A Single European Railway: On The Right Track

A locomotive rolling down the track (photo by Migro)

The Council of the European Union (the Council) announced last week that it has reached agreement toward a directive that would establish a single European railway area.

This would-be directive is a recast of the so-called “first railway package.”  The approach consists of three* directives:

  • The development of European railways.
  • Licensing of railway undertakings.
  • Management of railway infrastructure.

“The purpose of this recast is to simplify, clarify and modernise the regulatory framework for Europe’s railway sector so as to improve conditions for investments, increase competition and strengthen market supervision in that sector,” said the Council in a statement.

Goals of the new EU railway directive. Goals of the new directive include:

  • All companies having equal access to rails.
  • Greater cooperation between regulatory bodies on cross-border issues.
  • Improved financing as a result of long-term planning/stability.
  • Incentives to modernize railway infrastructure.

In particular, the agreement reinforces the independence of railway infrastructure. This includes:

  • Railway stations.
  • Freight terminals.
  • Maintenance facilities.

The idea is to get to operational independence from the companies that use that infrastructure. The separation could be critical to allowing all companies to have nondiscriminatory access to railway-related services.

The agreement last week means that the Council agreed on basic rules for European railway and railway infrastructure companies. The basic rules would enhance investment and improve market supervision and — in theory — increase competitiveness.  The new legal act aims at improving competition between railway undertakings by making rail market access conditions more transparent.

Innovation vs. competitiveness. To wit, last month the U.S. Federal Railroad Association and U.S. Transportation Secretary Ray LaHood announced $2 billion in high-speed rail funds which would serve as an unprecedented high speed rail investment.  The money is intended to:

  • Speed up trains in the Northeast Corridor.
  • Expand service in the Midwest.
  • Provide new, state-of-the-art locomotives and rail cars.

In the first quarter 2011 there was a lot of rustling in Europe about innovations and vision, especially regarding for the railway (see High Speed Rail from London to Beijing in 19 Hours).

Suddenly the buzz has shifted in Europe to the subject of competitiveness.  In fact, on June 27, 2011 there will be an Extraordinary Council meeting on the subject of Competitiveness in the Internal Market, Industry and Research and Space. The meeting will be in Luxembourg (view agenda).

The new rail directive agreement: on the right track. Under the new Railway agreement, the rails would be more competitive with other transport options and national regulatory authorities would have more power. Specifically, regulatory authorities would have the power to impose sanctions/penalties and to audit implementations of the railway directive. Cooperation between regulators on cross-border issues would be a goal, not an exception.

This type of longer-term planning is the cornerstone of improving financing of rail infrastructure, as it will offer more certainty to investors. The directive will provide incentives to modernize infrastructure, which is the best way to make sure it happens — no one spends multiple-million euros unless provoked — at least, I probably wouldn’t.

The Recast is known in e’er-pleasant-but-airy EU-speak as the “general approach.” Last week’s agreement by the member states enables the Council to start negotiations with the European Parliament.

The European Parliament, whose approval is required for the adoption of the directive, has yet to establish its position. Parliament is expected to convene on this subject in July and September.

Again: in the last quarter there was a lot of rustling in Europe about innovations and vision, and there is now a lot of rustling on the subject of competitiveness in Europe. Are the two complementary? We’ll find out.

*For specifics on the three ingredient directives, see directives Nos. 12, 13 and 14 of 2001.
For more see http://www.consilium.europa.eu/uedocs/cms_data/docs/pressdata/en/trans/122809.pdf