1. 1ICEA, 11 th April 2010 European transport policy – a railway perspective ICEA, 11 th May 2010 Jeremy Drew

2. 2ICEA, 11 th April 2010 Background

3. 3ICEA, 11 th 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

4. 4ICEA, 11 th April 2010 Railways have small but significant share of European transport in both freight and passenger transport RoadRailSea/IWAirOther Freight km45.9%10.8%40.2%0.1% 3.0% Pipelines 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

5. 5ICEA, 11 th 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

6. 6ICEA, 11 th April 2010 EU transport policy affecting railways

7. 7ICEA, 11 th 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

8. 8ICEA, 11 th 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

9. 9ICEA, 11 th April 2010 Three pillars of rail policy in 2000 White Paper - only one implemented Competition between rail providers is developing. BUT without fair competition between modes and adequate infrastructure, intra-modal competition is having mixed results.

10. 10ICEA, 11 th 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

11. 11ICEA, 11 th April 2010 Freight: small revival in Western Europe - but decline continues in Central Europe

12. 12ICEA, 11 th April 2010 Romania - Rail share of freight market (in tonne-km) has dropped to 18%

13. 13ICEA, 11 th April 2010 2009 Communication from Commission

14. 14ICEA, 11 th 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

15. 15ICEA, 11 th 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

16. 16ICEA, 11 th 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

17. 17ICEA, 11 th April 2010 Recast of First Railway Package

18. 18ICEA, 11 th 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

19. 19ICEA, 11 th April 2010 Recast likely to have many elements Recast elements? Infra financing + MACs Rail Related Services Network Statement Regulatory Body Track access charges RU/IM liability National Pass. Market Opening? Financial architecture

20. 20ICEA, 11 th 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

21. 21ICEA, 11 th 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

22. 22ICEA, 11 th April 2010 Internalisation of external costs

23. 23ICEA, 11 th April 2010 But: external costs of transport for the society have also risen dramatically Air PollutionClimate Change CongestionNoise

24. 24ICEA, 11 th 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

25. 25ICEA, 11 th 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.

26. 26ICEA, 11 th April 2010 The current Eurovignette directive is being revised Commission 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

27. 27ICEA, 11 th 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

28. 28ICEA, 11 th April 2010 Internal costs (€/lorry km) (paid by users) External costs (€/lorry km) (paid by society) Wages Energy/Fuel Rolling Stock Administration Other 1) TOTAL Infrastructure Air pollution Climate change Accidents Congestion Noise Other 2) TOTAL 0,39 0,27 0,21 0,18 0,21 1,25 0,200 0,044 0,122 0,055 0,090 0,004 0,078 0,515 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

29. 29ICEA, 11 th April 2010 EU institutions

30. 30ICEA, 11 th April 2010 Overview – main EU decision-making institutions

31. 31ICEA, 11 th 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 staff  DG MOVE ca.1000 staff on transport

32. 32ICEA, 11 th 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

33. 33ICEA, 11 th 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

34. 34ICEA, 11 th April 2010 BACK UP

35. 35ICEA, 11 th 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 RoadRailAirInland Waterways Accidents Noise Air pollution Climate Change Nature and Landscape Up- and downstream processes Additional costs in urban environments

36. 36ICEA, 11 th April 2010 Road does not cover its costs – government revenue hardly covers infrastructure cost Fuel Taxes 33 Road tolls 16 Other Taxes 5 Infrastructure 51 Accidents 30 Congestion 24 Noise 18 Air pollution 16 CO 2 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