High-speed rail is feasible in the US

Financing high-speed rail projects is notoriously complex. Compared to high-speed rail networks in Europe and East Asia, replicating similar high-speed rail networks in the United States would require generations of investment. However, Florida could be a pilot that, albeit on a smaller scale, achieves its goals without delay.

Also read: Canada rail outage worsens, billions in U.S. funding tied up

Florida’s high-speed rail, Brightline, opened last September. In the long term, an increasing population base and a booming tourism industry will drive demand. Rail trains travel at about 125 miles per hour, connecting Orlando and Miami. They are faster than Amtrak or cars, and the price is competitive. Brightline is operated by Florida East Coast Industries (FECI), which accumulated private capital and tax-exempt debt before construction, and used federal funds for safety measures, construction, and auxiliary support.

The Biden administration has allocated more than $6 billion in federal funds for high-speed rail construction across the country. The ambitious plan to connect San Francisco and Los Angeles has been in the works for nearly two decades, but the typical cost overruns and delays that plague most high-speed rail projects have persisted. The estimated cost of the California project nearly 15 years ago was $33 billion, while the latest estimate today is $100 billion.

Although the distance between Orlando and Miami, Florida, is shorter than between San Francisco and Los Angeles, doing business in Florida is less restrictive than in other Western states. California’s cap-and-trade system is designed to minimize greenhouse gas emissions. The state issues companies a “cap” on how much they are allowed to emit, which they can then trade. The model is market-based, but still means extra costs compared to Florida, which doesn’t have a similar system.

Second, California has a “Buy American” policy that requires all federally funded projects to use domestic materials. Understandably, some domestic materials are more expensive than imported materials, but FECI does not have to face this problem in Florida.

The challenge facing FECI and Brightline is ridership. The company expects to reach 8.2 million riders by 2026, but that will be a tough challenge. Another theory as to why high-speed rail hasn’t caught on in the U.S. is America’s car culture. In many states, residents are used to their cars, love them, and need more urging to give them up than elsewhere. Regardless, if Brightline succeeds in Florida, the U.S. will finally have a sustainable model to move forward. From then on, it will be up to state legislatures to decide how business-friendly they choose to be.