Public-private partnerships build infrastructure. Don’t let government dysfunction tear it down.
This week, in a small town in Nevada, engineers have been working hard to construct a critical minerals facility to advance the United States’ transition to electric vehicles. These engineers were working hard last week, too, even while the government careered towards a shutdown on Oct. 1. The reason is simple: Public Private Partnerships.
The Redwood Materials project in McCarran, Nev., is one of dozens of projects funded by the Infrastructure Investment and Jobs Act (IIJA) and the Inflation Reduction Act (IRA) and executed by the private sector. Through its green incentives, the IIJA and the IRA have helped spur massive investment in clean technologies, with a strong emphasis on solar capacity. Expedited with the help of funds from private investors, that success story now needs to be replicated across more renewable energy sources and clean technologies that will make net-zero goals attainable.
Yet, as policymakers in Washington attempt to align efforts to fund the government before the next deadline, global investors are closely watching to determine whether or not further investment in American infrastructure is worthwhile.
Communities across the country continue to struggle with age-old infrastructure that makes it difficult to commute, go online, or reliably access safe drinking water. The private sector has been a vital player in boosting projects that address these challenges. With vital infrastructure projects soon to be in jeopardy once again, investors are asking themselves “is America a safe bet?”
A dysfunctional government obscures the answer.
The president’s ambitious legislative efforts passed over the last two years have positioned the U.S. as the world’s leading infrastructure investment destination. The success stemming from these bills has attracted private capital from around the world to grow investment and expand clean infrastructure opportunities in the U.S. The Global Infrastructure Investor Association (GIIA)’s 2023 Infrastructure Pulse survey shows that the U.S., along with Canada and some parts of northern Europe, is emerging as the most desirable investment destination.
This is a great step forward for the U.S., but it is not news Congress can take for granted. With every verge towards a shutdown, investors reconsider their options. Just take Moody’s warning of the shutdown’s credit negative impact recently made to lawmakers as proof. Investors take calculated risks every day. As those risks begin to look more like bad bets, precedent proves that the private sector will not hesitate to look elsewhere. This is precisely why Congress must focus on function and continue efforts to position the U.S. as a viable incubator for global investment.
Less than a third (30 percent) of U.S. citizens are satisfied with the state of the country’s infrastructure, according to the latest major study of public attitudes towards infrastructure investment from the GIIA and Ipsos. A majority of Americans (57 percent) agree that “as a country, we are not doing enough to meet our infrastructure needs.”
U.S. citizens are starting to recognize the great progress being made by the Biden administration’s leadership, but want to see more and quicker infrastructure delivery. This points to a greater role for the private sector, and we encourage officials at the federal and state levels to build on the U.S.’s appeal to global infrastructure investors.
Fundamental to these efforts will be enabling greater utilization of public-private partnerships at the state level, reforming a cumbersome permitting system, and ensuring that IIJA funds and IRA credits successfully crowd in additional private investment. But more importantly, Congress must re-introduce stability and functionality into our system if they are to successfully attract investments at all.
With the next deadline to fund the U.S. government fast approaching, here is my direct message to lawmakers in the halls of Congress: Take action to ensure that partisan squabbles don’t derail infrastructure improvements before you reach the bridge, or you won’t have one to cross when you come to it.
Jon Phillips is CEO of the Global Infrastructure Investor Association, advocating on behalf of investors in infrastructure around the world. Representing investors with more than $1.6 trillion of infrastructure assets under management across 70 countries, the Association works with governments and other stakeholders to boost the role of private investment in providing infrastructure that improves national, regional, and local economies.