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Major Infrastructure Push to Come During State of the Union, with Business Support

What does industry need to facilitate business and to improve performance? More infrastructure projects and namely highways, seaports and airports. That’s according to the US Chamber of Commerce, which said that it would push for a gas tax to pay for those things.

The business group is advocating a 25-cent per gallon raise. That would be on top of the current 18.4 cents per gallon tax now for gasoline and the 24.4 cents per gallon tax for diesel fuel — something that would raise $375 billion over 10 years, it said. 

The country spends surprisingly little on infrastructure — 3% of gross domestic product. But it’s hard to find common ground when Congress just passed tax cuts while it is now discussing government outlays for highways and byways. Trump, though, says his infrastructure plan is revenue neutral and that it will return $10 for every $1 invested.

“We just got a new tax bill for the first time in 31 years,” Tom Donohue told the Washington Post in an interview. He is implying that it is possible to pass such a bill.

For its part, President Trump has said he will formally introduce his infrastructure bill during the State of the Union address. An actual bill could go in the hopper as early as this week.

Part of the Obama administration’s prescription to get the nation out of the 2008 recession blues had been to invest the national treasure into those projects — things that were roundly lambasted by conservatives, who called them makeshift programs that only sent the nation further in debt. If there is room for bipartisanship, however, this pursuit might be it.

The Hill newspaper points out that both Republicans and Democrats lawmakers last week provided a potential plan to modernize the nation’s infrastructure. That includes “an immediate or phased in modernization of the federal gasoline user fee” to fund the Highway Trust Fund, it added.  

Moreover, the American Society of Civil Engineers estimates that upgrading our surface transportation infrastructure alone will cost more than $1 trillion. $3.6 trillion is necessary for all infrastructure projects, it adds.

“We are going to fix our inner cities and rebuild our highways, bridges, tunnels, airports, schools, hospitals,” Trump has said. “We’re going to rebuild our infrastructure … And we will put millions of our people to work as we rebuild it.”

Manufacturers stand firmly behind the effort. If a port is clogged or shut down, for example, it cost everyone money and the delivery of goods to end users is delayed. Ditto for roads and highways, and air transport systems. But it all requires a national commitment, and investment, they say.

“Currently, the United States is ranked behind many of its biggest global competitors at 11th in infrastructure quality and I don’t think we should be satisfied with 11th,” Mary Andringa, chair of the board for Vermeer Corp. told the US House Transportation and Infrastructure Committee. 

“China,” she adds, “is spending more on infrastructure each year than North America and Western Europe combined.”

By some estimates, she continues, without significant and timely upgrading of our infrastructure, the United States will lose more than 2.5 million jobs by 2025 and more than 5.8 million by 2040.

Private financing cannot replace the role of public funding , she adds, but it should be pursued as a tool to upgrade our aging infrastructure. “One practical tool to increase private investment and public–private partnerships would be to expand the use of private activity bonds.”

Interestingly, this push to expand roads, seaports and airports comes at the same the same as the just released report by the Wind Energy Foundation that says as much as 51,000 megawatts of renewable energy could fail to reach market if the transmission network is not expanded.

Specifically, 100 corporate entities have set a goal to buy 60,000 megawatts of renewable energy by 2025. About 9,000 of that has been purchased, leaving 51,000 more megawatts to go. But serious questions exist as to how to get those electrons on the wires and flowing to where they need to be.

To that end, the foundation says that it will involve both upgrades of the existing network as well as an outright expansion, or new lines. Upgrading lines generally means adding new digital components so that the wires can become more efficient and carry more electrons. 

But the bigger tests will come when those utilities go to widen their transmission networks. Wind Vision — a document released by the U.S. Department of Energy —  says the amount of wind energy could roughly double from what it is today and supply 10% of the nation’s electricity demand by 2020 and 20% by 2030. American Electric Power, furthermore, concludes that if the North American high voltage and long distance lines would be expanded by 9% then 40% of the United State’s electricity could come from renewable sources in 2030.

“It will be a collaborative process,” says Rob Threlkeld, global manager of renewable energy at General Motors, in a phone conversation. “Once it is understood that this demand for wind and solar energy will only be met with additional transmission, then utilities will be a great position to discuss how this will get built.”

GE is part of the Renewable Energy Buyers Alliance that collaborates with the RE100, comprised of companies that aim to run their entire operations using renewable energy by 2050. As for GE, it expects to hit 20% by 2020.

Others in the group include Anheuser-Busch InBev, BMW,  Johnson & Johnson, Kimberly-Clark and Procter & Gamble. The use of power purchase agreements is a critical method of reaching that goal, or procuring wind and solar at fixed prices over a set number of years from developers. But so is buying green power at competitive prices directly from utilities.

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