"The American Recovery and Reinvestment Act of 2009 (commonly known as the ???stimulus??? program) currently allocates only about $105 billion over 12 years for infrastructure projects."
Does that include the $3 billion given to GM to upgrade a plant in Brazil?
America is broken.
Like our financial system, we have kicked the infrastructure can so far down the road that we are approaching a dead end. Our failure to modernize infrastructure that was built 50 years ago or more is finally catching up with us.
The San Francisco Bay Area where I live is, as ever, a leading indicator. Over the last seven years we’ve had fires, explosions, or other accidents in underground electrical vaults roughly every three months, which caused deaths, property damage, blackouts, and flying manhole covers. We’ve had an accelerating series of natural gas pipeline failures, including the one in Sept. 2010 that killed eight people and destroyed 38 homes in San Bruno. We’ve had significant accidental discharges of sewage into the Bay’s watershed every other rainy season or so. Invariably the fault is found to be with aging equipment, some dating back to the 1920s. Nearly all of the vulnerabilities have been known for decades.
Many roads are more patch than original pavement, and littered with potholes. Older bridges need replacement. Ports are struggling against the encroaching silt, spending $3 million a year on dredging just to maintain key shipping channels. Meanwhile, smaller marinas are slowly rendered unusable. The stalwart light rail system that connects the Bay’s communities, BART, dates back to the 1960s and is showing its age. The San Francisco intracity rail and bus system, MUNI, is ugly, decrepit, and so unreliable that it has become a standard butt for jokes. And aside from a few new wings, most of the area’s airports are battered dumps.
Nationally, we’re in similar shape. Most of nation’s systems are operating beyond their planned life cycles and suffer from deferred maintenance: power plants and grid works, roads, bridges, water lines, sewage treatment plants, dams, water ways and levees, rail systems, waste systems, schools and parks.
For the fourth time since 2001, the American Society of Civil Engineers gave America a grade of D in its 2009 Report Card for America’s Infrastructure. They estimated that the country needed to spent $2.2 trillion over five years — $440 billion a year — just to upgrade the nation’s infrastructure to a satisfactory level. Transportation alone would require $186 billion a year.
The price tag rises with every year of inaction, as problems worsen and commodity prices escalate. For example, in 2006 the U.S. needed an estimated $48 billion to repair all deficient bridges; that cost is now estimated at $70 billion.
Any international business traveler can tell you that the municipal transportation infrastructure of our major cities looks sad and shabby compared to that of their international peers.
Alex Herrgott, a staffer in the U.S. Senate Committee on Environment and Public Works, put his finger on the problem: “The reason maintenance budgets are where they are is that you can’t cut a ribbon on a maintenance project. […] we’re at a pivotal point where we have a legacy system that was built 50 years ago that’s crumbling under our feet — not just the roads or the small drinking water systems. We have an entire crisis that no one has seen. It’s a silent crisis and engineers know about it.”
The energy connection
Even if our infrastructure were restored to a satisfactory level — a grade of C — the 21st century will demand much more. Ever-increasing populations will require expanded infrastructure. Increasing demands for water will require ever-greater efficiency in how we use and recycle it. Our power grid must be massively upgraded and transitioned from its reliance on aged centralized coal and nuclear power plants to distributed power generation from renewables like solar, wind, and geothermal.
More urgent is the proximate peak and decline of fossil fuel production. The curve of conventional crude oil production hit its peak-plateau in 2004 and ushered in the era of permanently higher fuel prices. By 2015, the world will likely lose its race the against the five percent-per-year depletion of the world’s mature fields and start experiencing net annual declines in liquid fuel supply. By 2025 or 2030, natural gas and coal are likely to begin their respective descents.
These new demands will require additional investment. In 2008 the IEA estimated that the world would need to spend over $1 trillion per year until 2030 to meet the world’s projected energy demands. Half of that would be needed just to maintain oil production at current levels. A reasonable share for the U.S. would be in the neighborhood of $200 billion per year, either through direct supply investment or higher costs for imported fuel (on which we already spend about $500 billion per year).
As liquid fuel supply fails to keep up with demand, the U.S. will be gradually priced out of the market by the emerging economies. We will have to transition our transportation regime away from cars and semi-tractors and airplanes and back to rail. A key element in that transition will be the planned national high-speed rail network that would link America’s major cities by 2030. In 2010 the estimated cost of the network was $500 billion, but by the time it gets built that number will undoubtedly be higher, so let’s call it $35 billion per year.
The Electric Power Research Institute estimates that another desperately needed upgrade, fully modernizing the U.S. electricity system, would cost up to $476 billion by 2030, or about $25 billion per year.
America has no plan to transition to renewables, so no good cost estimates are available. But we might consider the vision offered by university researchers Mark Jacobsen and Mark Delucchi, who estimated that the world would need to spend around $100 trillion by 2030 to transition away from fossil fuels entirely. A reasonable 10 percent share of that cost for the U.S. would be $500 billion per year.
Therefore, the real infrastructure challenge for America — repairing our existing crumbling infrastructure, transitioning to rail, transitioning to renewables, and upgrading the grid — is on the order of $1.2 trillion per year, or about 8 percent of our $14.7 trillion GDP, give or take a few hundred billion. And that doesn’t even include some key steps in transition, like upgrading the thermal efficiency of the built environment, fundamental research to support an all-electric infrastructure, and natural gas conversions for transport trucks.
Strategic investments, not quick fixes
Before you call these numbers absurd, consider what other major economies are spending on infrastructure. According to the Urban Land Institute’s Infrastructure 2011 report, China is spending $1 trillion over five years; that’s 3.3 percent of its GDP. India is planning to spend $1 trillion over five years; about 9 percent of its GDP. The U.K. is spending $320 billion over five years; 2.9 percent of GDP. Brazil has allocated $900 billion over five years; 8.2 percent of GDP. All of the plans include significant investments in rail infrastructure.
America’s infrastructure spending pales in comparison. According to the Congressional Budget Office, public spending on transportation and water infrastructure has declined from 3.1 percent of GDP in the early 1960s to 2.4 percent of GDP in 2007.
The American Recovery and Reinvestment Act of 2009 (commonly known as the “stimulus” program) currently allocates only about $105 billion over 12 years for infrastructure projects. Most of that will be spent in the first five years; annualized, it’s about $18 billion per year, or 0.12 percent of our GDP. A mere $8 billion has been committed as “seed money” for high-speed rail, where cash-strapped state and local governments are expected to make up the difference. The most viable of the high-speed rail lines, connecting the major cities of the Northeast, is expected to cost over $120 billion alone.
Our current infrastructure spending plans are a rounding error on what we actually need to spend.
The difference, of course, is that the rest of the world has taken a hard look at the future of fossil fuels and come to the same conclusion I have: We have to leave fossil fuels before they leave us, and the world only has about 20 good years left before they start declining in earnest. And we have to invest heavily in efficiency upgrades in order to make the most of the remaining BTUs, while simultaneously building renewable capacity.
Other countries can’t indulge themselves in fantasies about following the U.S. transportation model and running hundreds of millions of cars on low-grade resources like oil shale and tar sands long into the future; they have to be realistic. So they have laid out long-range plans for energy transition and transportation according to a scientific, data-driven view of the world.
No such thought exists in America. We have no energy or transportation transition plans. We can’t even admit that the era of affordable and plentiful oil is already behind us. We form policy around ideological sloganeering, not data. We still believe prominent editorials in the Wall Street Journal that suggest that oil supply will continue growing for decades to come, even though it already maxed out seven years ago. We still entertain a presidential candidate who thinks she can bring back $2-a-gallon gasoline.
In America, we seem to think only about quick fixes. The Democrats’ stimpak wasn’t really a coordinated infrastructure plan; it was built around only “shovel ready” projects that might throw off some new jobs and generate some politically useful headlines. The GOP, for its part, is primarily focused on depriving president Barack Obama of any successes, and shows no real interest in infrastructure spending (unless, of course, it’s in their own districts). They are opposed to high-speed rail, opposed to incentives for more efficient and electric cars, and opposed to renewables and smart grid projects. They heavily favor the nuclear and fossil fuels industries, who have massive lobbies, and look askance on the renewable and efficiency industries, who have negligible lobbying juice.
Our only real motivation appears to be job creation. We just want to goose our stalled-out economy and relieve enough pain that the working class doesn’t get too restless and start occupying more than just Wall Street. Long-term investments to meet long-term challenges are the furthest thing from any politician’s mind.
But if we focus on building an appropriate infrastructure for this century, and start investing over $1 trillion a year in it, we’ll get all the jobs we need. Only they’ll be the right jobs. Jobs that won’t disappear the next time oil spikes. And the legacy will be a transportation infrastructure that can survive $150 oil and declining supply, instead of freshly-paved roads to dead suburbs. We’ll also make far better progress on reducing carbon emissions than the misbegotten focus on climate change produced.
We need to think bigger. Much bigger. Moon shot big. Interstate highway system big. World War II mobilization big. Big enough to remain competitive with China in manufacturing tangible, real-world assets.
Infrastructure investment isn’t cheap, but it isn’t getting any cheaper. It will benefit the whole country, and see us through some very rough water dead ahead. After a decade of studying the future of energy, I believe that transitioning from roads and airplanes to rail is a strategic, operational, and mission-critical imperative. If we fail to make it, our economy will be forced to contract as fuel simply becomes unaffordable and maintaining our existing transportation paradigm becomes impossible.
It’s long past time to act, America, and act boldly. Our future literally depends on it.
Photo: Damage from Hurricane Katrina in Biloxi, Miss. (Chris Metcalf/Flickr)
