Study of High Speed Rail in Alberta

Transcription

1 Study of High Speed Rail in Alberta Presentation to Standing Committee on Alberta s Economic Future Marc-Andre Roy February 4, 2014 Via Videoconference

2 Many options, varying capital costs: $3-$8 billion + $ $$ $S$ Route alignment Vertical alignment Rolling stock technology Electric vs. Diesel, etc. At Grade Below Grade Above Grade 200km/hour Talgo (Spain) 240km/hour Acela (US) 320km/hour TGV (France) 2

3 Economic Considerations 3

4 Economics of Alberta HSR Economic benefits of HSR could include increased mobility, productivity, reduced emissions from car and air travel, reduced wear and tear on roads, fewer accidents, time savings, etc. (all things that are difficult to measure, price) Economic benefits hinge on ridership => travelers shifting mode choice from road/air to rail My Personal Views No one truly knows ridership potential for HSR on corridor: Gamble Are Albertans willing to leave their car behind to take a train? Unclear Would HSR have a negative impact on for profit air/ bus transport? Probably Will the economic benefits of HSR outweigh the costs? Well this depends Is Province committed to getting people out of their cars, and onto a train? Are Calgary, Edmonton, Red Deer and YEC, YEG committed to integrating transport and development plans with HSR (e.g. transit connections to HSR)? Is HSR better use of public dollars relative to, say, health and education? 4

5 Less to do with short and medium term economics More to do with long term political vision for the Hwy 2 corridor Encourage use of personal cars? Maintain/expand highway capacity Subsidize use of cars (via roads) Encourage use of rail? Build HSR. Subsidize use of rail. High frequency. Road user charges / Discourage YYC-YEG air travel Integrate rail in provincial transport plan 5

6 [Political] Timing challenge: years: Project studies, debates, green light, environmental assessment, corridor acquisition, legal issues, procurement, design, construction, testing, all aboard. Significant cost before anticipated benefits, which will likely take years, and several political terms to realize Political traction and funding commitment today? 6

7 Funding and Affordability: Project WILL Need Public Investment Project primarily premised on generating public benefits Public Benefits Public benefits - Mobility / accessibility - Productivity - Regional economic devt. - Regional competitiveness - Job creation, etc. Negative externalities - Road congestion - Emissions - Road maintenance - Other social costs, etc. vs. Private (Commercial) Returns Return Adequate Return on Investment Given Level of Risk Risk/Return Profile Risk Private investment in rail projects: Return on investment expectations generally north of 15% 7

8 What sources of revenue could be used to FUND HSR? Private Financing Debt (commercial loans, bonds, line of credit, etc.) Equity (share issue, private equity) Public-Private Partnerships (PPPs) Other (Equipment leasing, etc.) Revenues Rail service (passenger fares) Ancillary revenues (e.g. related services) Other (e.g. retail/commercial developments) Project Capital Costs Operations and Maintenance (O&M) Funding Gap Funding Gap Or Net Profit (?) Public Funding (Capital) Public Subsidies or Revenue Guarantees General Account and Specific Government Funds Taxes (income, sale of goods & services, fuel, property, etc.) Fees and user charges (e.g. toll roads, parking, etc.) Value capture (developer charges, Tax increment financing, etc.) Government guarantees Other innovative funding mechanisms 8

9 Funding and Affordability of HSR Fact: All international HSR projects need some form of public support or guarantees to be viable. My personal views: Is there a commercial business case for investment in HSR infrastructure? Unlikely Can above rail operations be commercially viable? Maybe in the long term Maybe not Will the private sector put its own capital at risk without significant government guarantees (e.g. availability payment structure)? I doubt it. The Alberta HSR WILL require public investment, particularly for land acquisition and infrastructure, in the $ billions. There are many potential funding sources, but the question is - is there political appetite to use tax-payer / user charge sources of funding for HSR? 9

10 I would be remiss not to mention rural impacts Message: Key is understanding potential impacts of HSR on rural communities in Alberta to inform meaningful dialogue of options to mitigate negative impacts. 10

11 Potential Rural Impacts of HSR: Depends on Alignment Impact Magnitude RGA Highway 2 CPR Road User Impacts Emergency vehicle access Traffic delays & travel time & routing changes Commercial and Economic Impacts Foregone land-use opportunities Farm severance psychological costs Farm equipment access Livestock access Social and Environmental Impacts Wildlife mobility Recreation Noise and vibration Landscape and visual quality Administrative and Planning Impacts Planning uncertainty Road maintenance costs School bussing Emergency services training Equal across all three alignments 11

12 Questions and Discussions Marc-André Roy, IMBA, CMILT Partner, Vice President (North America) T: x 306 C: F:

13 CPCS Global management consulting firm (formerly consulting arm of CP (est. 1969)) Focused on transportation sector - passenger and freight Strategy, economic analysis and policy Multimodal CPCS Countries of Work Experience (shaded) and Offices (dots) Recent North American project experience: Alternative Revenue and Financing Mechanisms for Rail Projects (TRB) Benchmarking Intercity Passenger Rail Performance (Transport Canada) Rural Impact of HSR in Alberta (AAMDC) 13

14 Summary of Recent CPCS Experience Freight Rail 100+ Strategy mandates 8 Transactions $3+ billion in deals Port & Terminals 35+ Strategy mandates 30+ Transactions $5+ billion in deals Multimodal Transport 30+ Strategy mandates Passenger & Transit 10+ Strategy mandates 3 transactions $3 billion in deals 14