The infrastructure landscape in the U.S. is approaching an exciting period filled with new frontiers and opportunities to revamp outdated models. With that excitement, however, comes a greater burden on government decision-makers to accommodate long-term thinking into their plans. There is a widespread, bipartisan consensus that America's infrastructure is below any acceptable standard and that now is a critical point in reversing that trajectory. A recent S&P Global Infrastructure Ratings conference addressed these issues and offered an idea of what lies ahead.

With a particular focus on the P-3, S&P Global Ratings' P-3 & Renewables Sector Lead, Trevor D'Olier-Lees, moderated a discussion with C-suite industry experts in the global infrastructure space. A replay link for this insightful panel discussion can be found here.

Slow And Steady Wins The Race--Biden's Infrastructure Agenda

There was widespread disappointment among the panel that the infrastructure bill has not yet been passed. Amit Rikhy, a member of the Biden Administration's planning subcommittee, noted just how significant the bill's impact could be. Centering the infrastructure agenda around climate change was a priority for the subcommittee along with promoting infrastructure equity across America in less developed, rural communities.

Another issue the Biden plan addresses is Transportation Infrastructure Finance and Innovation Act (TIFIA) financing and an expansion of the program. Both Rikhy and Discenza noted how important TIFIA funding is for their respective asset sectors. Rikhy expanded on that point indicating that "TIFIA financing for airports is relatively unused or really hasn't been used in any major way" so there is a glaring demand for their inclusion into the TIFIA framework. Meanwhile Transurban's assets, Discenza pointed out, have a track record with TIFIA financing. The bill mandates a doubling of the private activity bond cap from $15 billion to $30 billion. Rubio added to the TIFIA discussion, highlighting a provision that establishes a "requirement to run a value for money analysis on every project that goes with a budget over $750 million and uses TIFIA or rail federal funding." The panel believed the revamp of TIFIA financing will improve the overall decision-making process in the infrastructure landscape.

Asset recycling was another popular topic for the panel as Discenza noted how the bill allocates $100 million to the U.S. Department of Transportation for assistance with the asset-recycling process. This largely beneficial transfer of asset ownership from the public to private sector has been heavily deployed in countries like Australia but is only modestly deployed in the US. Discenza stated that implementing asset recycling into the U.S. model has the potential to "unlock and offload these assets that need long-term major maintenance and enter into partnerships with private sectors to take on that responsibility in exchange for cash." Bonner touched on another important aspect of the bill, an increased awareness of long-term thinking in relation to public planning. The ongoing COVID-19 pandemic has shifted the priorities of P-3 development from strictly traditional assets such as roads and bridges to now include broadband in the hopes of "closing the digital divide and connecting rural areas and other smaller communities outside some of our urban centers." In addition, revamping the traditional assets to be more resilient to climate change and any future social crises represents another emerging concern in P-3 development. Rubio further developed this point, emphasizing that the bipartisan bill "is going to be a catalyst for some public authorities to step forward and take the decision of bringing the public sector and the private sector into their projects."

P-3 Market Conditions

Nicolas Rubio pointed out the considerable levels of liquidity in the P-3 market. With infrastructure investment gathering momentum, the problem arises in "the availability of opportunities rather than the availability of funds."

He went on to indicate that broadband might merit the most market attention because of its capability to address equity concerns around internet accessibility. In addition, the P-3 market will be drawn to resiliency initiatives that can reinforce existing infrastructure and have lasting sustainability benefits.

Back to the Future--The Need for Urban Air Mobility

Addressing the transportation needs of the future, Amit Rikhy presented an interesting account of how plausible personal urban air mobility is. With many manufacturers already in the trial-testing phase, a future of cities filled with personal aircrafts is not too far away as the 2024-2025 timeframe seems to be gaining traction.

With such innovation comes some level of concern. Rikhy pointed out "the regulatory issues that still need to be solved" and the potential congestion and safety issues. This concern is mitigated by the fact that along with manufacturers, airlines and vendors are making commitments in the form of ESG-friendly landing pads and large aircraft orders, respectively.

Connected And Autonomous Vehicles Lead The Way

Diving further into potential areas of technology disruption, connected and autonomous vehicles (CAVs) are gaining attention. Transurban, Discenza noted, has been a center of CAV development. The company has a record of deploying CAVs in real-time trials and sees an opportunity for their use in high-tech express lanes.

Nicolas Rubio continued on the subject acknowledging that CAVs will be a disruption to traffic and, as such, traffic forecasting, and he also devoted time to explaining more about the technology. The different levels of automobile autonomy, L1-L5, represent just how hands-off a CAV model is and current versions are transitioning toward L3. Regulation and safety concerns, again, deserve a mention, but the technology is dedicated to increasing driving capability and guaranteeing safety.

One of the long-term issues that CAVs pose is whether there will be a greater increase in the demand for passenger car traffic that ride-share apps like Uber have catalyzed or the natural increase in road capacity that CAVs provide because of their increased speed and ability to drive in closer proximity. Another issue that Bonner highlighted is the capacity of disruption that innovations like CAVS have on planning decisions. To that end, he asked "How do you build an environmental review process that is going to be very important around these new technologies that have uncertain demand, uncertain utility, and things of that nature?" While there is no immediate answer to the question, it is a concern that the most successful public planners will consider.

Roads Are Changing

Discenza and his team at Transurban have developed a tolling app similar to E-Z Pass that will allow people to pay with a mobile app on both Transurban and non-Transurban assets. It's currently available in Virginia, North Carolina, and Florida with plans for expansion to California with the hopes of competing with E-Z Pass. This monitoring of road usage would play into the idea of mobility as a service, the shift in the transportation model that platforms such as Uber and Lyft are advancing.

In addition, monitoring and more efficiently charging gas-tax and mile usage is gaining more importance. With the growing popularity of low- and zero-emissions vehicles, the static gas tax becomes an increasingly inefficient method of charging for road use. Discenza touched on the idea "that there's a way to embed technology in the vehicles to monitor how far you're driving and calculate a per-mile charge." This idea is being tested in real-time trials with potentially groundbreaking results.

ESG Will Not Be Ignored

ESG merited its own designated discussion section and every panelist addressed the matter. The general feeling among the panelists reflected exactly what the market is telling the world now: ESG is a permanent part of financial decision-making. Crucially, working along all parts of the ESG spectrum was a priority for all panelists and for all the market participants with whom they interact.