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1ICEA, 11th April 2010
European transport policy – a railway
perspective
ICEA, 11th May 2010
Jeremy Drew
2ICEA, 11th April 2010
Background
3ICEA, 11th April 2010
Growth in freight transport follows or even exceeds GDP – though passenger transport now decoupled from GDP
Source: European Commission, Energy and Traffic in Figures (2009)
Traffic volume and GDP – EU 27
4ICEA, 11th April 2010
Railways have small but significant share of European transport in both freight and passenger transport
Road RailSea/IW Air Other
Freight km 45.9%10.8
% 40.2% 0.1%
3.0% Pipeline
s
Passenger km
83.2% (74.8% private) 6.3% 0.6% 8.6%
1.4% Tram/ metro
• The decline in rail’s modal share reversed since about 2002
• However, rail is still losing modal share in some countries
• Rail is not meeting its potential anywhere
Modal shares (EU) 2008
5ICEA, 11th April 2010
Some EU railways receive considerable public sector support – but much is compensation for meeting state’s requirements In 2001, public sector contributions to EU15 railways €38.3
billion(1):– Compensation to operators for meeting public service
obligations - €11.8 billion. – Capital investment - €9.7 billion.– Infrastructure maintenance and operations - €8.7 billion.– Staff and pensions - €2.7 billion.– Debt service - €1.6 billion.– Restructuring - €1.0 billion.
Total public financing to railways in 2006 €46.5 billion(2):– For EU15 €44.3 billion – For EU12 €2.2 billion
Some railways - particularly in EU12 - do not even receive full compensation for their losses on services which the state obliges them to provide. (1) Source: NERA for Commission 2004
(2) Source: European Commission RMMS 2008
6ICEA, 11th April 2010
EU transport policy affecting railways
7ICEA, 11th April 2010
Commission’s planned new White Paper could lead to new legislation
European Commission (DGTREN) published Communication on “Sustainable Future for Transport” in June 2009
Consultation ended September 2009
Commission plans new Transport White Paper in December 2010
White Paper will set out transport policy for next 10 years
8ICEA, 11th April 2010
Achievements in railways since 2000
Communication asserts that the objectives of the 2001 White Paper largely met – in fact:
– Significant progress only in achieving rail liberalisation objectives
– Broader policy objectives only met to very limited extent
Decoupling of overall freight growth from GDP - not achieved
Increasing rail’s share of freight – fell in many countries
Efficient and fair pricing between modes - not achieved
Channeling revenue from charges to build infrastructure on competing modes, especially rail - not achieved
9ICEA, 11th April 2010
Three pillars of rail policy in 2000 White Paper- only one implemented
1
In the 2001 White Paper, the European railwaypolicy rested on 3 ‘pillars’
Market Opening Competition
Fair Competition between modes
Modern railInfrastructure
The original architecture of European transport and rail policy (as set out in the “2001 White Paper”)…
QUALITY PRODUCTIVITY EFFICIENCY
• Competition between rail providers is developing. BUT • without fair competition between modes and adequate infrastructure, intra-modal competition is having mixed results.
3
Nine years on: weak points of current European transport policy…
Market Opening
CompetitionFair Competition between modes Modern rail
Infrastructure
QUALITY
PRODUCTIVITY
EFFICIEN
CY
One “almost” straight “pillar” and
two neglected “pillars”!
10ICEA, 11th April 2010
Liberalisation should be part of a package of measures Liberalisation of rail markets key pillar of EU rail policy:
– All rail freight since 2006 – International passenger services since January 2010– Domestic passenger services soon?
As in other sectors liberalisation can improve efficiency and quality of rail
For liberalisation, need non-discriminatory access to:
– Infrastructure
– Other essential facilities and rail services
Need strong regulatory bodies to enforce this
BUT liberalisation must be part of a package to include:
– Fair competition between modes
– Adequate funding for infrastructure and public services
11ICEA, 11th April 2010
Freight: small revival in Western Europe - but decline continues in Central Europe Rail freight market share trend in EU27 and White
Paper target
Source:ETIF 2007/2008, Eurostat, CER own calculation
EU15 and EU10 Rail Freight Market Share
14.9%
16%
24.5%
29.7%
0%
10%
20%
30%
40%
50%
60%
1970 1980 1990 1995 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
EU15 EU10
35% target
24.5% EU10 rail freight market share in 2010 instead of the 35% target of White Paper.
12ICEA, 11th April 2010
Romania - Rail share of freight market (in tonne-km) has dropped to 18%
18%
77%
70%
14%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
1980 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
Rail Road IWW Pipeline
13ICEA, 11th April 2010
2009 Communication from Commission
14ICEA, 11th April 2010
Climate change bigger issue than in 2000 - but Communication does not adequately address this Communication recognises problem of
climate change But it does not consider radical solutions It relies too much on technological
solutions and sees standards as key driver of technological change
Role of prices in driving technological change is not recognised
Communication discusses “smart prices” (internalising external costs) - but inevitable need for price increases is not mentioned
15ICEA, 11th April 2010
Infrastructure financing and access charges Communication supports the need for greater infrastructure capacity and greater self-financing of investment
Greater self-financing is both inevitable and desirable
Higher rail infrastructure access charges could reduce rail market share unless there is:– greater differentiation in track access charges
based on segmented markets – difficult in practice
– higher access charges apply to all modes Communication silent on issue of public sector
funding of infrastructure
16ICEA, 11th April 2010
Internalisation of external costs
Communication supports internalisation of external costs – a long standing Commission policy - but:
– current legislation prevents charging for external costs of heavy goods vehicles
– rail is lowest emissions mode – yet perversely it is only mode for which charging for external costs allowed in EU legislation (Emissions Trading Scheme, rail specific legislation)
EU policy on internalisation is sound – but must be reflected in legislation and put into practice
17ICEA, 11th April 2010
Recast of First Railway Package
18ICEA, 11th April 2010
Recast of the First Railway Package
First Railway Package consisted of 3 directives for reforming railway sector
Likely to be adopted by Commission in July 2010 If domestic passenger liberalisation added, may take even
longer Will then take another 2 years to pass through Parliament
and Council of Ministers Will involve:
– codification of 3 directives in the First Railway Package
– amending the content of the text
– some detailed proposals being considered across a wide range of issues
19ICEA, 11th April 2010
Recast likely to have many elements
Recast elements?
Infra financing +
MACs
Rail Related Services
Network Statement
RegulatoryBody
Track access charges
RU/IM liability
NationalPass. Market
Opening?
Financial architecture
20ICEA, 11th April 2010
Rail related services
These include services provided by depots etc
Market for these services has evolved with increasingly open rail market:
– no longer provided mainly by infrastructure manager
– often provided by railway undertaking potentially to a competitor
Key issue of providing access to “essential facilities”
But important not to stifle commercial development
21ICEA, 11th April 2010
Regulatory bodies
Regulatory Bodies (RBs) needed to ensure non-discriminatory access
Commission considers RBs must:
– be vested with comparable competences and powers
– monitor competition in the market
– be able to independently and efficiently correct undesirable developments in the rail markets
– have budget to employ sufficient competent staff
– publish regular reports about their decisions creating transparency
But RBs must also:
– not impair functioning market processes by interfering in business (ex-post regulation)
– co-operate with competition authorities
22ICEA, 11th April 2010
Internalisation of external costs
23ICEA, 11th April 2010
But: external costs of transport for the society have also risen dramatically
Air Pollution Climate Change
Congestion Noise
24ICEA, 11th April 2010
+25%
Source: European Environment Agency, 2007
Development of Greenhouse Gas emissions of different sectors (1990 –
2010)
Development of Greenhouse Gas emissions in the transport sector
(1990 – 2010)
Transport is the only sector where CO2 emissions are still rising
25ICEA, 11th April 2010
Low prices for road transport have led to significant increase in traffic volume and thus CO2 emissions
Gfkm (Freight Transport activity)
Transport sector Greenhouse Gas Emissions
Source: European Commission, 2007
Road is perceived as the cheapest transport mode:
• Fuel prices largely stable (corrected for inflation)
• Productivity gains due to modern technology and logistics concepts
• Major costs are externalized to society
If prices are not adjusted, traffic volumes will continue to grow uncontrollably
Source: European Topic Centre for Air and Climate Change, 2008.
26ICEA, 11th April 2010
The current Eurovignette directive is being revisedCommission proposal (July 2008):
• Enables Member States to impose differentiated km based charges for external costs
• Limited to HGVs • Limited to congestion, air pollution and noise• Excludes CO2 emissions and accidents • Sets caps (maximum values) for charges• Extends scope to all roads rather than limiting
charges to TEN-Ts • Requires that revenue from charges be
earmarked for improving sustainability of transport
27ICEA, 11th April 2010
Source: Internalisation of External Costs on Transport, IWW Karlsruhe 2009
Internalisation of external costs will change modal split of freight – most for long distance traffic
28ICEA, 11th April 2010
Internal costs (€/lorry km)
(paid by users)
External costs (€/lorry km)
(paid by society)
Wages
Energy/Fuel
Rolling Stock
Administration
Other1)
TOTAL
Infrastructure
Air pollution
Climate change
Accidents
Congestion
Noise
Other2)
TOTAL
0,39
0,27
0,21
0,18
0,21
1,25
0,20
0
0,04
4
0,12
2
0,05
5
0,09
0
0,00
4
0,07
8
0,51
5
Source: Internalisation of External Costs on Transport, IWW Karlsruhe 2009
1) E. g. insurance, taxes, etc.2) E. g. land use, water and soil pollution, etc.
External costs need to be internalised following the “polluter pays” principle
29ICEA, 11th April 2010
EU institutions
30ICEA, 11th April 2010
Overview – main EU decision-making institutions
31ICEA, 11th April 2010
Points to note
• right of initiative• checking implementation
But• unaccountable • untransparent – not even detailed organigram of DGs available
EU institutions – European Commission
ca. 21,000 staffDG MOVE ca.1000 staff on transport
32ICEA, 11th April 2010
Points to note / challenges
• The main focus of the new treaty in terms of institutional reform aimed at the Council of Ministers (very vertical structure)• ever-changing make-up dependent on national governments politics• even less transparent than Commission
EU institutions – Council of Ministers
Council secretariat – ca. 2400 staff. 2 EU summits per year are held there as of 2004. Contains meeting facilities for Councils, working groups etc. Rail sector: Land Transport working group, once a week; Transport Attaches represent their national interest
33ICEA, 11th April 2010
Points to note
• MEPs work often depends on lobbyists due to the complexity and pressure of their work
EU institutions – European Parliament
1979: first Parliament elected by universal suffrage 2004: 732 elected members of 25 countries 2007: 785 MEPs from 27 countries
biggest elected Institution of the world steadily increasing influence on all EU activities including power
to block and amend initiatives Location in Strasbourg (officially) with administration in Luxembourg and day-to-day work in Brussels
34ICEA, 11th April 2010
BACK UP
35ICEA, 11th April 2010
Source: Externe Kostens des Verkehrs in Deutschland – INFRAS, March 2007
Average external costs for freight transport in Germany (2005)
Example: freight traffic in Germany – external costs of road four times as high as rail
Road Rail Air Inland Waterways
Accidents
Noise
Air pollution
Climate Change
Nature and Landscape
Up- and downstream processes
Additional costs in urban environments
36ICEA, 11th April 2010
Road does not cover its costs – government revenue hardly covers infrastructure cost
0
20
40
60
80
100
120
140
160
Fuel Taxes 33
Road tolls 16
Other Taxes 5
Infrastructure 51
Accidents 30
Congestion 24
Noise 18
Air pollution 16
CO2 Emissions 5
EU 27 – HGV Revenues and Costs in billion Euro
Total Revenue: 54
Total costs: 144
Source: Are Trucks taking their toll? (CE Delft, 2009)
?Price Gap
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