Obama proposes bold new clean transport program financed by a $10/barrel oil tax

The White House announced today its plan for a proposed “21st Century Clean Transportation System”. The President’s plan will be part of the final proposed budget next week and will include over $300 billion in investments in mass transit systems, high-speed rail, self-driving cars, and other transportation systems aiming to reduce carbon emissions over the next 10 years.

What is particularly interesting, but at the same time depressing due to the extremely low odds of making it passed a Republican-controlled Congress, is that Obama’s plan would include a $10/barrel oil tax to fund the new clean transport initiative. Oil is currently priced just over $30 a barrel.

The plan would increase American investments in clean transportation infrastructure by roughly 50 percent. It would also include nearly $20 billion per year to reduce traffic by expanding transit systems. Investing in maglev trains is mentioned in the plan. No love for the Hyperloop?

The administration published a fact sheet summarizing the plan:

A new approach to an old system

Our nation’s transportation system was built around President Eisenhower’s vision of interstate highways connecting 20th century America. That vision enabled economic expansion and prosperity, fostered a new era for automobiles, and supported the growth of our metropolitan areas.  But what remains today of that system is not ready to meet the challenges of a growing 21st century economy. What used to be the world’s leading transportation system is no longer even in the top 10. And today’s transportation system imposes a hidden tax through congestion, which every year costs families $160 billion and businesses almost $30 billion.

Late last year, Congress passed a bipartisan long-term transportation bill that finally broke a decade-long cycle of short term extensions and made important gains on permitting reform, innovative finance, and dedicated freight funding. However, last year’s bill was merely a first step towards what our economy needs, with only a modest increase in infrastructure funding.

The Benefits of the President’s Plan

• Reducing carbon pollution: The plan would make public investments and create incentives for private sector innovation to reduce our reliance on oil and cut carbon pollution from our transportation sector, which today accounts for nearly 30 percent of U.S. greenhouse gas emissions.  The investments in vehicle research and deployment would get clean autonomous vehicles on the road more quickly and more safely, while ensuring electric cars and other alternative vehicles have the technology and the charging infrastructure they need.
• Strengthening our economy: The President’s plan would support hundreds of thousands of good-paying, middle-class jobs each year and increase the competitiveness of U.S. businesses and the productivity of our economy by making it faster, easier, and less expensive to move American-made products.
• Making transportation easier for American families: The plan would expand clean, reliable, and safe transportation options like public transit and rail, making it easier for millions of Americans to get to work, access new jobs, and take their kids to school—reducing the 7 billion hours that American waste in traffic each year.

Background on the bold investments in the President’s Plan:

For the United States to remain a leader in the global economy, while reducing the carbon pollution that fuels climate change, we need to take a new approach to our investment in infrastructure planning and funding. The President’s 21st Century Clean Transportation Plan would set America on a long-term path to achieving our economic and climate goals by:

• Refocusing federal investment to enhance transportation options for American families:  The President’s plan invests nearly $20 billion per year above current spending to reduce traffic and provide new ways for families to get to work and to school. The plan would expand transit systems in cities, suburbs and rural areas; make high-speed rail a viable alternative to flying in major regional corridors and invest in new rail technologies like maglev; modernize our freight system; and expand the Transportation Investment Generating Economic Recovery (TIGER) program begun in the Recovery Act to support high-impact, innovative local projects.
• Rewarding state and local governments for innovations that lead to smarter, cleaner, more resilient transportation systems:  The President’s plan invests roughly $10 billion per year to transform regional transportation systems by shifting how local and state governments plan, design and implement new projects. The President is proposing to reform the existing transportation formula programs to ensure that local, regional, and state governments are maximizing returns on public investments and delivering better outcomes. As part of reforming formula programs, the plan would create a new Climate Smart Fund that provides bonus funding to states that use existing formula funding to cut carbon pollution in the transportation sector – for example by encouraging better land use planning, investing in clean vehicle fueling infrastructure or increasing use of public transportation. The plan would also launch three new competitive grant programs: a 21st Century Regions program to implement regional-scale transportation and land-use strategies, a Clean Communities program to support more livable cities and towns with expanded transportation choices, and a Resilient Transportation program to spur investments that bolster resilience to climate impacts.
• Accelerating the safe integration of autonomous vehicles, low-carbon technologies, and intelligent transportation systems into our infrastructure:  The President’s plan invests just over $2 billion per year to launch a new generation of smart, clean vehicles and aircraft by expanding clean transportation R&D and launching pilot deployments of safe and climate smart autonomous vehicles. It also accelerates the transition to cleaner vehicle fleets in communities around the country, including expanding Diesel Emissions Reduction Act Grant Program funding, and supports the creation of regional fueling infrastructure for low-carbon vehicles. The budget also proposes to invest $400 million a year to ensure that new and changing technologies are integrated safely into our transportation system.

Background on funding the President’s plan:

For too long, bipartisan support for innovative and expansive transportation investment has not been accompanied by a long-term plan for paying for it. We need a sustainable funding solution that takes into account the integrated, interdependent nature of our transportation system. Travelers choose between walking, biking, driving, flying, and taking the train; and companies choose between trucks, barges, airplanes and rail lines. So to meet our needs in the future, we have to make significant investments across all modes of transportation. And our transportation system is heavily dependent on oil. That is why we are proposing to fund these investments through a new $10 per barrel fee on oil paid by oil companies, which would be gradually phased in over five years. The fee raises the funding necessary to make these new investments, while also providing for the long-term solvency of the Highway Trust Fund to ensure we maintain the infrastructure we have.  By placing a fee on oil, the President’s plan creates a clear incentive for private sector innovation to reduce our reliance on oil and at the same time invests in clean energy technologies that will power our future.

In addition, the President’s plan:

• Utilizes one-time revenues from business tax reform: The plan would continue the President’s call to use the one-time revenues from pro-growth business tax reform to fund a temporary near-term surge in investment, while the oil fee will play for the long-term investments needed to put us on the right path for the years ahead.

• Provides assistance to relieve energy cost burdens for families: Consistent with other Congressional proposals to increase energy fees, the plan would provide assistance to families to relieve energy cost burdens, including a focus on supporting households in the Northeast as they transition from fuel oil for heating to cleaner forms of energy.