When you think of infrastructure you don’t normally think about technology, but the 2021 infrastructure bill is more than just roads and bridges.
Why it matters: The bill is squarely focused on modernizing our infrastructure through integration of frontier technology.
The House is expected to vote on the bipartisan infrastructure package this week. When you think of infrastructure you don’t normally think about technology, but this bill is more than just roads and bridges. It is squarely focused on modernizing our infrastructure through integration of frontier technology. The legislation includes dozens of programs that seek to incorporate technology into a range of infrastructure-related systems, processes, and facilities, and reshore advanced technology manufacturing. It shows a clear intent by Congress to accelerate American economic growth and opportunity by harnessing the power of innovation to address significant societal issues.
Below is an overview of technology’s role in the bipartisan infrastructure framework. If successful, the bill could generate both a greater supply of new technologies that address various societal priorities and more significant demand for those technologies from government and other public service entities.
We will work through the process to identify and target any issues that may unintentionally exclude startups and growth companies. Should this bill pass into law, various federal agencies will be responsible for implementation, including writing the rules that will stand up the programs. To achieve the objectives of the legislation, program rules and procurement processes must emphasize the most promising and best technologies. They must be clear and timely to fit with commercial practices and provide a level playing field for technologies developed with equity financing.
The bipartisan group of policymakers who passed this bill should be applauded for their efforts and vision of a modernized American infrastructure network that enhances productivity and reduces carbon emissions. We look forward to facilitating discussions between policymakers, NVCA members, and their portfolio companies to support these efforts. We know the highest quality technology necessary to accomplish these goals will be developed by innovative startups backed by venture capital. Our goal will be to ensure open access to all technology companies for these programs. This is an exciting opportunity to bring public and private sectors together to move our country forward, and we are prepared to do our part to make it a success!
OVERVIEW OF TECHNOLOGY PROGRAMS IN BIPARTISAN INFRASTRUCTURE FRAMEWORK
Potential VC Industry Verticals Affected:
There are a number of VC-backed companies that could participate if the programs are written and implemented correctly. These include companies that focus on cybersecurity, transportation and mobility, clean energy sources and storage, smart city technology, semiconductors, carbon capture and utilization, water technology, and advanced manufacturing.
How the Programs Work:
The bill funds a series of grant programs to accelerate the integration of cutting-edge technology into U.S. infrastructure. The programs will provide grants to state and local governments utilities, transportation authorities, and other private entities for technology acquisitions, demonstration projects, research, and domestic manufacturing activity. The bill also creates several new government offices that are intended to enhance government insight into infrastructure-related technology trends.
Grants for Technology Acquisition
The grant programs for state and local governments and other public service providers will provide resources to these entities for the acquisition of new technologies to achieve goals such as greater grid resiliency, improved cybersecurity defenses, lower carbon emissions and more efficient transportation networks. Several examples include:
- $7.5 billion program to build out alternative fuel recharging infrastructure that includes the acquisition of charging and storage technology.
- $1 billion dollar program to address cybersecurity risks and threats.
- $5 billion dollar program to support the acquisition of clean school buses.
- $3 billion for the Smart Grid Investment Matching Grant Program to support the deployment of technologies that enhance electric grid flexibility.
- $50 million grant program for rural and disadvantaged communities to identify and deploy emerging drinking water technology.
Grants for Technology Demonstration Projects
Grant programs for technology demonstration projects will provide resources for public and private sector entities to create demonstration projects for promising infrastructure and climate-related technologies. Some of these programs will be administered by federal agencies while others will be administered by state and local governments and other public service entities. Examples include:
- SMART Grant program to provide $500 million for smart city demonstration projects.
- $3.5 billion for carbon capture large-scale pilot projects and carbon capture demonstration projects.
- $500M for a program to demonstrate viability of clean energy projects on current and former mine land.
Research and Manufacturing Grant Programs
The bill creates several grant programs for private companies to support research in critical areas and to encourage more domestic manufacturing activity. These programs will be administered by various government agencies depending on the goals of the program. Examples include:
- Creation of ARPA-Infrastructure (ARPA-I) to fund private sector R&D on advanced transportation infrastructure technologies.
- $750 million to create the Advanced Energy Manufacturing and Recycling Grant Program to provide grants to smaller climate technology manufacturers that build or retool manufacturing facilities in former coal communities.
- Creation of a Battery Manufacturing and Recycling Grant Program for battery manufacturing and recycling facility retooling and construction, and for battery demonstration projects.
New Technology-Focused Government Offices
There are several other provisions establishing new entities within the government to create domain expertise in certain areas. Examples include:
- Smart Community Resource Center, a new federal office that would provide resources and information to state and local governments regarding smart city and transportation-related technologies.
- Industrial research and assessment centers to identify climate and environmental upgrade opportunities at manufacturing and other industrial facilities.
- Center of Excellence for new mobility and automated vehicles.
Manufacturing and Buy American Requirements
In seeking to maximize domestic job creation opportunities, the bill includes requirements that manufactured products and construction materials must have some production nexus in the United States or qualify for a waiver. To satisfy the domestic production requirement, more than 55% of the cost of components making up the product must be mined, produced, or manufactured in the U.S., unless another standard already exists in federal regulations.
The agencies implementing the program may waive this requirement if:
- Adherence to Buy America would be inconsistent with the public interest.
- Materials are not produced in the U.S. in sufficient quantities or reasonable quality.
- Using U.S. sourced products increases the costs of the overall project by more than 25%.
Justin served as Chief Strategy Officer of Government Affairs at NVCA. Justin joined NVCA in September 2014 and focuses on tax policy, capital formation, regulatory and energy issues. Justin is a member of the NVCA Tax Policy Council and acts as liaison to the Capital Markets Working Group, NVCA Growth Equity Group, Blockchain Technology Working Group and the Emerging Ecosystems Task Force.