France offer electricity price relief to promote shift to rail

France has given added impetus to its aim to speed up the transition of freight transport modes by opening up the state energy savings certificate (ESC) scheme to shippers. Agnès Pannier-Runacher, minister for Energy Transition, and Clément Beaune, minister delegate for Transport, announced the measure earlier this month, underlining that rail transport consumes six times less energy than road.

The ESC scheme, which Is based on the ‘polluter-pays’ principle, has been in place since 2005. It is intended to enable sectors that reduce their carbon footprint to benefit from the funds paid (into the scheme) by large industrial groups responsible for a large part of CO2 emissions.

In order to encourage shippers to transport goods by train, the French authorities will now contribute to offsetting the extra transport costs incurred in switching from road to rail freight. The energy cost ‘break’ works out at approximately 13 per cent of the average cost of a tonne-kilometre (t-km), which is estimated at 3.3 euro centimes per t-km.

Doubling modal share

A national strategy for the development of rail freight in France focuses on doubling its modal share of goods from 9 per cent in 2019 to 18 per cent in 2030, reaching 25 per cent in 2050. The means to achieving this focus on enhancing the attractiveness of rail, both operationally by improving the quality of freight train slots, and financially by setting up aid schemes to compensate for the additional costs compared to road transport.

After three years of decline, rail freight transport in France has returned to growth since 2021, notably at state railway utility, operator SNCF. Rail’s share of surface freight transport increased to 10.7 per cent last year, up from 9.6 per cent in 2020 and is expected to increase further in 2022.

Threat to growth

However, there is a risk that the hike in electricity prices will weigh on the sector’s growth. In a recent interview with French business newspaper Les Échos, Frédéric Delorme, président of Rail Logistics Europe (RLE) – SNCF’s rail freight division – warned of a downturn in the sector.

The underlying favourable trend towards rail could come to a halt with the energy crisis – an obstacle that will be very difficult to overcome due to the high price of traction. Expected is n additional cost of 200 million euros in 2023 compared to 2021, he argued. “This is an outrageous situation, where we are penalised because we use electricity, whereas freight by rail consumes six times less energy than a HGV and emits 10 times less CO2”, Delorme observed