California to start work on high-speed rail project on Tuesday

[SAN FRANCISCO] California will break ground in Fresno on Tuesday on its ambitious but controversial high-speed rail project, marking another milestone for Governor Jerry Brown and for foreign manufacturers waiting to bid on lucrative train contracts.

The United States lags behind Europe and Asia in building both high-speed rail and its trains. The 1,287-km high-speed rail is expected to be the legacy project for Mr Brown, whose unprecedented fourth inauguration will take place the day before the groundbreaking.

President Barack Obama, too, wanted high-speed rail to be his signature transportation accomplishment. But in the six years since he took office, plans have lagged or been squashed. California's rail is the most ambitious project and one of the few still on track, although it has been mired in environmental lawsuits and eminent domain land disputes.

Still, the California High-Speed Rail Authority has enjoyed victories in recent months. One of seven environmental lawsuits was settled in December, after the rail authority agreed to find an alternative route through the city of Bakersfield. In October, the California Supreme Court declined to hear a lawsuit challenging the project's funding.

Funding remains a major hurdle for high-speed rail. In 2008, Californian voters approved nearly US$10 billion in bonds to kickstart the project, estimated to eventually cost US$68 billion.

For many years, that appeared to be the project's only source of money, until the legislature recently agreed to pledge 25 per cent of future cap-and-trade revenues, or funds paid by companies to offset carbon emissions, plus an additional US$650 million.

California raised nearly US$1 billion from its cap-and-trade programme since 2013. That money could increase significantly next year as the programme expands to cover distributors of transportation fuels such as gasoline and diesel and home heating fuels like natural gas. Still, it is unlikely to cover the full cost of the project.

In the spring, the rail authority plans to seek bids from train manufacturers. Ten companies have expressed interest, which could generate US$45 million for each train capable of traveling at speeds up to 354 km per hour. Eligible firms or their parents companies predominantly hail from abroad, including Canada's Bombardier Inc, Germany's Siemens Ltd, France's Alstom, Italy's AnsaldoBreda and China's CSR Corp Ltd. The trains must be built in the United States.

Tuesday's ceremonial groundbreaking comes months after construction started on the first phase of rail near Fresno, the largest city in California's agricultural Central Valley and a region of high unemployment.

Reuters