Vironsogo says hello and wishes you a happy new year 2024!
At the start of this new year, I’d like to take a brief look back at COP28 and share with you a sketch of an idea for a mass transit project that has been simmering in my head since June 2023, following a business trip to New York by train. This idea took shape in my mind when, in September of the same year, on my return from a trip to Cape Cod, I was driving along I-93 just north of Boston, when I noticed that it was now permitted to use the shoulder lane during rush hour. Nonsense to me!
COP28 ended a few weeks ago. We understand that negotiations between countries were once again difficult. Several groups campaigning for unequivocal recognition of a phase-out of fossil fuels are disappointed. Their disappointment is justified in particular by the scientific consensus on this issue and the legitimate fear that there is not enough time to make the energy transition required to meet the temperature limitation targets of the Paris Agreement. It’s easy to imagine that certain oil-producing states, Saudi Arabia in the forefront, took a hard line to prevent the need for a rapid phase-out of fossil fuels from being recognized. In the final text of the commitments, countries agreed to take measures to promote a transition away from fossil fuels in a fair, orderly and equitable manner. Despite its shortcomings and grey areas, I believe this language represents a significant step forward. I agree with the UN Secretary General that a complete phase-out of fossil fuels is now inevitable.
Over the holiday break, I imagined a role-playing game and the reflections I might have had if I were in the shoes of the CEO of JPMorgan, Goldman Sachs or another major US financial institution, bearing in mind the conclusions of COP28, the climate emergency and the upcoming US election year. At the end of these reflections, I would have come to the conclusion that it is now imperative for my financial institution and the United States to fully assume the expected global leadership in the fight against climate change, by concretely supporting the movement advocating an unequivocal exit from fossil fuels.
Given the urgency of the climate, and the fact that, despite the considerable increase in renewable energy projects, the move away from fossil fuels is likely to lead to a scarcity of global energy supplies over the years, I would have come to the conclusion that the efforts and changes required to meet this enormous challenge are akin to those deployed by the United States during the Second World War. On the basis of these assumptions, and given that the transportation sector is a major contributor to greenhouse gas emissions, and that it will be very difficult in the short to medium term to significantly decarbonize the air transportation sector, I would have imagined the outline of a public-private mega-project for mass passenger transportation covering the whole of the United States. Big problems need big solutions: A war effort is called for!
This megaproject sketch consists of the development of a medium- to high-speed electrical light rail network serving major U.S. cities and their suburbs. Based on the assumption that it would be necessary to significantly reduce the size of the automobile fleet to meet greenhouse gas reduction targets, and in order to limit social and environmental impacts, I would have come to the conclusion that this rail network project would have to be built by encroaching on existing roads. This would send a clear message about the need to develop mass transit as a priority and in a sustainable way, in a context of climate emergency and ongoing energy transition.
I would then have asked myself how such a project could be financed, and how it could be made unifying, economically viable, and contribute to accelerating the move away from fossil fuels. To do this, I would have asked myself who the main parties affected by the project were. I would have identified, first and foremost, the car and aircraft manufacturers, as well as their subcontractors and dealers, the oil companies, the airlines and intercity bus services. Just as in World War II, when some automotive plants were converted to warplane plants in a vital effort to change the course of events, I would have imagined that auto and aircraft plants could be partially converted to rail equipment plants. With the endorsement and interest of government authorities, I would then have sounded out the interest of the leaders of the targeted parties in becoming financial partners in the project. Investing in the project would give them an additional means of transitioning their capital into a promising sector, as well as managing their risk.
In the context of the climate emergency and the ongoing energy transition, it goes without saying that such a project requires a carefully thought-out communication plan to demonstrate its necessity and benefits to the public. In particular, this plan would highlight the fact that the energy efficiency of the automobile, taking various parameters into account, is excessively low compared with that of the train, not to mention the many inconveniences and significant financial, ecological, social and health losses associated with automobile traffic. When communicating with citizens, it would probably be appropriate to raise their positive awareness of the changes and future efforts required to effectively combat climate change and promote the ongoing energy, ecological and sociological transition. It would surely be appropriate to emphasize that the stakes are probably higher and more complex than those that prevailed during the World War II and the Covid-19 crisis.
I would also have wondered whether a project related to the transportation of goods could, within similar parameters and with the necessary adaptations, be developed in parallel and simultaneously. In the context of an election year, as CEO of a major American financial institution, I would also have wondered whether this project represent a risky gamble, given the real threat of Donald Trump’s re-election. Would promoting this project give ammunition to the Trump camp, or, on the contrary, would it enable us to distance ourselves from it? Would such a project help to give real meaning to the slogan “Make America Great Again”, thus taking the wind out of Trump’s sails?
If I were the CEO of a major American financial institution, I would start 2024 by devoting a good part of my time to studying the feasibility of the outline of this project. In this American election year, discussions surrounding the feasibility of this project would make a positive contribution to the upcoming polarized and acrimonious debates between the Republican and Democratic camps. I would keep in mind that the plausible eventuality of Donald Trump’s re-election represents an enormous threat to the future of American democracy and its economy. The possibility of Donald Trump’s return to power would also hinder the advancement of ESG standards and virtues, in several respects.
Without neglecting the ESG issues affecting Quebec and Canada, I’m also concerned about the situation in the United States because, without a massive contribution from that country to the efforts required, global climate change cannot be contained. I also feel, perhaps mistakenly, that the United States believes it can contain the climate crisis mainly because of present and future technological advances. Although essential to the answer, I believe that technology alone will not be able to overcome the climate crisis.
As in Canada, the budgets devoted to the development and maintenance of road networks in the United States are preponderant in comparison with those for mass transit and rail freight. Despite the hopes raised by the increase in the number of electric vehicles on the market, the expansion of road networks seems to be counteracting the actions required to contain climate change and mobility-related social issues in a sustainable way.
The outline of this project imagined for the United States could also, with the right adaptations, be deployed in Canada. A high-frequency, and possibly high-speed, train project is currently the subject of a request for proposals by the federal government for the Quebec-Toronto corridor. Let’s hope this project comes to fruition quickly, and encroaches on certain highways if necessary. Other corridors could also be evaluated, including the one linking Edmonton to Calgary and Calgary to Vancouver.
The climate crisis is the greatest challenge of our time. Without neglecting the less far-reaching measures that will produce their effects if implemented on a large scale, I believe we need to apply major remedies at the right times. By doing so, we can clean up the balance sheet and improve the accountability we owe to future generations.