Without adequate investment on infrastructure the US could face a $2.4 trillion drop in consumer spending by 2020, a $1.1 trillion loss in total trade and experience the loss of 3.5 million jobs in 2020 alone.
This is just a sliver of the doom and gloom the American Society of Civil Engineers predicted this week with the release of their final report in the “Failure to Act” series that focuses on the impacts associated with continued infrastructure deterioration. The latest installment of the ASCE reports focuses on specifically on economic impacts.
Under current investment trends, only 60% of the investment funding required by 2020 will be secured and this underinvestment in infrastructure will have a “cascading impact on the nation’s economy” and culminate in a “gradual worsening of reliability over time,” Gregory E. DiLoreto, ASCE President told the participants on a conference call.
The previously-released “Failure to Act” reports addressed surface transportation, energy, water and wastewater, and airport and waterborne transportation. DiLoreto made the point that all these sectors are inter-related and need to be thought of as a cohesive system. For example, “wastewater treatment plants are one of the biggest users of electricity,” he said.
Janet F. Kavinoky, Executive Director of Transportation & Infrastructure and Vice President of Americans for Transportation Mobility, U.S. Chamber of Commerce pointed out that while the country has been blessed with the opportunity to expand domestic energy production, this will do little good without the necessary infrastructure to transport it to markets and end users.
Kavinoky was optimistic that the ASCE report could provide some of the impetus required to “bridge the gap between the need [for infrastructure investment] and a willingness to act.”
The report and presentation did an excellent job at framing the looming infrastructure crisis, which has been widely reported, but was short on recommended solutions.
Taken For Granted
Jim Hoecker, former FERC Chairman; Counsel & Adviser, WIRES, described US energy infrastructure as a “Collection of critically important strategic assets that are usually taken for granted,” even though the “power grid influences the price and availability of just about everything.”
Congestion on electricity transmission lines thwarts the performance of bulk power markets, he said, and power infrastructure decay has implications for smart technology advancement, reliability, clean energy development and employment.
This is not news – so given the power grid’s importance, why isn’t more being done to shore it up?
Hoecker said it’s not necessarily due to a lack of government funding – as much power transmission infrastructure is privately owned – but lack of investment clarity and regulatory uncertainty. “There is a lack of regional planning and cost recovery issues are a concern,” he said.
There is strong competition for capital and power grid investment is extremely risky for private entities, said Hoecker.
Regulatory hurdles abound as the grid extends across large regions, but is regulated by numerous overlapping institutions – sometimes down to the county board level – which creates a virtually unworkable business climate. Given this counterproductive regulatory system, a national policy would be desirable, he said.