Sunday Train: Rapid Rail and Pedal to the Metal Climate Change Policy (part 1)

Earlier this month, Micheal Hoexter offered a "A Pedal-to-the-Metal Plan" to respond to the challenge of Climate Chaos at New Economic Perspectives, also crossposted to Naked Capitalism (part 1, part 2 and part 3).

His plan is an overarching plan for a 15-20 year equivalent-to-worldwar mobilization of our economy for the purpose of reducing the degree of severity of the climate catastrophe that our economy has signed up for under status quo policies. What I am looking at this week is the role that Rapid Freight Rail and Rapid Passenger Rail can play as part of the mix of Pedal to the Metal Climate Change policies addressing transport.

There is a tremendous gap today between the maximum that is politically feasible and the minimum required to make a serious dent in the challenge that we face. This piece lies primarily on the "minimum necessary" side of our current political dysfunction, looking at necessary (though not sufficient) structural transformations of our transportation system. However, it is also address in part to the "maximum feasible" side, since these are policies that can be put into place on the back of only a partial political breakthrough, which may not on its own be enough to get a complete Pedal to the Metal policy package in place.

I argue that both Rapid Freight Rail and Rapid Passenger Rail can play the roles of "front-runner" policies on the transport side of a Pedal to the Metal Climate Change policy package. One of the things we look for in prospective front-runner policies is that the policies stand on their own, but they also strongly complement follow-up policies that we would look to put into place to complete the Pedal to the Metal policy package.

Priorities of Front-Runner Pedal to the Metal Climate Change Policies

In my view, there are five priorities for candidates as front-runner Pedal to the Metal Climate Change policies. You may have additional priorities that in your view should be considered, and if so, please contribute them in the discussion.

Speed of project roll-out: A ten year project with concrete results in five years or less. It may be that the politics of the full Pedal to the Metal policy package will be self-reinforcing once it gains momentum, but as we have already seen, specific policy successes will face serious backlash from the individuals and industries with their short term wealth tied to the Climate Suicide Pact. Once projects have been approved and funded, it becomes substantially more difficult in our system to stop them, but given sufficient time to work on the problem without reinforcement in the form of visible results, the risk of the Climate Suicide Pact derailing the front-runner policies increases. And the sooner that visible results are delivered, the sooner that the front-runner policies offer complementary support to other policies in the package. I pick five years or less for earliest visible results and a ten year project horizon in line with the time horizons required for projects that deliver basic structural changes, our two, four and six year political cycles, and with an eye to the laying the foundation for elaborating the Pedal to the Metal policy package within its overall fifteen to twenty year life.

Self-reinforcing: The results of the project as it is rolled out supports continuation of the project. This is the other side of the coin for more rapid project roll-out. Among the range of policies that might be pursued that deliver visible results in a time frame that fits our two, four and six year political cycles, some are self-extinguishing, in that delivery of visible results reduces the urgency and motivation to follow up. The ideal front-runner policy sees increased incentive to pursue the policy as the visible results are delivered.

Cross-reinforcing: The results of the project as it is rolled out support other elements of a Pedal to the Metal policy package. No policies that deliver useful structural change on any front can avoid having an impact on the rest of the economy. And it is easier to destroy complex systems than it is to build complex systems. So unless the project is explicitly chosen to reinforce other parts of the policy package, the odds are that it will tend to undermine them. No matter how rapidly a project results begin to appear and how self-sustaining the project is once established, it is not truly a front-runner project unless it benefits a range of complementary projects.

National in scope: The project should be able to be pursued on a national basis. The presumption for any front-runner project is that it is being pursued after the movement to pursue Pedal to the Metal Climate Change policies have achieved a national breakthrough. However, in that political setting, projects that are only regional in scope will require Congressional horse trading with other projects, and the more projects that have to be involved in the horse-trading, the more vulnerable the deal is to sabotage by the Climate Suicide Pact. Projects that can be national scope allow Congressional horse-trading to involve the distribution of spending in various parts of the country, without being exposed to the risk of a successful political attack on some other project.

Multiple Benefit: the project should be able to deliver benefits that are valuable independent of the benefit to Climate Change. Any 15-20 year policy package is going to require the forging of a robust change coalition. And any project that can deliver a useful structural change will necessarily threaten some vested interests. Projects with multiple benefits aid in recruiting political allies, and as they deliver their results strengthen those alliances.

The Steel Interstate as a Front-Runner Project for a Pedal to the Metal Policy Response

My argument is that both Rapid Rail projects I have been discussion in Sunday Train over the past four years qualify as Front-Runner projects for a Pedal to the Metal Transport Policy package, as part of an overall Pedal to the Metal Climate Change policy package. This week, I will consider the case for the Rapid Freight Rail project that I have called the "The Steel Interstate", following the primarily Virgnia-based Steel Interstate Coalition, following in part on previous discussion of the role of the Steel Interstate project in sustainable transport and energy policy in:

To recap on the "story thus far": the Steel Interstate is a project to establish a national system of electrified freight rail corridors for long haul freight. The target is to replace long-haul diesel truck movements with long-haul electric freight train movements. This offers a double energy efficiency, since train freight offers over three times the energy efficiency of truck freight, and electric trains powered by overhead catanary offers over three times the energy efficiency of diesel trains. The end result is therefore under one-tenth the energy consumption per ton-mile.

Given this efficiency, why doesn't the US already have a national network of electric freight rail corridors? First, there is an effectiveness threshold to clear. The best advantages are offered by the longer routes. The advantages are larger for a grid of corridors than for a single corridor. Second, there is the capital intensity of the project. Private freight railways are quite capital intensive for their size as commercial operations, and so it is financially risky for them to pursue an increase in their capital intensity, especially since the commercial benefit will ebb and flow with the state of the US economy. Third, we have been subsidizing inefficiency in the form of cross-subsidies from automobile drivers to road freight and hidden subsidies of the third party costs of road freight, while freight railroads do not benefit from these subsidies, but rather pay property taxes on their right of way ~ property taxes that are an essential budgetary lifeline for many small town and rural communities that they pass through.

A Steel Interstate system would clear these hurdles by changing the rules of the game. Interest subsidies on capital costs of publicly owned new infrastructure means that the private freight railways are not exposed to either the risks of more capital intensity, nor exposed to an increase in their property tax bill. Allocation of Steel Interstate corridors by a public authority provides the national grid of corridors that increases the usefulness of each corridor. And final corridor allocation made in negotiation with the private corridor owners by the public authority ensures that the project is to the net benefit of the private stakeholders as well as the public interest.

The system would be designed to accommodate both conventional heavy freight as well as Rapid Freight by being balanced for the operation of 60mph freight trains, with the Class 6 110mph track to allow lighter Rapid Freight trains to share the corridor. Sharing the corridor between primarily 60mph Heavy Freight and primarily 90mph-100mph Rapid Freight will allow the Rapid Freight to compete aggressively for the most time-sensitive and delivery-schedule-sensitive freight that truck freight currently dominates. Providing those higher speed freight paths require investment in additional track capacity, which is budgeted as part of this Steel Interstate project proposal.

While the Steel Interstates would have the interest on their financing subsidized, the original capital cost would be repaid by user fees for the overhead electrical energy supply and by access fees for the additional track infrastructure installed by the public authority to allow for Rapid Freight. The subsidy would only represent a fraction of the total capital cost, as the user and access fees refund the original investment and become available for further extension of the system.

I have proposed that the User and Access fees should be set at a "100% utilization" rate, a rate allowing for full original capital cost recovery in set number of years of using the corridor at full capacity. This would mean the more successful the corridors are in attracting freight, the more rapidly the original capital funding can be recycled into extensions of the corridor, and would provide a strong incentive to all parties to develop the most effective freight transport system that they can.

According to the 2008 study by the Millenium Institute undertaken in cooperation with David Drake, a full Steel Interstate system for the 20% of our rail corridors that represent 80% of the freight would cost about $450b total for about 36,000 miles of corridor. The "Front-Runner" project that I propose is to finance an initial 12,000 miles of track. With one year start up lead time for each annual corridor project, this implies 1,200 miles of corridor per year over a ten year project period. At the Millenium Institute's projected $450b for 36,000 miles of track, or $150b for one third of that, and assuming 3% bond rates for a circulating pool of Energy Freedom bonds, that is an interest subsidy rising from $500m in the first year to a peak interest subsidy of $4.5b.

The benefit of the Steel Interstate corridors as insurance against severe petroleum price hikes or interruption to the majority of our petroleum consumption that we import is, in my view, well worth an annual interest subsidy out of the general of $4.5b. That is, in effect, a $150 or less annual insurance premium to ensure that our economy can continue operate as a national economy without severe disruption to long-haul freight flows in the event of a petroleum supply disruption, or a series of severe oil price shocks, both of which seem likely to be growing risks over the coming two decades.

Indeed, compared to the amounts we spend on "national defense" spending that offer far less improvement in our national military security, we could readily justify placing the project in the hands of an expended Department of Defense STRACNET. We wouldn't put the program into the Defense Budget, given the need for a long term interest subsidy appropriation and constitutional limits against Defense appropriations of more than 48 months ... but if it was operated out of the Department of Defense STRACNET, it seems likely that the interest subsidy could be sheltered from political attack for a sufficient period of time for the system to become self-sustaining.

Evaluating the Potential of the Steel Interstate as a Front-Runner Pedal to the Metal Project

Now I turn to looking at how the Steel Interstate through the prism of the five priorities I have advanced for Front-Runner projects.

As far as speed of roll-out, if pursued with full commercial urgency, and given assured capital finance to roll out about 1,200 miles of corridor per year over ten years, we get the first visible benefits in two years, by five years we have two corridors spanning much of the nation from east to west, and by ten years we can have a national grid serving the highest density long-haul freight corridors in the country. Indeed, as the initial project finishes rolling, given ten year's experience in building Rapid Freight Rail corridors at this pace, and if the political will was there, it would be straightfoward to pick up the pace of construction and complete the full 36,000 miles of corridor in an additional five years of construction.

This project is strongly self-reinforcing. The more miles of electric Rapid Freight Rail become available, the more competitive Rapid Freight Rail becomes in a larger range of freight markets presently served by grossly inefficient long-haul truck freight. If pursued on the basis of a given interest rate subsidy and using Access and User fees to refund the original capital funding, once the first corridor goes into operation to establish a revenue baseline, it becomes possible to supplement the original funding with Revenue bonds, and the available Revenue bond funding will grow as the system is rolled out.

This project is cross-reinforcing in several ways. It supports electric and hybrid electric local freight transport, since the local trucking of freight to the railhead implies that an electric or hybrid electric truck may be plugged in to recharge at the loading dock, and plugged in to recharge at the railhead. With a hybrid electric truck, this implies a substantial increase in efficiency due to an increase in the percentage of miles spent on the charged battery, and for a full electric truck implies an increase in effective range, determined by the one way distance between railhead and loading dock. It also supports sustainable passenger transport. A system that allows for 90mph-100mph freight will require Positive Train Control, which is the system required for passenger trains to safely share track with freight trains. And a system designed to allow 90mph-100mph freight to deliver its freight to a tight schedule is also a system that can allow 110mph passenger trains to operate to a tight schedule, so both long distance and medium distance intercity passenger trains can benefit from an increase in transit speed, increase in demand and decrease in operating costs by operating along the Steel Interstate where available.

It is also cross-reinforcing for carbon-neutral power supply. One aspect of the project is the use of the support towers for the overhead electric supply to carry long distance UHVDC electricity transmission lines. This is the specialized high capacity, low line loss point to point transmission that can allow surplus renewable power from one region to be used to make up for a shortfall in another region, reducing the amount of energy storage and back-up energy supply required in a renewable energy supply system.

The project is intrinsically national in scope. The competitive advantage for Rapid Freight Rail is in long-haul transport. For shorter routes, the ability to dispatch trucks one truck at a time on a flexible schedule is difficult for rail to match. However, when one can haul freight safely at 90mph to 100mph over distances of 1,000 to 3,000 miles, the time saved en-route compensates for additional time required to marshal the train at the railhead, and once Rapid Freight can deliver freight as fast or faster than truck freight with similar schedule reliability, rail's lower cost per ton-mile makes the rest of the competitive argument. My future plans for Sunday Train include laying out a sequence of 1,200 mile per year system to emphasize how many of the highest density freight truck transport corridors can be accessed by a 12,000 mile system.

Finally, this is a system with a wide range of benefits. The full elaborated 36,000 mile system can replace roughly 10% of our current petroleum consumption with less than 1% of our current electricity supply, and the Electricity Super-Highway component of the project can make renewable energy sources viable that are worth substantially more than 1% of our current supply, by connecting them to distant markets and reducing the effective volatility of the entire portfolio of renewable energy sources. In addition to the benefits of reduced Greenhouse Gas emissions, that reduces price pressure in petroleum markets, reduces the exposure of the US economy to overseas interruptions to our imported energy supplies, and increases our national security whether in maintaining peace or fighting a war.

A final benefit that cannot be ignored is the impact on our existing Interstate Highway system, where the large majority of road damage done by traffic is done by truck freight and a large share of that by long-haul truck freight. At present, even with a hefty cross-subsidy from automobiles, rather than repairing the damage as it takes place, we are wearing down our existing road infrastructure. Taking a large share of the current long haul truck freight off the road would narrow the road spending gap, and may make it possible to start maintaining our Interstate Highway system in a steady state of good repair.

Conversations, Considerations and Contemplations

So my argument is, this is a strategic project to include in the package of front-runner Pedal to the Metal Climate Change policies we should be developing and popularizing, so that we are prepared to take advantage of any political opening that may present itself.

And now, as always, rather looking for some overarching conclusion, I now open the floor to the comments of those reading.

If you have an issue on some other area of sustainable transport or sustainable energy production, please feel free to start a new main comment. To avoid confusing me, given my tendency to filter comments through the topic of this week's Sunday Train, feel free to use the shorthand "NT:" in the subject line when introducing this kind of new topic.

And if you have a topic in sustainable transport or energy that you want me to take a look at in the coming month, be sure to include that as well.