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COP26 and Rail – On the right track

05 November 2021 | Insight

With tough challenges ahead in decarbonising transport, rail should be a bigger part of the COP26 conversation

If tackling transport's greenhouse gas (GHG) emissions is one of the biggest challenges in climate policy, is it better to focus on curbing the problem or encouraging existing solutions? As governments descend on Glasgow for the United Nations' climate summit COP26, rail is not at the forefront of the discussions, despite being one of the greenest forms of transport. Understandable perhaps but still, we think, a mistake.

Rail can and should continue to play an important role in decarbonising transportation by displacing more carbon-intense alternatives. But to reach its potential as one of the key solutions to transport's enduring climate problem, the rail industry must strive to further reduce GHG emissions and position itself as an accessible and sustainable option.

With stretched public budgets, implementing the necessary changes presents a number of opportunities and challenges for operators, infrastructure managers, suppliers and investors in the sector. We explore the background and huge environmental promise of an expanded rail sector.

Is rail already green?

Rail transport is notably absent from the COP26 Presidency Programme. With regards transport, COP26 aims to "kick-start the mass market for zero emission vehicles – a transition that needs to be significantly accelerated to keep [core climate goals] within reach" and "galvanise action to decarbonise the harder-to-abate forms of transport: aviation and shipping". On 10 November 2021, COP26's Transport Day, the programme will cover four topics: green shipping corridors; accelerating the zero emission vehicles transition; international aviation climate ambition coalition; and internal road freight – with no mention of rail.

The omission has a rationale, of course. In 2019, domestic transport was the largest emitting sector in the UK. Rail, however, represented only 1% of the UK's domestic transport GHG emissions, compared to over 90% for road transport (including cars, taxis, heavy goods vehicles and buses). Similarly in the EU, rail represented only 0.5% of GHG transport emissions in 2016.

Global transport sector CO2 emissions by mode in the Sustainable Development Scenario, 2000-2030

Source: The International Energy Agency

As a result, any switch from road or aviation to rail is a step towards cutting GHG emissions, even without any further move to reduce the industry's carbon footprint. Earlier this year, France banned domestic flights on routes than can be covered by train in under two and a half hours to tackle climate change. Last June, Austria’s government introduced a €30 tax on airline tickets for flights of less than 217 miles (350km) and stopped its Vienna-Salzburg route to replace it with an additional train service. Notably, ahead of COP26, around 500 young activists and policy makers are set to depart from Amsterdam to Glasgow under the banner 'Rail to the COP', aiming to put rail transport at the forefront of the agenda as a greener transport alternative.

Carbon footprint of select modes of transport per kilometre of travel in 2018 in the UK (in grams of carbon dioxide equivalent per passenger kilometre)

Source: UK Department for Business, Energy & Industrial Strategy

 

Making rail greener

Although rail does not emit as much GHG as other transport modes, there is opportunity to improve its energy efficiency, solidifying its role in greening transport. Moreover, the decarbonisation of rail is arguably further advanced than other transport sectors. According to UK Secretary of State for Transport Grant Shapps, rail is currently the only low-carbon means of moving heavy goods via existing technology.

As a result, decarbonising the rail network is key to many national strategies. In the UK, the Department for Transport (DfT) recently published its climate strategy for transport, including rail. Decarbonising the network relies on three key technologies to replace diesel locomotion: battery-powered, electric and hydrogen trains.

As a proven technology, electrification – already used on 38% of the British rail network – is likely to retain its position as the primary means of decarbonising the sector. Battery and hydrogen-powered trains are newer technologies that remain to be fully exploited. In a recent report, Network Rail, the state-backed operator for the majority of the UK's rail infrastructure, outlined its preliminary recommendations for which technology to deploy on each route. Battery and hydrogen are unlikely to provide the energy needs of long-distance, high-speed and freight services. However, on less intensively used lines, hydrogen may deliver lower whole-life costs than electrification, which requires substantial fixed infrastructure.  

Source: SCI Verkehr

Rail is also a key means of supporting decarbonisation at European level. EU policy has focused on rail for the last 30 years, with the aim of developing a common transport policy for rail and the Single European Railway Area, an EU-wide system of connected networks. More recently, the emphasis has been to position the region's rail sector as a key part of EU decarbonisation strategy.

The EU's Sustainable and Smart Mobility Strategy presented as part of the European Green Deal in December 2020 calls for a doubling of high-speed rail by 2030. Furthermore, 2021 has been designated as the European Year of Rail in an effort to promote railway transport as a sustainable and safe option for Europeans' mobility. In June 2021, the Council of the EU, which represents the 27 member states, also adopted conclusions on 'Putting rail at the forefront of smart and sustainable mobility'. The conclusions underline the need to further develop rail transport for passengers and goods in the EU.

At national, regional or global level, it is clear railways play a key role in green transport policies and are essential to meet climate objectives.

The future of sustainable rail investment

Policies implemented by governments to decarbonise transport have a significant impact on rail investment decisions. Given the lengthy economic life of rail assets, obtaining policy certainty ahead of time is key for investors.

For instance, the UK Government has challenged the sector to plan for removal of all diesel-only trains by 2040 and to decarbonise traction, rail property and infrastructure. The Rail Industry Decarbonisation Taskforce, which published recommendations to the Government in 2019, observed that, due to the economic life of rolling stock, many existing fleets will be in existence past the 2040 deadline. To prevent the loss of economic value, key decisions on fleet refurbishments and conversions will need to be made in the short term. As many developed countries have set sustainability targets for 2030, 2040 or 2050, rail policies must be quickly finalised to allow investors to make long-term decisions about key assets.

The need for long-term clarity equally applies to investment decisions regarding construction and development of new rail infrastructure, which has historically been publicly funded as it is capital intensive and investors are unlikely to recoup all outlays through charges. Implementing the necessary changes to meet climate goals will require new capital-intensive infrastructure, such as replacing diesel trains, building new lines, electrifying existing networks and developing hydrogen trains. However, given competing demands for public funding, implementing such changes is likely to present opportunities for private investors. This may lead to a rise in the number of private-public partnerships to develop infrastructure, as was envisaged for the Kuala Lumpur–Singapore high-speed rail project.

Furthermore, for trains to provide a realistic alternative to more carbon-intensive transport, further investment is needed to make the rail network more accessible, attractive and affordable. Governments have started introducing measures to promote trains. For instance, part of the UK DfT's strategy includes modernising fares through contactless ticketing and flexible pricing. In January 2020, Germany's government implemented climate protection measures aimed at making train travel more attractive. This involved a cut in VAT, effectively reducing fares for long-distance travel. France this autumn revealed its new high-speed train, which will be in service by 2024. The new trains, which are greener, spacious and cheaper to run than previous generations, are hoped to revolutionise rail travel in the country. While some of these measures are implemented and funded by governments, the vast funding needed will likely present substantial investment opportunities for the private sector.

Down the track

With low emission rates and existing green technology, rail should be a key part of global climate conversations, even before taking account of the scope to further decarbonise the sector. Key to bringing the industry more centrally into that dialogue will be further progress on electrification of rail networks, development of hydrogen and battery-powered trains and making passenger travel more affordable and convenient. The industry must embrace different forms of financing to ensure rail fulfils its huge potential to decarbonise economies, transport and daily life.

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