Working together to find adequate solutions

The Community of European Railway and Infrastructure Companies (CER) brings together more than 70 European railway undertakings, infrastructure companies and vehicle leasing companies, including long-established bodies, new entrants, and both private and public-sector organisations. In EU, EFTA and EU accession countries, CER members represent approximately 75% of the rail network length, more than 85% of the rail freight business and over 90% of rail passenger operations, with 1.2 million jobs directly created by CER members. Exclusively for Global Railway Review, Dr. Libor Lochman – the newly appointed Executive Director of CER – provides an insight into CER’s current work and what the future holds.

Mobility challenges and the role of railways

The 2011 Transport White Paper, published by the European Commission in March 2011, recognised the stark challenges facing Europe’s transport system. Meeting growing mobility needs, Europe must move away from its dependence on oil, and must achieve substantial cuts in greenhouse gas emissions. While other sectors of the economy should cut emissions by even larger amounts in order to meet the Union’s long-term overall target, transport should also contribute by reducing emissions by at least 60% on the 1990 level by 2050. In that context, the Commission correctly identified the unique role that rail can play over intermediate distances. As a result, two highly important modal shift targets are proposed: 30% of overland freight should go by rail or inland waterways by 2030, 50% by 2050; and rail should account for the majority of intermediate-distance passenger travel by 2050, notably based on an expansion of high-speed rail infrastructure which should triple by 2030. These targets go hand-in-hand with expansions and improvements in airport-rail and sea port-rail connections. This will involve considerable investment to expand or upgrade the capacity of the rail network and thus represents an important opportunity as well as a challenge for railway companies.

CER’s priorities

Improving the rail sector’s competitiveness will require the Community of European Railway & Infrastructure Managers (CER) to focus its activity over the next five years around two major poles: the completion of the internal market for rail and fostering an enhanced modal shift towards rail transport. CER will continue its constructive dialogue with the European institutions on activities supporting the future role of railways and better integration of different transport modes.

The above mentioned aspects also demand higher focus on the sufficient financing of transport developments. Over the past years, CER has repeatedly underscored the fact that current prices do not reflect the cost of the negative effects of transport activity on the environment. The European Commission has taken this on board and will present, in late- 2012, a report summarising the measures needed to internalise the external costs from all transport modes, along with a timetable. When fully implemented, this should in crease the appeal of more sustainable transport modes such as rail.

Thus the focus for the current legislative term must now be on how to implement these measures if the vision of the Transport White Paper is to become a reality over the next decade. CER will continue to call on European decision-makers to translate the proposals into action as quickly as possible in order to achieve these goals, knowing that the variety of interests at stake does not guarantee that there will be sufficient political will on the side of Member States, the European Commission and the European Parliament to effectively implement them.

Over the upcoming years, CER will also continue to pro-actively drive forward the debate on a more sustainable future for European transport.

Completion of the internal market in rail

The European Union is committed to achieving a single European market for all goods and services. In the case of rail, this implies a vision of a single European railway area with open and competitive markets, a systematic reduction or removal of national barriers (technical, infrastructural, legal), and the creation of a uniform regulatory environment.

This process was initiated two decades ago and, to date, has still not been completed for many valid economic, political, technical and legal reasons.

CER believes that completion of the internal market must proceed in a fair and pragmatic manner, while limiting the costs to the strict minimum for the sector as a whole. A number of policy dossiers contributing to this objective are underway at EU level or will be launched during the course of the year.

The recast of the first railway package aims to clarify existing legislation setting the framework conditions for the formal creation of the single European railway area (clarification of conditions for non-discriminatory access to services, of infrastructure financing rules including charging rules and of regulatory control to ensure fair access to the market), and therefore paving the way for the final stages of the further opening of the market to competition. This dossier is currently being discussed in trialogue by all three EU institutions (Parliament, Council and Commission) and its completion is envisaged for later in 2012.

The European Commission is expected to adopt new legislative proposals, the so-called fourth railway package, at the end of 2012. The objective of this dossier is to build upon the economic, legal and technical framework achieved in the recast by opening the domestic passenger rail market to comp – etition, promoting enhanced transparency in the relation between operations and infrastructure management, increasing reg – ulatory cooperation/control throughout the EU, and fostering an enhanced European Railway Agency.

In October 2011, the European Commission published the TEN-T guidelines and related Connecting Europe Facility. Planning, financing and operating the infrastructure for a Single European Transport Area is a prerequisite for a good product quality and better services for the customers. These dossiers follow the Transport White Paper targets and propose a new infrastructure policy for the EU. To date, transport infrastructure as such is welldeveloped within the EU, but it is still frag – mented, both geographically and between transport modes. The main objective of these new guidelines is to establish a complete and integrated trans-European transport network covering all Member States and providing the basis for a balanced development of all five transport modes in order to facilitate their respective advantages, thereby maximising the value added for Europe.

Another important political milestone in 2012 is the work of the European Railway Agency (ERA) and the technical harmonisation which will promote efficient and safe cross border operation. CER will remind the Commission about the enforcement of the European legal framework with a view to the removal of residual national processes. Where necessary, we will make proposals to strengthen the European legal framework and the role of the European Railway Agency to achieve a single process of vehicle type authorisation and railway undertaking certification across the EU. The definition of harmonised technical rules (TSIs) for the European railway system including the closing of open points will have to be finished. In parallel, national rules have to be made transparent. CER will actively request from Member States and the Commission the removal of residual national technical rules as long as they do not cover justified derogations or specific cases. The implementation and enforcement of previously developed harmonised safety approaches and manage – ment systems to ensure safe and efficient maintainability of vehicles across Europe will complement the association’s activities.

Fostering an enhanced modal shift towards rail transport

Achieving modal shift of passenger and freight business from road to rail has been a central goal of CER’s work over the past decade. The need for such a shift is well-documented, both from the energy security (oil dependence) perspective and from the environmental perspective, notably in the Commission’s Transport White Paper. This is why CER will continue its efforts towards a more sustainable transport system.

The necessary enabling conditions for modal shift are the same as in any other business: prices need to be undistorted in order to allow for fair competition, in this case between transport modes; infrastructure needs to be well-financed and readily available for operators to be able to deploy high-quality services; and the structure of costs and revenues for operators need to be fair and sustainable.

Starting with the latter, many historical operators suffer from inherited historical debts which grind down their ability to modernise and compete in today’s environment. Also, historical operators are often forced by public authorities to provide passenger transport services (Public Service Obligations or PSO) under lossmaking conditions, thus further eroding their financial capacity.

Infrastructure financing also suffers from serious governance problems. As rail infra – structure managers are typically state-owned, their accounts are often seen merely as ‘balancing accounts’ of Member States: forcing infrastructure managers to raise the charges paid by operators reduces the draw on the public purse, but this in turn worsens rail’s competitive position with respect to road, where, in most cases, user charges still do not exist. CER considers it essential to introduce road user charges on a compulsory basis and on a much wider scale in order to create a level playing field in terms of infrastructure cost recovery.

Essential element – fair transport prices across the modes

Transport prices do not reflect the real cost of transport. Local environmental costs such as air pollution, noise, accidents, and congestion (so-called negative local externalities) are usually not reflected in the prices. As shown earlier, road user charging is essential in order to achieve a level playing field from the point of view of infrastructure cost recovery. Such charging is also the ideal vehicle for the internalisation of local external costs. CER therefore strongly supports the revision of the Eurovignette proposal, adopted in June 2011. The revised Directive goes some way towards creating a more level playing field between road and rail. We believe that a wider application of the ‘polluter-pays’ principle is crucial to bring about the necessary structural changes needed to achieve a more sustainable European transport system. It is clear that the European Commission will need support in its attempt to introduce full internalisation of the external costs of transport operations across all modes, a measure which will face considerable opposition from some Member States.

In CER’s view it is demonstrably the case that internalising the external costs of transport poses no threat to competitiveness. The example of Switzerland shows a successful implementation of the ‘polluter-pays’ principle. The country reduced the environmental impact of freight lorries while raising revenues for investment in more sustainable transport infrastructure. There is no sign that this policy led to a loss of competitiveness for the Swiss economy. On the contrary, the Swiss example shows the positive outcomes that can be achieved if a serious and comprehensive scheme to internalise the external costs of road freight is introduced.

To summarise

A lot still needs to be done if we want to reach the ambitious goals set by the European Commission’s Transport White Paper. And we can only reach these targets if all parties involved are closely working together to find adequate solutions.

About the author

Dr. Libor Lochman has been Executive Director of CER since 1 January 2012. Libor graduated at the Transport University in Zilina and has a doctorate in electronics from the West-Bohemian University Plzen. He has a strong background in Control-Command and signalling systems. Prior to his role as CER Deputy Executive Director and Leader of Technical Affairs (2007-2011), he acted as Director of the Railway Test Centre, a facility for testing European rolling stock, infrastructure and signalling components, in Prague (2000-2005).