122 october 2009cer the voice of european railways the future of railways in europe what shall we...
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122 October 2009 CER
The Voice of European Railways
The future of railways in EuropeWhat shall we do?
International Conference on the Future of Railway Transport in Europe
October 29th, Budapest
Dr Libor Lochman
222 October 2009 CER
The Voice of European Railways
CER – representing the railway sector in Brussels
CER stands for…
The Community of European Railway and Infrastructure Companies (CER) brings together 75 railway undertakings and infrastructure companies from the European Union, the accession countries (Croatia, Macedonia and Turkey) as well as from the Western Balkan countries, Norway, and Switzerland
CER is based in Brussels and represents the interests of its members to the European Parliament, Commission and Council of Ministers as well as other policymakers and transport actors
CER`s main focus is to promote a strong rail industry that is essential to the creation of a sustainable transport system which is efficient, effective and environmentally sound.
...therefore, we are the Voice of European Railways
322 October 2009 CER
The Voice of European Railways
Future? Clear government objective needed:RAIL or NO RAIL
Upward spiral Downward spiral- Government takes responsibility for infrastructure provision (as for road infrastructure) - public authorities – cities, regions, state – take responsibility for public service (as for busses)
1. rail freight companies able to
compete with road on equal par2. revenues can be reinvested in business 3. rail competitiveness increases4. fair chance for incumbent to compete with other companies
- rail infrastructure paid by tolls from rail operators OR infrastructure ill-maintained - freight services pay for passen- ger public services OR public
services close
1. rail freight competitiveness
decreases against road freight2. rail freight volumes shift to
road3. rail freight revenues decrease4. Market unattractive to outside investments
422 October 2009 CER
The Voice of European Railways
Target: An efficient and successful railway system
BUT
Three commonly held (mis)beliefs:
A. Competition on its own will lead to the self-regulating power of the market and lead to the revitalisation of rail mode
B. As soon as incumbent railway companies are organisationally restructured and infrastructure is split off from railway service providers, competition will automatically start working and solve the problems of the rail market
C. Charges for the use of railway infrastructure can to a large extend replace investments from the state
522 October 2009 CER
The Voice of European Railways
0
20000
40000
60000
80000
100000
Year
thou
sand
s to
ns
CFR Marfa
Private rail operators
Total
Example: Romania – freight volumes versus
market share of new entrants
MISBELIEF A: ‘Competition on its own will lead to the self-regulating to the revitalisation of rail mode’
622 October 2009 CER
The Voice of European Railways
Separation
- infrastructure is less market driven
- complicated regulation of interface between infra-structure and operations
- high transaction costs
- non-discriminatory access is more obvious
- clearer use of public money
- market / client driven
- integrated system that takes account of inter-dependencies
- no transaction costs
- returns-to-scale technology (especially in uncertain world)
- incentives for IMs
- Competent cooperation partner for other railways
Integration
MISBELIEF B: ‘Infrastructure separation from railway brings competition and solves problems of the rail market
722 October 2009 CER
The Voice of European Railways
Direct loss from rail PSO transport increases every year
Cross- subsidisation from freight and
low passenger infrastructure
charges
Less income for network
maintenance, renewal,
investment and rolling stock
Rail freight
becomes less
attractivefor customers
Deterioration of the quality of public service transport
Downward spiral of indebtedness /
competitiveness…
MISBELIEF C: ‘Track access charges can replace investments from the state’
BUT:
Rail services will continue to deteriorate because it cannot compete with road if road users do not pay similar road tolls
822 October 2009 CER
The Voice of European Railways
Reversing the downward spiralling trend…what to do about it?
Raising track access charges further not an option: already at the maximum of what the market can bear in most CEE countries
Capitalize on best practices from abroad to enhance railways competitiveness– Dutch and Swedish model
– High level of investments in the rail infrastructure– Adequate financing of Public Service Obligations (for
passenger services)– Low rail infrastructure charges (almost equal to those
applied to road)– Swiss model
– Mobilize revenues through progressive implementation of ‘polluter pays’ principles for all modes
– Infrastructure fund to allocate these revenues to most sustainable transport options
922 October 2009 CER
The Voice of European Railways
Thus: Stable financial architecture necessarytoday: a vicious circle that matters to all
*TAC= track access charges Source: CER, 2009
Insufficient finances for infrastructure
Insufficient government funding for rail infrastructure
Regulated industry with limited commercial freedom
Accumulation of debt and debt
service payments
High TAC* for rail freight (cross-
subsidization of PSO traffic)
Decline in rail infrastructure quality
Loss of rail freight and passenger traffic
Loss of income and ability to invest
Unfair conditions for
inter-modal competition
(road undercharged)
Historic Debt
Insufficient revenue from rail passenger services leads to low
passenger TAC* (PSO under-compensation)
1022 October 2009 CER
The Voice of European Railways
Rail ‘financial architecture’: a clear legal requirement in EU law!
financing infrastructure adequate compensation of PSO
(and rolling stock)
treatment of historical debt
Art. 6 (1) Dir 2001/14
MS shall ensure the accounts of an IM shall at least balance income from infrastructure charges, surpluses from other commercial activities and State funding on the one hand, and infrastructure expenditure on the other
Art. 1 (1) Reg. 1370/2007competent authorities to compensate public service operators for costs incurred in return for the discharge of public service obligationsParag.6 third indent of Annexthe costs of the public service must be balanced by operating revenues and payments from public authorities
Art. 9 Dir. 91/440MS shall set up appropriate mechanisms to help reduce the indebtedness of such undertakings to a level which does not impede sound financial management and improve their financial situation
1122 October 2009 CER
The Voice of European Railways
A successful railway system in future?
… the RAILWAYS make efforts to achieve better quality, productivity and efficiency and are vitally supported in their efforts by politics…
Market Opening / Competition
Fair Competition between modes
Modern railInfrastructure
Introduce market ope-ning and competition but
in the context of
Equal treatment in taxation and charging between all modes of
transport
Provision of adequate infrastructure is the responsibility of the
national state
Integrated policy concept
1222 October 2009 CER
The Voice of European Railways
To have a future…… railways cannot handle this alone
Stricter enforcement of EU law protecting the competitive position of railways (state obligations to insure financial equilibrium of infrastructure etc)
Moratoria on measures which would increase railway costs
Encouragement of investment in high priority projects
Support for investment especially in infrastructure Incentives for scrapping environmentally unsound
rolling stock Clarity that TEN-T projects should be built to
commercially viable standards – not excessive ones
Needed:
1322 October 2009 CER
The Voice of European Railways
… or maybe not?Option unacceptable to Europe’s ambitions
Unacceptable political cost:> in contradiction to the EU transport policy of the last 20 years
Unacceptable economic cost:> medium and long distance rail services would go to air and road = massive congestion of airports and roads = enormous (road) infrastructure costs (road congestion costs now already 3% of EU GDP)> sprawling cities throughout Europe = not enough road infrastructure capacity = migration of work force (incl. related costs)
Unacceptable social cost:> ca. 1 million of direct employment from rail in Europe > greater social inequality (less public transport)
Unacceptable environmental cost:> more polluting modes take over market = increasingly impossible to reach CO2 reduction targets > increased transport accidents, noise, air pollution…
1422 October 2009 CER
The Voice of European Railways
CER’s input to the next White Paper
The Commission should develop a plan for reducing CO2 emissions from transport
The plan needs to be ambitious and to be based on a consideration of all possible instruments
In order to provide incentives for innovation, appropriate investment and demand management, prices for all modes should be adjusted to adequately reflect the costs of transport to society
full internalisation of external costs should be introduced for all modes of transport and not be limited largely to rail (e.g. ETS)
1522 October 2009 CER
The Voice of European Railways
Conclusion: Long-distance traffic needs network of RAIL CORRIDORS. Road and rail need a good network of TERMINALS. Short-distance traffic needs network of FEEDER ROADS.
Terminal Terminal
RAIL & ROAD are COMPLEMENTARY modes:
- Rail freight is suited for long distances. 50% is international - Road freight suited for short distances. 70% is short-distance
Combined Rail-Road Transport = Fastest growing transport segment.
The future of European transport – intermodal!
1622 October 2009 CER
The Voice of European Railways
The future: no alternative to rail as the backbone!
+25%
Source: EEA 2007
Development of GHG emissions in different sectors (1990 – 2010)
Development of GHG emissions in different sectors (1990 – 2010)
GHG emissions in Transport sector
(1990 – 2010)
GHG emissions in Transport sector
(1990 – 2010)
!
It is time to act now!!!
1722 October 2009 CER
The Voice of European Railways
Thank you for your attention!
For further information, visit our website: www.cer.be
Libor Lochman
CER Deputy Executive Director
Tel: +32 2 213 08 82Email: [email protected]