With another $4 billion from the Biden administration & Congress on its way to electrify and cut emissions at our nation’s ports, the federal government is continuing to demonstrate the need for modernization and innovation of our maritime infrastructure. In this VX2023 plenary conversation, moderated by Arup’s Katherine Perez, Denver International Airport CEO Phillip Washington and Port of Long Beach Executive Director Mario Cordero share the progress being made & the transformational challenges ahead in greening their respective air and sea ports; as well as what they project is the return on the investments being made.
Katherine Perez: This VX2023 panel is about addressing important issues with two of the most preeminent port leaders that we could ever assemble: Phil Washington and Mario Cordero.
Let me introduce them for a moment because we know them both very well. Phil Washington is the CEO of the Denver International Airport: the third busiest airport in the world and the seventh busiest airport by passengers. Before that, as we all know and lovingly remember, he was the CEO of LA County Metro, from 2015 to 2021, overseeing $18 to $20 billion of capital projects and an agency of more than 11,000 folks. He also spearheaded Measure M. We all benefit from the investments that M is bringing with nearly 778,000 jobs. Also, I want to say that he is a veteran of the Army. Thank you very much, Phil, it's always great to have you in Los Angeles.
Mario Cordero is a resident of Long Beach and an attorney; and he's the Executive Director of the Port of Long Beach. In 2011, he was appointed by former President Barack Obama to the Federal Maritime Commission, and he stayed there until 2017, when he came to Long Beach. As of 2021, he has also been appointed to the Federal Reserve Bank of San Francisco and sits on the Los Angeles branch of the seven-member Board of Directors. He also has a distinguished record of teaching and other appointments in Long Beach. So, it's great to have them both here with us.
Now, we don't have a lot of time; and, Phil and Mario have a lot to say. I have one question for them each. I'd like to start by painting a picture of where we are with infrastructure in Los Angeles and the state of play. We have $1.1 trillion in US infrastructure funding that is supposed to, hopefully, optimize our economic recovery efforts, maximize our transformational climate, infrastructure investments, and, importantly, accelerate growth in our global clean energy economy.
At the end of the day, airports and seaports lie at the center of this transformation. Our national effort is really organized around how we're going to use this extraordinary moment in time to upgrade and green our nation's infrastructure. I'm going give Phil an opportunity, as our guest from Denver, an opportunity to state how he sees it from his vantage as the Head of Denver International. Phil.
Phillip Washington: Well, first of all, thank you, Katherine.
Let me start off by saying something on the Bipartisan Infrastructure Bill. We are at a time of great investment in our infrastructure, but I've got to say that we need much more.
Airports received $25 billion of the $1.2 trillion. ACI, which is the Airports Council International, estimates that America's airports need about $151 billion over the next five years. Now there's a lot of things that go into that: there is climate change; there's the impact of flooding; there's the impact of heat; there are more people flying. When I look at the $1.2 trillion, yes, that is significant, but when I look at what China or what other folks are doing in terms of investing in their infrastructure, we need to move forward with infrastructure spending in this country.
We took a delegation to Africa in February because we're trying to get a direct flight from Denver to the continent of Africa. I listened to what they were thinking about in terms of infrastructure. What they were thinking about building and the resources that they needed was incredible. I saw a huge opportunity for this country and businesses in this country to invest in many places, but the continent of Africa is something that we should be thinking about in terms of investment.
The last thing I'll say on this segment is that, often, practitioners like myself and Mario and others think in a transformational way. Mario is thinking about ports 20, 30 years from now. I'm thinking about airports into the 2040s. Often, we talk to our leaders who are transactional. They are thinking about their four years in office. They are thinking about their reelection. Invariably, we tend to be talking different languages.
When we say that we need to move forward with global leadership in aviation or how we need to get rid of PFAS or how we need to get rid of or plug abandoned oil wells that are on the airport in Denver, we need to keep leading the leaders, as I call it. We make them think in a transformative way.
I like the idea of the $1.2 trillion. It's a good start, but when we are looking at how infrastructure is right now, being used for so many more people than it was ever designed for, I think we need much, much more.
Katherine Perez: Thank you, Phil. It's great to see he hasn't changed a bit. He’s got the same fire energy that he had in Los Angeles, he's got now in Denver. It's great to hear your comments about Denver International. Mario, do you want to go ahead and start.
Mario Cordero: Thank you, Katherine. It's an honor to be here. Thank you, David, for your leadership over the many years about greening not only the supply chain, but going green in every respect that we can. It's always an honor to be on the same stage with Phil Washington. We miss your leadership here, Phil, in LA County. You can always come back because we need an answer to the 710 program.
Basically, in 2005, we moved forward the Green Port Policy. As part of that policy, we acknowledged the fact that when we invest in infrastructure at the port, we have to do it in a sustainable fashion. Now, back in 2005, a lot of people didn't know what that meant. Now, if we look and see what we've done, it's a great story in terms of how the Port of Long Beach has moved forward to create not only efficiencies, but sustainable development and reduce the footprint regarding harmful emissions emanating from ports.
One of the big projects that we have coming is the Pier B on-dock rail facility. This is very important because, back in 2005, we committed to not only reducing emissions, but decongesting our corridors. In other words, fewer trucks on the corridors. The answer is amplifying how we move containers by rail. This is a $1.5 billion project. I'm very proud to say that up to this point, the Port of Long Beach has received the highest grant from Washington D.C. by way of the Port Infrastructure Development Program (PDIP). That was nearly $53 million.
As Phil referenced, is that enough money? No. Is it the shape of things to come? Hopefully. Do we need to keep advocating for funding? Absolutely. Whether it's at the federal level or at the state level, we've been a beneficiary of some funding. One of the things that has brought this out was the pandemic. People realized that the supply chain was not as resilient as some people thought. There have been a lot of conversations in Washington and Sacramento about investing in ports.
Another big project that we're working on is deepening the channel, so that we create greater efficiencies with some of the larger vessels: the tankers and bulk vessels. That will result in lower fuel consumption. So, another big project that we're working with the Corps of Engineers and moving forward to have a groundbreaking on this project by 2027.
The next program is the one that we're very proud of, along with our partnership with the Port of Los Angeles: a Clean Air Action Plan. Obviously, there’s been a lot of news over the weekend in terms of the CARB Regulation. When you look back in terms of what these ports did in 2017, the respective Commissions of these two ports moved forward with a cutting-edge policy to make sure that everybody understood that the goal at the San Pedro Bay complex ports was to move forward to zero emission cargo hauling equipment by 2030 and zero emission trucks by 2035. Of course, we welcome the truck rule now moved forward by CARB because it basically fortifies what we projected back in 2017 and will help us to get to that goal.
Incidentally, the Clean Air Action Plan also emphasizes the continued move for us to invest in rail. The more containers we put on rail to get out of the metropolitan area, the better, not only in terms of congestion but reducing the carbon footprint.
The next is our latest endeavor with the Port of Los Angeles, what I call the Port of Long Beach Goods Movement Training Center. This will be a cutting-edge training facility unlike any other facility in terms of the Port Authority District in the United States. The concept is about workforce development. Part of that is developing the skills of the next generation of labor. I think this is a very promising project that we're moving forward with. We've already received $110 million from the Governor’s office to budget this 20-acre site in the San Pedro Bay Complex.
Now, this is the proudest endeavor that we announced recently. Admittedly, it’s very visionary. The Port of Long Beach feels they have an answer to collaborate with the State of California to move forward with a goal of five gigawatts, as a state by 2030; 25 gigawatts by 2045. Obviously, this is a large endeavor that we're undertaking to reduce the carbon footprint and for us to get to zero emission, renewable energy is a necessary part of the game plan. We need to be 100 percent renewable, not only regarding solar, which we're very well versed in now, after several years. We're moving forward with an amplified wind project here at the State of California. We believe at the Port of Long Beach will be able to partner with the State and other ports to make this a reality.
The last thing I want to touch on is the equity and infrastructure. All the credit goes to Phil Washington and his leadership in terms of making sure that when we talk about equity, inclusion, and diversity, at the end of the day, we’re in a monumental era of governmental infusion of infrastructure projects. It's incumbent for public agencies to practice that equity issue when it comes to infrastructure. Many of us in public agencies, in these public procurements, go to the same old companies. It is paramount, whether it's a disadvantaged, minority, or as we say HUB (historically underutilized businesses), to get the opportunity to have a contract procurement opportunity in public agencies.
The Port of Long Beach was one of five movers. We were the first of the Port Authorities. We're very proud of this endeavor coming from the White House. There is a lot of momentum across the country because of the leadership of Phil Washington. We are very happy to be in this position.
In conclusion regarding my opening remarks, I think, again, I'd like to acknowledge my Committee President, Sharon Weissman, who's here and Commissioner Loewenthal. I'd like to impress on this group, as I have in years past, that these two ports at the San Pedro Bay complex are environmental stewards and leaders, not only in the nation, but in the world. I know there's a lot of pressure on them to come to become zero tomorrow, but I think if you look at the CARB regs, even CARB knows it's a pragmatic time that we have to accomplish here. It will take some years. Thank you so much.
Katherine Perez: Thank you very much Mario for giving us an update and overview of Long Beach. As a sponsor of this conference, but also, as a firm that works on a lot of projects, I have to say that Long Beach Port is one of the most ambitious and audacious groups I have ever met. It's exciting to see the level of energy that you bring to that.
One of the things I want to ask you about, Phil, before we come back to the one question, I have for each of you. As you said, Airports Council International says we need $151 billion over the next five years to basically fund our aviation needs in the States. I'm not surprised. In 2021, you stated that you strive for the Denver International Airport to become “the greenest airport,” not in the U.S., but in the world. Denver International has also released its Vision 100 Plan: which is to reach 100 million annual passengers, which is really big. How do you plan to leverage the Infrastructure Investment and Jobs Act, and it's $1.2 trillion to accelerate your goals? Even withstanding the fact, you say it's not enough. How can you use it?
Phillip Washington: Well, a couple of things. First, Denver International Airport was built for 50 million annual passengers. Last year, we hit 69.3 million. It's already outgrown the design, if you will.
Now, I've got a theory of why people are flying and why more people will fly. You can agree with me or not. First, the world's population is increasing. It depends on which demographer you talk to. There are about 8 billion people on Earth. Demographers say, by 2040, there will be 9 billion. The second big piece is the rise of the middle class in places like Asia and Africa. That will enable more people to fly. The third big piece is rapid urbanization. More people will be moving to maybe 15 or so mega urban areas on the globe. That will lead to more and more people flying. The fourth big piece is the accelerating technological advances in aviation that will reduce flight time to different places.
That is why we're seeing, in the case of Denver International Airport and other airports around the world, so many more people flying. Roads and bridges in this country were also never built for the amount of traffic that they're seeing now. Whether it is aviation or any other mode of transportation, this number of cars and trucks was never anticipated. Then, you factor all of that into the climate change impacts of flooding and heat. At many airports around the world, the heat is melting runways. When you see 120 degree heat, that is causing the investment we need to make in all our infrastructure. Factor in the lack of a qualified workforce to work on that infrastructure, then you have a real issue.
We have put forward what I've called Vision 100, which says that we need to prepare that particular airport, you could say the same thing about aviation throughout the country, but we need to prepare Denver International Airport to accommodate 100 million annual passengers. Keep in mind, it was built for 50 million, we are already at 70 million, and we need to get ready for 100 million. Because of all those things, Vision 100 is in play.
We are doing capital projects to accommodate that increased passenger load. We have the capability to build 12 runways at Denver International Airport. We have six right now, and we're building the seventh. I think, with all these things that are going on, investment and how we look at the Bipartisan Infrastructure Bill, as a start, is very important.
The last thing I'll say, before the Bipartisan Infrastructure Bill, as we and many people in this room were working hard to get an infrastructure bill before it was signed, in China, they had already initiated what's called the Belts and Road Initiative in 2013 to invest in infrastructure all over the world, not just in China. That has resulted in China being the largest creditor on the planet in terms of infrastructure building in places like Africa. We were in Addis Ababa, Ethiopia and saw all the infrastructure being built there. It was all being financed by China. I think we, we being the United States, have an opportunity to do business in other parts of the world for the benefit of the world as we go forward.
Katherine Perez: Thank you very much, Phil. It's great for you to kind of put all those pieces together about the labor force and then also this issue around international aspects.
Mario, we talked a bit about, and Commissioner Gideon Krakov mentioned it earlier today, the CARB vote on Friday, with their historic decision to ban all new diesel trucks effective 2036: the Advanced Clean Fleets Rule. This mandate obviously creates a new regulation on medium and heavy-duty fleets that are sold or registered in the US to be zero emission by 2036, which is 13 years away. You said that you welcome it. I want to understand what impacts are going to affect the port and the adjustment to this new CARB decision?
Mario Cordero: Number one, it's going to be a very positive impact. Number two, we're going to adjust to this very well.
When we announced the Clean Air Action Plan in November 2017, what other Port Authority, other than Los Angeles at the Port of LA, what other port authority in the world had such a substantive goal? However, I will tell you that since that time, there have been people who expect the Port to be zero emission, like, yesterday.
I welcome the CARB Regulation, because it says that by 2036, all heavy-duty trucks that are sold in California have to be zero emission. That’s good for us because our goal is 2035 to have zero-emission drayage trucks. In fact, CARB’s regulation requires zero-emission trucks in California to be all zero in 2042.
When you look at the port authorities, our percentage of trucks on California highways every day is de minimis. There are about 1.5 million trucks on California highways daily. The percentage of drayage trucks is in a very low percentile.
Lastly, an air quality report that came out just last week about LA County getting an F for poor air quality. If you put this in perspective, California has 58 counties, and 56 of California's counties received an F.
My point is, this is a welcome regulation because at the Port of Long Beach and Los Angeles, we move forward a cutting-edge policy. We believe we needed to be zero emission in terms of our truck drayage. We welcome that the State of California has finally realized you need to force everybody else to get to zero.
Katherine Perez: Everybody else get on board. Thank you very much Mario for that because I appreciate the fact that the Port of Long Beach has been a leader with its climate action plan and has been moving quickly to transform its operations on site.
We have no more time. I have one question. It’s to the both of you to answer the kind of prompt from the panel title, which is the return on investment. Can you tell us what the return of investment looks like? What’s that going to be so that we can begin to say, these are the things that are happening?
Mario, you teed it off a little bit, maybe you can answer first with cleaner air. What does it mean for us in terms of the return on investment? We're putting a lot of money into these massive systems and these massive programs. How can we begin to measure what that return looks like?
Mario Cordero: Well, to be honest, from a port perspective, keep in mind that the port is a public entity. We're a department of a city. We're not private sector; we're not Google; we're not Microsoft. There's never going to be a return on investment as we see it financially. The return on investment in terms of bettering our neighborhoods and bettering our communities is huge by having zero emission truck drayage. I think we're going to get to before 2035, as it relates to trucks.
I think that's the big plus for us, in terms of how we move forward. California continues to be the fourth largest economy in the world, and a big factor of that is international trade. We are very proud that we talked about zero years ago, and we're going to get there way before all the other trucks in California.
Katherine Perez: Well, that's awesome to hear. And that you're hiring people and making transformation neighborhood by neighborhood by neighborhood.
Phil, what do you say?
Phillip Washington: Return on investment is so many things. This is an economic development program for one, right, in terms of training people with jobs in the new technology, the greening of our infrastructure, if you will. It is social sustainability. It begs the question: how do we want to live? Do we want to live in an area where you’re breathing smog and all that, like it used to be 30, 40 years ago?
I think this idea of return on investment is so many things, but it boils down to that one question: do we want to live in an environment where the air is clean, where we don't have to worry about people making a living because we've got to redo the infrastructure in this country where we have to train the people to do that? That is why I see it as an economic development program if we do this right.
The other big piece of all of this is it is our responsibility to take care of the earth. I was in a session last June where Miss Mae Jemison, the first African-American woman astronaut, was speaking. She said when she first went up into space, she looked over her right shoulder and and caught a glimpse of the earth, you know, the sphere itself. She was thinking about pollution and all of that, and she thought to herself, “the Earth will survive”. People say we're going to destroy the Earth, but the Earth will survive. It is the people that may not survive. The Earth will be here. It's been here for billions of years. It's us that may be extinct if we don't do anything.
This is all about our survival and our way of life if we do not do anything about sustainability and climate change. We see all the signs. We have to do what we're doing, and I applaud the work of everybody in this room and Mario at the Port and other infrastructure leaders.
Katherine Perez: If we could give you a magic wand, besides more money, what would you have for the Port of Long Beach and the Denver International Airport? What would that be? Briefly.
Mario Cordero: Well, I'll give you a facetious answer, and then I'll give you a more serious answer. The facetious answer is, I would love the LA Times to have a headline story, an op ed, praising the San Pedro Bay ports for their leadership in environmental sustainability. There's no other port authority that can say we've reduced SOX 97 percent and we've reduced PMs by 95 percent and we’ve reduced NOX by 51 percent. No other port authority in the world has those zero emission goals. So that's my wish list for the LA Times.
On a serious issue. I think my wish list is on Pier W. If we could get sufficient funding to make that vision happen. It's not just the vision of the Port of Long Beach, it’s State of California. I think that's going to be huge for us going forward because it is, like I told my staff, it's cutting edge; we're outside the box.
Katherine Perez: Thank you very much. Phil, magic wand?
Phillip Washington: I think it would be that, at least at the federal level, that we return to supporting transformational leaders. Transformational leaders that do not think about everything being transactional. We don't hear, like we heard in the early 60s, President John F. Kennedy, saying that we are going to go to the moon in this decade. That's transformational thinking. If I had a magic wand, I would say we need more transformational leaders, especially at the federal level.