COVID-19 and Russia's aggression on Ukraine are both crises and opportunities for the rail sector

By Andrey Novakov, MEP, (pictured)
Spring 2022

Andrey Novakov, MEPThere is a link between the future of rail transport, the fallout from the COVID-19 pandemic and the impact of Russia's war on Ukraine. In the EU, rail transport's Achilles’ heel is the electricity production and the price of raw materials used by the industry. The corona crisis resulted in unprecedented price hike of raw materials such as steel, copper, aluminium and concrete. The military aggression underlined the Union’s energy vulnerability and revealed the (rail) transport sector's exposure to energy supply and inflation in energy prices. Rail companies across the Union already feel the effects of higher electricity prices. This could temporarily “derail” the progress of the rail sector.

Given the two crises, day-to-day operations, the production of rolling stock as well as building infrastructure are much more expensive. High expenses reduce profit margins and the ability of the operators and owners to invest in infrastructure, rolling stock and widening of the network.

The EU could do a few things to turn the latest developments to opportunities. The first thing is to look for ways to provide short-term financial support to the rail sector through state aid flexibility. Member States could then support the companies out of the crisis. Second, it is to make an upward revision of the costs for key EU-funded rail projects in order to consider the inflation. Such a revision should cover the EU funding through the Multiannual Financial Framework as well as the Next Generation EU funding. Third, to come up with new initiatives that would increase the visibility of the sector. For example, the EU, with the help of Member States, could finance a European Refugee Pass for those who flee from Russia's war on Ukraine. The free rail ticket would contribute to the integration of Ukrainians.

If the EU successfully navigates the sector out of the crises, rail transport could once again revolutionise our economy just like it did in the 19th Century.

Rail is key to decarbonise transport and contribute to the EU's green recovery
Rail transport is responsible for only 0.4% of greenhouse gas emissions from EU transport. The sector has reduced its emissions over the past 30 years, facts proving that rail is fully in line with EU ambitious climate objectives. EU aims to become the first climate-neutral continent by 2050. Undoubtedly, the future of Europe is green and building the mobility system that EU needs without strong support for rail sector would be impossible. Europe has already started its one-way journey towards a more competitive and clean economy. This journey will be challenging, but I am convinced that in order to make it a success it should be by train. The questions in front of us is how to enable rail transport to reach its full potential and to contribute to the decarbonisation of the Union in the most effective manner. European Year of Rail was a great initiative during a year that changed our lives and our way of thinking. Covid-19 pandemic had an unprecedented impact on all transport modes, also heavily affecting rail sector with billions of euros lost. Despite this, the initiative has achieved its objectives, namely to raise the important questions, putting rail in the spotlight and engage citizens in using more sustainable and greener modes of transportation.

The most crucial is that EU is starting to work on concrete solutions and that rail definitely stays at the centre of Union's priorities. Key priorities have been set for European mobility sector and especially the system we want to build for our future – sustainable, safe and affordable. The EU's Smart and Sustainable Mobility Strategy to double high-speed rail traffic by 2030 and double rail freight traffic by 2050. The European Commission proved its strong commitment again in December 2021 with the publication of the Action plan to boost long distance and cross-border passenger rail and the TEN-T Regulation revision which will be of outmost importance to improve rail network in Europe, connecting regions and remove obstacles for more efficient and competitive rail freight and multimodal transport.

Rail transport is a part of European history, there is a clear signal from the European Commission that the sector should stay at the centre not only of the debates but of the future initiatives. Ensuring the decarbonisation of the transport sector in Europe will be a question of a very strong partnership between politicians, experts and industry. Bringing ideas and priorities into reality and turning them into real success would be only possible with the joint efforts between policymakers and authorities, railway undertakings and infrastructure managers. A holistic approach is needed in order to contribute rail sector development, while guarantying EU's green recovery.

At the first place, rail needs funding – proper financing is essential for the future of the sector. Member States should significantly speed up their investments in existing and new infrastructure, strengthening territorial cohesion and improve connectivity between EU regions. The completion of the TEN-T network should not be put at risk, because of the poor planning and diverging priorities especially regarding cross-border projects. A strong TEN-T demands us to be ten times bigger in investments and implementation.

In the aftermath of the pandemic and Brexit, we are observing a critical shortage of heavy-duty vehicles drivers, nevertheless freight transport demand is growing. The current modal split is still highly unbalanced, e.g. 76.3 % for road freight transport, followed by rail and inland waterway transport -17.6 % and 6.1 % respectively. Transport is a system and its good functioning depends on all different modes of transport. (Introducing restrictions for one mode of transport is not an efficient measure to promote more sustainable modes of transportation.) Greener and cleaner modes need more incentives, giving them the opportunity to explore their full potential and capacity. I would like to see more goods going by train, this is the way to meet growing demand, while neutralizing the negative environmental impact.

Secondly, EU rail sector needs to be attractive – make traveling by train easier, the most efficient and pragmatic choice. EU economy is still recovering from covid-19 pandemic, customers' demands are evolving. The "safe" became the new black, the sector should help citizens regaining trust in public transportation.

From customers' perspective, I am convinced that improving and optimizing services will be vital for the rail sector. Reservations for rail journeys should be as simple as booking a flight, more user-friendly and accessible. Diversifying services is another pillar of the sustainable and green recovery of the EU mobility system. The renaissance of night trains is a perfect example how rail could be a part of the solution for the EU's recovery – first as an alternative to a short-distance flights and secondly as a tourism opportunity.


Finally yet importantly, we should not lose our focus on research and innovation in the rail sector as key instruments to drive the evolution of a digital, competitive and sustainable European railway system. In this context, we need to speed up the development and the deployment of these technologies in passenger, freight and intermodal services. Investing in European rail traffic management system (ERTMS) will enable the creation of a high capacity integrated European railway network and eliminating barriers to interoperability. Europe does not need 30 of national signalling systems, European railways should speak the same language.