Rail is sustainable by nature: while transportation accounts for 28.9% of greenhouse gas (GHG) emissions in the European Union (EU), rail contributes only 0.4% to sector emissions (Exhibit 1). And this despite rail holding an 11.9% market share in freight (tkm) and 7.2% in passenger transport (pkm).

As the most carbon-efficient transport mode, rail has a vital role to play in broader efforts to reduce GHG emissions. And given that rail has the potential to decarbonize more compared to other transport modes — through a variety of as-yet untapped levers — attracting more passengers and freight to rail should be a top priority.

Critical sustainability levers for rail

EU rail companies have been making progress in reducing Scope 1 and 2 emissions, such as by transitioning away from diesel fuels and sourcing green energy. They also have been communicating more ambitious science-based sustainability targets than their peers in other industrial sectors (Exhibit 2).

The three most critical sustainability levers now available to EU rail operators are optimizing energy consumption, transitioning to renewable energy sources, and increasing the use of recycled materials to close the circular economy loop.

Increasing the energy efficiency of trains

Rail transport is, on average, three to four times more energy efficient per metric ton-km or passenger-km compared to trucks and cars. But a focus on reducing emissions through train electrification has meant that rail operators are the largest single consumers of electricity in many EU countries.

One key next step then to further reduce GHG emissions from rail is to improve the energy efficiency of rolling stock. A variety of initiatives are beginning to take shape, with industry leaders making significant investments. Levers with the greatest potential for carbon reduction include optimizing train speed and stop frequency (approximately 10-15%), as well as enhancing heating, ventilation, and air conditioning (HVAC) systems (approximately 5-10%) (Exhibit 3).

A train’s lifecycle emissions comprise the amount of energy a train consumes in operation, the carbon intensity of the energy used to run the train, and the emissions from train manufacturing. For a commuter train in France, for example, train production emissions comprise over 40% of total lifecycle emissions, as the energy consumed in operation is lower in carbon intensity and such trains have relatively low energy consumption overall. In contrast, for a high-speed train in Germany, production emissions only account for about 2% of lifecycle emissions, due to higher energy consumption in operations and the significantly greater carbon intensity of the energy utilized.

Because lifecycle emissions are not the same for all trains, it is crucial to create sustainability strategies that are specifically tailored to the distinct characteristics of each operator and train type. Such an approach will help achieve the most effective balance between emissions reduction and investment efficiency.

Transitioning rail systems to renewable energy sources

As EU rail systems increasingly rely on electric traction, transitioning to renewable energy sources — such as wind, solar, and hydroelectric power — is another step that would markedly reduce rail’s GHG emissions. Eurostar, for example, expects to use 100% renewable energy by 2030, while, the Netherlands’ entire train network already runs on wind power.

Rail companies are increasingly prioritizing the sourcing of green energy as part of their sustainability strategies. By entering into power purchase agreements (PPAs) with renewable energy providers, rail operators can secure a stable supply of green energy, while also supporting the growth of the renewables sector and reducing the financial risks connected to volatile energy prices. Some rail companies are also investigating innovative solutions such as on-site energy generation and energy storage systems to further integrate sustainability into their operations.

Increasing the use of recycled materials to build trains

Did you know that purchasing a train constructed from recycled steel can cut production carbon emissions by 60% to 70%? This is comparable to the emissions a French regional train would generate operating over multiple years.

While only about 20-25% of the material used to build new trains now is recycled, potentially 85-95% of such materials could be recycled. Until now, rail operator procurement mostly has focused on financial implications and direct contributions to sustainability targets, such as energy consumption performance. As operators begin to implement scope 3 initiatives, however, it will be crucial to integrate the added complexity of scope 3 purchasing criteria – such as the manufacturing emissions associated with trains – into the procurement process.

Equipment manufacturers that can provide clear insights into the full lifecycle of trains and are able to quantify the financial impacts of sustainability will gain a first-mover advantage in the awarding of new train design contracts. This capability will enable them to influence operators’ procurement decision-making criteria and align their own product offerings and research and development initiatives to establish a competitive advantage.

Accelerating a Scope 4 shift to rail

“Scope 4” in transport refers to avoided emissions from using more energy-efficient modes. Shifting more freight and passengers to rail would be a Scope 4 opportunity — one that is estimated to be four to six times greater than the combined impact of Scope 1-3 (Exhibit 4).

While rail operators have been proactively working to attract customers from less energy efficient/higher emissions modes of transport to rail, there are many opportunities to accelerate this transition. On the passenger side, this involves improving reliability and comfort,  offering more attractive ticket prices, and optimizing door-to-door travel times and station accessibility. On the freight side, performance and service levels have not been up to expectations; improved corridor coordination, capacity management, and synchronized planning with infrastructure maintenance and construction are all needed.

Twin goals —  economic feasibility and sustainability in rail initiatives

Sustainability initiatives are rarely adopted if they offer only environmental benefits without clear economic justification, since these initiatives often require the allocation of limited financial resources. Many attractive sustainability opportunities also require collaboration — bringing companies together across the value chain to unlock mutual benefits. A prime example is circularity, which requires an end-to-end industry view to be successful.

Two key factors currently driving rail sustainability initiatives are: 1) competitive differentiation (superior offerings are more highly valued by customers because of quantifiable benefits for their sustainability footprint); and 2) direct cost reductions facilitated by sustainability improvements that drive efficiency (such as eco-driving and eco-parking.

Prioritizing rail sustainability initiatives from the perspective of both economic feasibility and environmental impact will be essential going forward, to increase the chances of successful implementation and integration of sustainability into the core business strategy. And these initiatives must align with the industry's long-term goal of attracting more passengers and freight to rail, both to support growth and accelerate EU transport sector decarbonization.

This article was co-created with Eolos