“The Transportation Trifecta” Global Competitiveness– Highway and Bridge Preservation & Clean Air

1. “The Transportation Trifecta”Global Competitiveness– Highway and Bridge Preservation & Clean Air June 18, 2008 FHWA “Talking Freight Seminar” Gregory G. Nadeau MaineDOT Deputy Commissioner

3. GLOBAL COMPETITIVENESS HIGHWAY & BRIDGE PRESERVATION The Transportation Trifecta TRANSPORTATION Investment CLEAN AIR (CLIMATE CHANGE)

4. The Transportation Trifecta • Global Competitiveness • China • 10.5% annual GDP growth (2002-2006) • China will invest 9% of GDP for new infrastructure up to 2011 • 4 of the top ten container ports in the world are in China • 52,000 mile national expressway system planned (41% complete) • Planned 18 major intermodal rail yards

5. The Transportation Trifecta • Air Quality • Climate Change will be a central policy focus of the next federal transportation reauthorization act in 2009. • California and the Northeastern states are leading the nation in policy development to reduce GHG emissions from the energy and transportation sectors.

6. The Transportation Trifecta • Highway & Bridge Preservation • One freight car equals four trucks on our highways and bridges - Approximately 85% of all freight tonnage is moved by truck in Maine (down from 89% in 2000). • Maine alone is looking at a shortfall of over $3 billion just to adequately maintain our highways & bridges and invest in basic strategic investments over the next 10 years. • According to FHWA, freight movement will double over the next twenty years. • We’ve got to get more freight off the roads and on to rail – an ounce of prevention is worth a pound of cure.

7. Forces of Nature • The AASHTO Freight Bottom Line report states that freight demand will grow nearly 90% over the next twenty years. The four major drivers of this freight demand identified are: • First -- Consumption – the U.S. population reached 300 million in 2006 and will reach 380 million by 2035. This population growth will drive more demand for goods driving the demand for more freight transportation. • Second -- Production – Growth in service employment will outpace manufacturing employment, but investment in technology and improvements in manufacturing processes will increase manufacturing output and generate demand for freight transportation.

8. Forces of Nature • Third -- International Trade – Between the 1860’s and the 1960’s, trade grew slowly – imports and exports each represented less than 10% of the U.S. Economy. Trade as a percent of GDP reached 27% in 2005 and is projected to increase to 37% in 2015, and 60% by 2030. This will intensify the flow of goods through our international gateways around the country. • Fourth -- Supply Chain Management – mostbusinesses are moving to pull or on-demand supply chains, replenishing whatever the customer consumes as soon as it is sold. The result has increased the importance of transportation over warehousing.

9. Rail Is Increasingly Important toShippers But needs some attention!

10. Freight Rail Improvement Program-Danville Project • MaineDOT’s first FRIP project is a $5 million joint investment between PanAM Railways / St. Lawrence & Atlantic & MaineDOT • Interline rail traffic between these two railroads is interchanged at Danville and grew 68% in four years. From 14,400 carloads in 2002 to 21,000 carloads in 2005. • Increased traffic has resulted in increased public wait time at at-grade crossings – increased noise and air pollution – increased transit time for Maine shippers. • This project will realign the interchange allowing SLR & PanAM to eliminate the at-grade crossing of the two mainlines. This track reconfiguration will significantly speed up interchange movements. • Public benefits include: - Reduced public wait time and increased safety - Reduced noise and air pollution - Reduced transit time for shippers of up to two days

12. Who can make it happen? • State Governments • The U.S. Federal Government • The Canadian Federal Government • Canadian Provinces • Railroads, Shippers, Retailers, Manufacturers, Distributors…..and other elements of the economy that depend on the transportation system

13. “The Feds” - A New Mindset • “We don’t want the federal government to get out of the way, we want them to get on board! The Federal Government’s funding for rail and intermodalism is anemic at best. We need to make the federal government and states full financial partners with the private sector in the business of moving goods in this country. It will enhance our global competitiveness, reduce greenhouse gas emissions, and preserve our highway and bridge system.”

14. Federal Authorization • SAFETEA-LU Expires in 2009. • Congress must immediately determine how to cure the $3.2 billion (or more) shortfall in FFY 2009. in the HTF (Baucus/Grassly pending.) • The next Transportation Funding Act needs to address the long-term funding crisis. New sustainable source of revenues. • Climate Change policy will influence transportation funding in the next Congress. Freight rail offers one of the few near term solutions.

15. New England Governors & Eastern Canadian Premiers Conference • Connecticut • Maine • Massachusetts • New Hampshire • Rhode Island • Vermont • New Brunswick • Newfoundland & Labrador • Nova Scotia • Prince Edward Island • Quebec

16. New England Governors & Eastern Canadian Premiers Conference • The NEG/ECP Conference has been active for the past 31 years. • It has a history of collaboration on regional issues – particularly environmental issues. • Focus on issues that don’t recognize borders like energy – environment & transportation. • Reduction of GHG emissions has been a particular focus since 2001.

17. New England Governors & Eastern Canadian Premiers Conference • 31st Conference held in Prince Edward Island, Canada on June 26, 2007. • Received report of a Ministerial Forum on Energy and Environment held in Quebec City on February 12, 2007. • Preparation for the Ministerial Forum included a forum entitled – Transportation Solutions to Climate Change held in Portland, Maine on December 15, 2006.

18. New England Governors & Eastern Canadian Premiers Conference • Governors and Premiers adopted recommendations of the Ministerial Forum in PEI. • They included creation of a Standing Committee on Transportation and Air Quality. • The Committee is charged by Governors and Premiers to implement specific action items included in the Forum recommendations.

19. Standing Committee on Transportation and Air Quality – Action Steps • The Committee make includes transportation and environment officials from the eleven jurisdictions. • Goals and Objectives: - Reduce air emissions RGGI (Regional Green House Gas Initiative) - Set regional goals for greenhouse gas reductions from the transportation sector. • Develop Regional Transportation Action Plan and report to 2008 NEG/ECP Conference to be held in Maine.

20. Standing Committee on Transportation and Air Quality – Action Steps • Development of environmentally friendly biofuels. • Consider policy options like CA proposed Low Carbon Fuel Standard (LCFS) • LCFS sets a 10% GHG reduction target for fuel providers by 2020.

21. Standing Committee on Transportation and Air Quality – Action Steps 2) Promotion of fuel efficiency in all modes of transportation. • Investigate use of incentives for public to acquire fuel efficient vehicles like feebate programs. • Utilize fuel-efficient and GHG friendly vehicles in public transportation fleets.

22. Standing Committee on Transportation and Air Quality – Action Steps 3) Expansion of alternative transportation and commuter services. • Explore regional transit system opportunities. • Address funding issues and opportunities.

23. Standing Committee on Transportation and Air Quality – Action Steps 4) Alignment of infrastructure funding with energy and climate goals by encouraging energy-efficient development in municipalities and regional entities. • Develop and promote programs that prioritize funds for jurisdictions that employ “smart growth” strategies. • Incentives for transit-oriented development.

24. Standing Committee on Transportation and Air Quality – Action Steps 5) Use of life-cycle greenhouse gas and carbon emission analyses to set indicators for policy and project planning. (When appropriate) • The Committee will determine if transportation measures have adequate Lifecycle Analyses (LCA) estimates associated with them – if not, research consistent sources.

25. Standing Committee on Transportation and Air Quality – Action Steps 6) Governors and Premiers will seek to adopt clean car programs including the CO2 and air quality standards, such as California standards, throughout the entire region. • Expand CA-LEV to NH and Eastern Canadian Provinces.

26. Standing Committee on Transportation and Air Quality – Action Steps 7) Collaboration with the private sector to seek new opportunities to enhance regional interconnectivity and efficiency of freight networks in the region. • Engage the private sector to jointly assess opportunities to improve freight movement efficiency. • Opportunity to reduce GHG emissions and improve regional competitiveness.

27. AASHTO Authorization Policy Process Freight Funding Modal Team

28. FREIGHT STAKEHOLDERS

29. FREIGHT FINANCING QUESTIONS QUESTIONS Do you think that the freight industry in general would be willing to support new sources of revenue for investment in freight transportation infrastructure? New sources of revenue that have been mentioned include percentage of customs fees, waybill tax, tax credit bond financing, ITC, container tax, VAT, and carbon tax.  What would you add to this list? Which of the above do you think is worth further consideration and might get enough support to be enacted? What general criteria would you apply to determine the acceptability of a new revenue source? Are there any analyses or position statements produced by your organization or others that you would recommend as being useful on this subject?

30. The U.S. is preparing……. … to address Global Warming

31. Connecting Maine Thank You Gregory.Nadeau@maine.gov