In the second part of our New Age of American Infrastructure webinar series, Venable's multidisciplinary infrastructure team explored the environmental justice and equality elements that accompany the Biden administration's prospective infrastructure package. With Jim Reilly as moderator, panelists Fred Wagner and Michael Bloomquist also addressed follow-up questions.
Q: Are there certain provisions/aspects of the proposed infrastructure bill that have a chance of moving forward with bipartisan support despite the challenges around funding it?
A: Regarding surface transportation bills, there have been good faith efforts by both the Republican and Democratic teams to try to move forward and not get caught up in arguments over reconciliation, tax hikes, and so on. That said, all sides are punting somewhat on how these bills are going to be paid for – pushing that question down the road. There is a lot of interest in the House in the authorization of a large drinking water and wastewater program, which should also be on the Senate floor shortly, but again the question as to how it will be paid for isn't settled. The goal seems to be getting bipartisan agreement on the policies and structures, be they surface transportation or waste or drinking water programs, broadband expansion, and so on, and then paying for these programs through a more partisan budget reconciliation process, which would need only 51 votes (all Democrats in the Senate plus Vice President Harris) as opposed to 60 votes.
Q: President Biden recently hosted a climate summit. To what extent are the administration's climate goals likely to impact infrastructure development?
A: The administration announced a whopping goal of a 52% reduction in carbon admissions by 2030, which is a tremendous acceleration over current commitments. This will inevitably have a huge impact on the transportation sector, because according to most experts, that is the area of industrial activity in this country with the highest levels of greenhouse gas emissions. So, there is likely to be even greater pressure on legislators working on the highway bills to deal with the carbon reduction proposals. For example, when it comes to building electric vehicle (EV) infrastructure, it will be impossible to meet the carbon reduction goals without advancing the electrification of the transportation industry. But you can't electrify the transportation sector without the associated infrastructure. That applies to regular people who drive cars, and to changing the mix – gas-powered vehicles versus electric vehicles – in the trucking industry, in the maritime sector, and in aviation. The pressure to transition the transportation sector to greener standards will be even greater with the administration's ambitious climate goals.
Q: Are there likely to be ripple effects in other sectors and agencies?
A: Absolutely. Take the housing sector, specifically Housing and Urban Development (HUD) grants. These can be targeted to bring about greater efficiency of thermostats and other efficiency measures. HUD grants can also be used to promote the development of affordable housing, with the mandate to include EV infrastructure in the basement of new apartment buildings, or for the redevelopment of streetscapes in urban and suburban areas to eliminate parking and to provide public charging stations. In the energy space, we may see an increase in the amount of research dollars that are allocated to efficiency measures. Generally, the climate goals are going to have ripple effects throughout these and other government agencies and will have real and practical implications for the debate over this infrastructure bill.
Q: So clearly climate goals and infrastructure goals are intertwined, but are they also sometimes at cross-purposes?
A: I think the announced climate goals will lead to many unintended consequences that will in turn create headaches for the administration. For example, to promote increased use of electric vehicles, you need more and better batteries. Unless technology changes (and it may over time), the main element that currently supports batteries is lithium. Most of the world's lithium is produced right now in China. There are proposals for major lithium mines in the United States and Canada, which are facing the same kind of opposition that the mining industry faces generally from the environmental community. But unless we have that resource, the necessary raw materials to build these batteries, we won't be able to get to greater electrification. So, it's kind of like two trains approaching each other on the same track – in this case the EV goal and the fairly entrenched NGO opposition to new American mining facilities. Similarly, in the offshore wind space, we have the collision between preserving fishing resources and naval facilities balanced against much more intensive offshore development. There's going to have to be some reckoning on how we reconcile these competing interests, because these major climate goals that affect us all cannot be met unless there is some compromise on these issues.
Q: What is your sense as to how much trucking and the trucking industry is involved in Biden's plan to roll out new electric infrastructure?
A. Without speaking for the trucking industry, it is in a truly unique position. The industry clearly supports increased spending to improve the safety and capacity of the interstate system. And with the very swift technological advances related to the electrification of freight vehicles and other heavy-duty equipment, the development of necessary infrastructure is absolutely vital to making that transition. However, they ordinarily oppose increases in the gasoline tax and are wary of the potential for a Vehicle Mile Traveled (VMT) framework. Without a user fee structure to pay for electric vehicle infrastructure, where will the money come from?