources Board is a one sided conversation.

I understand that they have a one sided conversation with the Legislature too, so I'm not clearly aware of that as well. I don't doubt that. Right. What is your alternative timeline?

Well for us, if you look at that 2035 date, if That's really the date, then That's what we should be headed towards. And try to see how we can reach that with utilizing great incentives like HVIP like Carl. Moyer like the VW program and using those as well as Charge ready That's available for PG E, as well as SoCal Edison, as well as San Diego Gas and Electric. Let's look at that.

But there just hasn't been an opportunity for dialogue with anything because frankly, this isn't about air quality, this is about politics. And at the end of the day, when we think about if we truly wanted to reduce diesel particulate matter in local communities, we'd be running biomethane renewable natural gas trucks and using those to reduce diesel particulate matter exposure, which is where the real true health impacts are. I think that it's important to have all sides of the story, without a doubt.

And I don't think that our industry deserves to be labeled as somebody who is anti technology or anti emissions reductions. We've made tremendous strides, especially in the ports of LA and Long Beach. Their emissions inventory just came out. We're talking about reductions of 98% of diesel particulate matter. We have a long way to go and a tremendous amount of challenges, no doubt.

But we would entertain any opportunity to have a dialogue about a more sensible timeline that also took into account some of the community health benefits that could be achieved. Meanwhile, while the Threats glacier is still melting out from under us, what I'm.

Hearing you're open to the 2030. Is it 2035 for 2035 and the 2040 deadline, right.

Because this is now 2036 for all zero emission trucks in California to be sold in California.

That's correct. Right. But I think it sounds like the heartburn you're having is around the impending deadline coming years.

That's the challenge. And Air Resources Board, even according to their own data, they're talking at thousands of thousand trucks per year, at least 2000 in 2025. And they assume that there's going to be a one to one replacement with battery electric. They're almost greenwashing their own rule.

With that. I understand that CARB is having a one sided conversation. I'm not surprised. Have you offered an alternative kind of phase in to them and do you want to talk about absolutely.

We, through our partners with the California Trucking Association especially, have led the charge on this. And one thing that we had initially suggested to Carp was to focus on those Shorter routes because unfortunately, those Amazon trucks can't haul containers, right? The container going from Texas to LA Long Beach in a trade truck. That's absolutely what is happening.

What we said is focus on what we would call store door moves, which are short moves from the port to either local rail yards or distribution centers, back and forth, a little bit more predictable route. Obviously, there's possibility for time in charging during off peak. We have two shifts in LA Long Beach as well as up here in Oakland.

And so the time for you to charge if you're slip seating your vehicle is right during peak demand from basically five to 08:00 p.m.. And so that creates a challenge. And we suggested that this would be a pathway that the industry could stomach, for lack of a better way to put it. And it was met with what we see today, which is the ACF got.

And that conversation was held directly with the commissioners, not just with the staff.

That was held with the highest levels of ARB staff. And it has been communicated to the board Members, several of them, I know, have been engaged in many discussions with our colleagues at the California Trucking Association, without a doubt. And the needle has not moved.

Got it. Thank you.

Appreciate that.

What else could we do to move the needle on this? Because I do feel like we've done some work, but yeah, go ahead, John.

Yeah, I think it's a great question. I would say it may be a good opportunity just to take a fresh look on the incentives. And there was a move to restrict the incentives just to the smallest of the fleets and that was backed by the Legislature.

We may just want to take a look at that because the biggest purchasers of the new trucks are the medium and larger fleets and That's how then they get into the used market and then they can be picked up by the owner operators. Those are fundamental truck economics today. So do we really want to restrict the medium and larger fleets from being able to buy at this point? Maybe there's a role for them being able to move that ahead.

And just one example is like, OK, produce is out in Fresno and they're going ahead with electrifying your fleet. They got a hundred trucks, but it's a challenge, but they're making it happen. But should we encourage more mid sized fleets like that?

Professor, one of the best things you can do to move the needle is just sort of keep the regulation as it is. If you push this back two years, we'll be back in this room in two years and you'll be asking us the same question. I think if you keep it as it is, it's going to be difficult. But I think we have to try.

I'm just wondering what the cost is. What are the trade offs and what can we stomach as trade offs as an economy here in California? I wholeheartedly agree with John that the incentive program, especially for HVIP, is backwards. It's trying to build this industry, this electric vehicle, heavy duty industry on the backs of the smallest of the small fleets. They need so much runway and they haven't even showed up at the airport yet.

And I would say I think for the heavy duty fleets, I think it's really important that we probably need a lot more data and information. Right. Because with passenger vehicles, we all drive passenger cars, right. We see the dealerships, we watch the evolutions. Very easy to see in front of our eyes. I mean, we know who the producers are. No one needs to tell me that the top selling cars are Toyota. You look around, you can kind of see it, right?

I think this is an area where a lot more education for all of us needs to frankly happen in terms of what that time frame looks like and also what needs to be know. Professor Hardman mentioned the transition for CVRP to clean cars for all. I mean, if you'd asked me three, four years ago, I was dead set against it. But I probably led that charge last year because to me the timing was right.

We watched the evolution, the whole point of incentives, at some point, incentives go away. And we saw that with solar, we're seeing that with passenger vehicles, we're seeing success. So I would say the same thing. I think there needs to be a lot more education just because we don't know who the players are. We don't know the industry as well. It's a smaller market. It's a business to business market. So it's something that on the natural, we're not going to be as familiar with.

But going back to Mr. Shrapp's point, the stakes are real, right? There's no question the stakes are real. This is very important. And to be fair to your mean, when you look know, I kind of agree with I mean, you have to have some deadline. So if you need a reprieve, there has to be a good reason. There has to be a very set reason because you've been told, and we all know from when we were all students, I'm teaching a class at Berkeley.

No one gives me the paper the day before. They're like, up till the minute I say, you got to turn in by this time. And I say the time. And it's so funny now with software, the computer locks it so if you don't turn in by 10:00, they can't turn it in. It's really funny. But you know, just human nature. If you don't have a deadline, you don't do it. Right? So I think it's a tough I empathize and I don't think anybody's wrong here, right?

I think we are all learning and we're trying to figure out what the right way to do it is. But I think it would be really and That's why I asked you about in terms of alternatives to come up with a real alternative that you say, hey, I think this is realistic, and part of it's not even this is not something that you have control over. You don't represent the automakers, you don't represent any of the manufacturers.

Right.

So you're just representing the customers who are buying these trucks. So I think That's part of the challenge that we're all trying to figure out on the investment infrastructure. Yeah, absolutely.

It just doesn't seem to be that they're on the same page. We need to continue to have this and make investments on the infrastructure as much as we also need to be able to work with our federal partners, too. We all have to be on the same page because we're going to be back here in a year and looking at hopefully right, what were the damages, what were the costs, so what was a trade?

I think we got to have that discussion before the year.

Yeah.

Right. So I think you're talking about nine weeks. I mean, times of the essence, but I think That's why it's sort of like your move in the chess match. Right? So it's like kind of what often, and I say this all the time in budget, there's two ways to do it.

And I always give every single Department the opportunity to say, hey, we need a plan on X, Y and Z. And if you can give me a plan that we can all work with and digest, I'd much rather have that. If you don't give me a plan, guess what? I'm doing my plan. When the clock strikes midnight, there will be a plan one way or the other, mark my words. And I'll guarantee you my plan. You're going to like, a lot less than your plan. Right.

So you've been kind of warned. I think you're in that part of the game where, like, okay, you got the plan you don't like, I think you got to put forward the plan that absolutely you can live with. Right. Not that you can even like that you can live with. And I think you got to put that together.

Absolutely. Our mission is to educate all stakeholders about drainage operations as well as the trucking industry in General. In California, we embrace any opportunity for discussion. And again, unfortunately, it's just during development of the Advanced Clean Fleet Tool, there was very little willingness to move away from the mark that was already set. And we understand that you can't just cry, Pollyanna, and the sky is falling on top of you, and we can't afford to do this. That's not what we're saying.

We're saying that the timelines don't work and a better timeline. We're absolutely open to it. And I don't know if now that the California Trucking Association has sued the Air Resources Board over ACF, if That's going to drive ARB to come back to the negotiating table. They did it with the EMA on the act in order to get a nationwide Low. NOx standard. But we're always willing to have a conversation anytime.

I get it, and I get the posturing. Right. I just think my advice to you is come up with a plan and come up with the plan fast. Right? Otherwise, Jan, One, that hangover is going to be a real hangover.

Great, Karen.

Thank you.

Thank you.

Well, I just want to thank the panelists today for being here today. We will now open for the public hearing, public comment. For those of you who wish to speak, please form a line and approach the microphone. You have exactly two minutes. I see none. There we go.

Well, good afternoon. Can we hear? Yes.

Good.

Hi. Hi. Chairman Ting. Chairman FIO Padua. Thank you very much for holding this forum and to your teams for putting this together. I also commend all the panelists. I think there were some great learnings today. I just wanted to add in. I'm Alicia Rockwell, the chief government affairs officer for Blue Diamond Growers. I am also an appointed Member of USDA Secretary Vilsac's agricultural technical Advisory Committee on trade for fruit and vegetables.

So just as I think was discussed or mentioned from Steve a little bit earlier, trade is incredibly important for California almonds. And to highlight that, I wanted to just impress a few additional facts that Steve wasn't able to bring out earlier in his testimony. First of all, California almonds are number one US. Specialty crop export for the US. So they're not just California almonds. They're America's almonds. California's also. They are California's number one AG export with a value of over 4.9 billion in 2019.

And in 2020, the farm gate value was 5.6 billion. We have nearly 7000 almond growers, ranging from Bakersfield in the south all the way up north of Chico. They actually support and are the foundation and fabric for all of those rural communities, providing jobs and supporting their local communities, churches, schools, et cetera. More than 80% of the supply of almonds in the world are produced right here. We are the only state that has the climate and conditions to effectively and efficiently grow almonds.

So they truly are something to be celebrated and supported here within the state. As Steve mentioned, 70% is exported, and of the 70%, 30% of that is going into the Asian Pacific regions of the world. In order to continue to produce California almonds here, we need to maintain our market value. Trade allows us to do that, and That's why we're here. That's why it's so important that APEC will be here in San Francisco for us to continue to shed a light on how critical it is.

I think I'm out of time. Am I not? Yes. Thank you very much.

Thank you. Anyone else?

You're going to hear more from me today. Anyway, I'm really again, thank you very much for the opportunity to come and testify and also share thoughts about what we're doing in this space. I do want to share that we are organizing an event for APEC and Chair Tang. You will be speaking at our event that day. It is taking place Tuesday, November 14. Please. Chair. Villapudua. You are also welcome to come as well, but the event is on Tuesday, November 14.

I think we have someone from our almond growers coming too. But it's going to be a full day program and it's focused on the future starts in California. It will start with a leadership breakfast, and we'll be talking about climate change, whether it be decarbonization, whether it be climate tech, especially most importantly for companies who want to learn how to do business in the US. And actually partner with government.

We'll have some representatives from Department of Energy as well as from the General Services Administration to come talk about the opportunities as well. And of course, AI is a very important subject that everybody wants to know about, and we'll be having speakers talk about that as well, just to mention a few. So for more information, people can actually log on to our website, GlobalSF. Bi Z, and see more information. And I hope to see people there. Thank you all.

Thank you. Anyone else? I see none. I want to thank the panelists and the public participation. Your insight expertise will continue to help inform the Legislature. I want to thank Assembly Member Ting. Thank you for hosting this event for us, this meeting for us and the hearing in your district. And I look forward to continuing this conversation in the near future. So with that, I will adjourn the meeting.