Planes, Trains, and Automobiles

Why extending the Acela is the infrastructure project we need

Intro

This piece has, we’ll admit, changed significantly in the research and writing processes. We started off intending to use the Acela as a metaphor; Most who’ve spent significant time in the East Coast business community ride the trains between DC, New York, and Boston often, and so we thought it an apt exploratory framework for plugging Montreal, as our new climate city, into those economic centers. This is still true, but our position has evolved. Now, we also think the relevant state / federal / provincial governments should legitimately build the damn trains. 

Let’s dive in. 

The Four Minute Mile

One of the reasons we started Coral was a market inefficiency; It’s clear that there’s a colossal amount of money, talent, and attention flowing into climate, and yet there hasn’t been a signature financial win, let alone several, that validate the commercial category and kickstart the associated economic engine. 

For Montreal to truly cement (pun intended) itself as the climate city, it needs to undertake a signature initiative, at large scale, that boosts the commercial outcome of several native companies, ties those businesses into the larger US market, and serves as a proof-of-concept for transformative climate-focused infrastructure projects worldwide. 

It needs a four minute-mile; An Overton-shifting accomplishment that wills green infrastructure into being. 

It needs to build trains. 

Wait, what exactly are you proposing?

We propose a grand public-private partnership to build high-speed rail infrastructure connecting Montreal, Boston, New York, and Toronto into a new Northeast economic development zone, project-managed by the Quebeqois government, and primarily undertaken by private industry from all four relevant constituencies. 

Crazy? Damn straight. 

What’s an Acela?

For those who’ve never been to the East Coast. 1. Sorry. 2. The Acela is a 457 mile high-speed rail line that runs from Boston to DC, with stops in Providence, NYC, Philadelphia, and Baltimore. It’s the most trafficked rail in the US, with ridership of about 2.2m annually, and 20 departures per day. This is especially impressive considering the proliferation of flights along the same route, with 16 departures per day from Boston’s Logan airport to the 7th circle of Hell New York’s JFK. 

The Market

In 2019, the last year before… you know, there were 14.99m US visitors to Canada, the majority of which head to the eastern hubs we’re discussing. While accurate data is difficult to obtain, let’s conservatively say that 20% of the total travels to or through Montreal, 40% to Toronto, 20% to Vancouver, and the additional 20% further off the beaten path, to locales like Alberta and and further north. Our new Acela therefore has potential ridership of 9m+, on routes that are underserved and inconvenient for airlines. Remember our 16 flights between Boston and NYC daily? That number going north is just 3. 

Sidenote; You may be wondering as to the emissions impact of redirecting as many of these ~9m travelers from air and car travel to rail. A fair question. Data from The Kleinmann Center for Energy Policy at Upenn shows a ~54% emissions reduction per passenger mile traveled from air to rail, and more if adding cars into the mix. Even assuming no improvement in Amtrak’s existing diesel trainsets, this modality is much more efficient. 

Aren’t there trains already? 

Sort of. Amtrak currently operates the Maple Leaf line from New York to Toronto, which departs once daily and takes a rather remarkable 12.5 hours to traverse ~500 miles through the gorgeous Hudson River valley. While this is undoubtedly a lovely sightseeing trip for folks with unlimited time on their hands, we’re after strengthened economic ties, and those stakeholders care about efficiency. We need to move faster. 

The contractors

Let’s pull in the best of private industry, backed by public purchasing power. 

Montreal-based Carbicrete (the subject of our next post), provides carbon-negative cement, of which we’ll need a lot to make this project work. 

Toronto-based E-Zinc promises revolutions in battery technology, and can help to power mobile, modular construction crews. 

Montreal-based Effenco electrifies commercial-grade trucks. We’ll take a dozen. 

GHS-Sat, of which we are great fans, can provide transparency and certainty that our project is the most green infrastructure project in the world. 

We could keep going, but you get the idea. There are innovative, ready-to-scale industrial providers that can accelerate tremendously by participating in a project of this magnitude. How, you ask?

The money

Our public stakeholders (The governments of Massachusetts, New York, Quebec, and Ontario), spend about $75bn net annually on infrastructure, per their respective websites and budgets. The federal governments of both nations spend…. A lot more. 

As to the cost of the project, it depends on whose standards are being applied. California has famously been sinking cash into a high-speed rail project for years, with a current estimated cost of $200m (!) per mile. The French, meanwhile, routinely build sections of their TGV for $36m per mile. Canada falls somewhere in the middle, at around $80m per mile for non-tunneled projects. The why of this phenomenon is fascinating & will be explored in a further post. Short version; insane permitting costs and processes, shitty construction controls, and very high healthcare costs driving up labor spend make the US a difficult place to build. 

At European rates, the entire project will cost around $40bn (1,000 miles X $40m per mile), which strikes us as the bargain of the century in order to create transformative economic ties, and to replace a lot of car and plane trips with greener travel. This is why working with innovative companies, and applying stringent cost controls are vital to success. Assuming that costs can be kept inline with the range we suggest, allocating 5% of annual infrastructure spend over a decade to a project of this size seems entirely reasonable. 

We have another suggestion; Each of the mentioned governments has economic development funds, or EDFs which it can spend with significant gubernatorial discretion. What if, and hear us out, the EDFs made a separate equity investment in each of the contracted companies? 

Think about it; Hard-tech companies face a long slog to achieving commercial scale and viability. Once validated by governmental investment, and their revenue bolstered by 5-10 year guaranteed contracts, they’ll take off. Short-lists for other infrastructure contracts, simplicity in attracting follow-on financing, and a direct path to $200m+ revenue and IPO. 

Everyone wins. 

The verdict

Is this piece realistic? Probably not. There are innumerable complexities to any infrastructure project, and this one more than most; Securing the land to lay tracks, finding flat, straight routes to allow for the creation of true high-speed rail, the American political system, etc. It’s unlikely to happen in our lifetimes, sad though that is. 

Our point is this; Those of us working on the climate problem need to think really, really big. We need hyper-ambitious public / private partnerships, new financing structures, and ways to bring the best startups from around the world into the American market. Fast. 

Consider it a challenge. Let’s look for the new 4 minute mile of industry, and start the sprint.