Brussels (Brussels Morning) – The European Commission approved a €1.7 billion German scheme to support rail freight operators, enhancing competitiveness and environmental performance, aligned with the EU’s Sustainable and Smart Mobility Strategy and Green Deal.
The European Commission has agreed, under EU State aid rules, a €1.7 billion German scheme to sustain rail freight operators in single and group wagon transport. The effort will contribute to assuring that the rail freight sector remains competitive while protecting the environmental performance of rail, in line with the policies of the Commission’s Sustainable and Smart Mobility Strategy and of the European Green Deal.
What is the goal of the €1.7 billion rail scheme?
Germany informed the European Commission of its intention to raise a €1.7 billion scheme to support rail freight operators of single and group wagon transport services. The scheme aims to help rail operators cover part of the high operating costs. In doing so, the scheme strives to support and preserve the modal transformation from road to rail transport, thus advancing a greener means of transport.
What benefits does rail freight gain from this aid?
In single-wagon load transport, individual wagons or groups of wagons from different consignors are bundled together to form one train. On the contrary, wagon group transport upholds the same composition from the origin to the destination and is qualified under the scheme for journeys up to a maximum distance of 300 km if functioned by short block trains with up to 15 wagons.
Both types of transport attempt to reach economic viability. Single wagon load transport holds high costs due to its complex and multi-step nature resulting from the shifting and shunting of wagons. Wagon group transport performed by short block trains does not benefit from economies of scale due to the lower number of wagons and the short distances they serve.
Under the project, the aid will take the form of direct contributions. The maximum annual budget amounts to €320 million, with an overall budget of €1.7 billion over the five-year period of the scheme. The scheme will run until 2029. The European Commission evaluated the measure under EU State aid rules, in particular of the Treaty on the Functioning of the European Union (‘TFEU’) on transport coordination, and the 2008 Guidelines on State aid for railway undertakings.
Why is the European Commission supporting this rail scheme?
The Commission found that the scheme is useful for the environment and mobility, as it supports segments of rail freight transport, which is small polluting than road transport and decreases road congestion. The action is necessary and appropriate to accomplish the objective pursued, namely to defend and preserve the modal shift from road to rail transport segments which meet high operating costs. The scheme is proportionate, i.e. restricted to the minimum necessary, as the support remains below the maximum thresholds set out in the Railway Guidelines.
Moreover, the commission concluded that the aid is determined to reduce the competitive disadvantages faced by rail freight transport compared to road transport. Therefore, the effort will not have undue negative impacts on competition and trade in the EU. On this basis, the Commission authorised the German scheme under EU State aid rules.
