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European Commission publishes proposal on regulations to establish Shift2Rail public-private partnership

The European Commission yesterday adopted a proposal to the European Parliament and Ministers to approve a new public-private partnership named Shift2Rail, that will invest just under €1 billion in research and innovation over seven years to help get more passengers and freight onto Europe's railways.

According to the Commission, rail travel is among the most efficient and climate-friendly forms of transport, but currently carries only about only 10% of European cargo and 6% of passengers a year.

On the announcement of adopting the proposal, Commission Vice President Siim Kallas responsible for Transport said, "If we want to get more passengers and freight on Europe's railways, then rail needs provide better services and offer an attractive choice to more customers. For that to happen, rail needs to innovate. This public private partnership is a major breakthrough, it will drive innovation to reduce the costs of rail services, increase capacity and provide more reliable, frequent rail services for customers."

 

Shift to Rail budget of over €900 million to reduce development costs, and increase capacity and reliability

The Shift2Rail public-private partnership will manage a 7-year work programme of research and innovation to support the development of better rail services in Europe, with a budget for designed to bring to market of technological breakthroughs that more than triple's the Commission's financing for rail - to €450 million (2014-2020) compared to €155 previously. This will be matched by €470 million from the rail industry.

Shift2Rail aims to deliver: a reduction, by up to 50%, in the life-cycle cost of railway transport (ie costs of building, operating, maintaining and renewing infrastructure and rolling stock); an overall increase in capacity of up to 100%; and an overall increase in reliability of up to 50% in the different rail market segments.

Research will focus on five key areas:

  • To improve the quality of services, it will focus on developing a new generation of high capacity trains which are cost-efficient and reliable;
  • To increase capacity and get more trains running on the same lines – it will develop better intelligent traffic management and control systems;
  • To provide reliable, high quality, infrastructure, including reducing track noise, cutting costs and developing intelligent maintenance
  • To provide integrated ticketing and journey planners – it will develop innovative IT solutions and services;
  • To allow rail to compete effectively in more markets, it will develop better logistics and inter-modal freight solutions, so rail can connect better with other forms of transport.

The rail joint undertaking is designed to pool public and private resources to focus on research activities critical to delivering the Single European Railway Area and to supporting the competitiveness of the rail sector as a whole, creating jobs and boosting exports. The project will involve "virtually all" Europe’s rail industry suppliers to develop new technologies and bring them to market.

It will also involve rail operators and infrastructure managers in order to help the research activities are aligned to market needs.

To date, rail equipment manufacturers Alstom, Ansaldo STS, Bombardier, Siemens, Thales and CAF, as well as infrastructure managers Trafikverket and Network Rail, have confirmed that they will each make a contribution of at least €30 million to the Shift2Rail initiative (total €270 million).

 

Challenges of rising congestion, traffic demand and need for sustainable transport connections

The Commission said that EU goals on climate change, energy supply and the environment mean that the railway sector will have to take on a larger share of transport demand in the next decades. In its 2011 White Paper on a Roadmap to a Single European Transport Area, the Commission underlined the importance of creating a Single European Railway Area in order to achieve a more competitive and resource-efficient European transport system. The White Paper aims for 30% of road freight over 300 km to shift to other modes such as rail or waterborne transport by 2030, and more than 50% by 2050. It also aims for a majority of medium-distance passenger transport to go by rail by 2050.

Despite the challenges of rising congestion, increasing traffic demand and the need to build sustainable transport connections to fuel economic growth, the Commission views is that rail is stagnating or declining in many EU Member States. The modal share of passenger rail in intra-EU transport has on average remained more or less constant since 2000, at around 6%, whereas the modal share of rail freight has decreased from 11.5% to 10.2%.

The European Commission has responded with a package of measures to restructure the rail market in Europe (the fourth railway package; a tripling of investment in infrastructure from the current €8 billion to €26 billion 2014-2020 with over 80% of this to be spent on rail; and a tripling of investment in rail research and innovation, under the new Shift to Rail programme.

 

Exceptions of the rail industry that justified public intervention

Rail research and innovation suffers, in the view of the Commission, from important market and systemic failures that justify public intervention:

  • High level of product customisation due to the diversity of national standards and operating frameworks in effect across Europe, making the development of pan-European vehicles that can be used in several Member States a challenging task, and hindering the creation of a single European railway market;
  • Lack of a system-wide approach to innovation due to limited or uncoordinated participation of actors from the full rail value chain and the complexity of interfaces between railway sub-systems. This limits the potential of achieving breakthrough solutions with an impact on the whole system. For instance, the introduction of high-capacity or high-speed trains can only help to increase capacity if accompanied by infrastructure changes, such as removal of loading-gauge limits and switch and crossing constraints. Past research projects have mostly focused on just one component of the rail system.
  • Limited private investment in research and innovation and limited market uptake of innovations due to low operational margins and funding gaps in the full innovation cycle;
  • Heightened financial risks due to the capital-intensity of investments and long product lifecycles. For example, a locomotive can be used for 40 years, compared to the typical renewal cycles of 7 years in the automotive industry or 20 years in the airline industry.

Shift to Rail is an example of Joint Technology Initiative, managed through a Joint Undertaking for EU research activities. This is the structure planned by the SHIFT²RAIL Promoters plan under the next EU Research Framework Programme, Horizon 2020 (for the period of 2014-2020).

This approach is to avoid fragmentation of resources and create "critical mass" of research at European level between EU and private resources.

Such a legal framework can become operational by setting up a Joint Undertaking under Article 171 of the European Treaty.

Other Joint Undertakings to be established under the Horizon 2020 programme, following the Commission's Communication of 10 July 2013 on "Public-private partnerships in Horizon 2020: a powerful tool to deliver on innovation and growth in Europe" include the Clean Sky, Innovative Medicines (IMI), Fuel Cells and Hydrogen (FCH), Bio-based Industries (BBI) and Electronic Components and Systems (ECSEL) Joint Technology Initiatives.

 

Rail Industry calling on European Parliament and the Transport Council of Ministers to approve the regulation

UNIFE, the European Rail Industry Association, on behalf of the 80 organisations promoting the SHIFT2RAIL initiative,welcomed the publication of the European Commission’s proposal for a Council regulation establishing the SHIFT2RAIL Joint Undertaking (JU) - an initiative, it said, that will make rail transport more attractive to millions of European passengers and freight users and boost the competitiveness of the most sustainable transport mode.

In doing so, it added, the R&D outputs of SHIFT2RAIL will help solve the societal transport challenges outlined in Horizon2020 and realise the key objectives of the Commission’s 2011 White Paper on Transport.

Philippe Citroën, Director General of UNIFE, said “SHIFT2RAIL will bring together on a large scale for the first time in our history, industry, railway undertakings, urban operators, infrastructure managers, SMEs and research centres/academia from all over the European Union to solve our collective transport challenges.”

UNIFE and the promoters of SHIFT2RAIL called on the European Parliament, the Transport Council of Ministers, and the Commission to work together to approve the regulation during the Greek Presidency of the EU so that the Joint Undertaking can start its activities at the beginning of 2015.

 

Some facts on rail in Europe

  • The European rail service sector has a turnover estimated at EUR 73 billion, with around 800,000 employees.
  • The European rail manufacturing industry accounts for more than EUR 49 billion of a global rail market worth some EUR 131 billion, and employs some 400,000 employees in the EU.
  • More than 8 billion passenger journeys are made by rail each year and rail carries about 10% of all freight traffic across Europe, with estimated revenue of €13 billion.
  • Each year public authorities invest huge sums in the railway sector. In 2009 this amounted to some €46 billion of public subsidies.
  • Under the Seventh Framework Programme, the Commission provided funding for rail research and innovation amounting to roughly €155 million for the period 2007 to 2013.
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