21 October 2021

The Transport Decarbonisation Plan (the Plan) and Rail Environment Policy Statement were published on 14 July 2021 setting out ambitious plans for a cleaner, greener transport network.

The headlines for rail include:

  • a net zero rail network by 2050; and
  • all diesel-only trains (passenger and freight) being removed from the network by 2040.

The Plan recognises the important role that rail freight has to play in reducing carbon emissions, echoing the sentiments expressed in the Williams-Shapps Plan for Rail published on 30 May 2021 (the White Paper).

Rail freight as a low carbon solution

Rail freight enables the efficient movement of goods from ports, quarries and distribution centres, helping reduce the need for HGVs on roads. The Plan highlights that on average rail freight trains emit around a quarter of the CO2 equivalent emissions of HGVs per tonne mile travelled.

Given these green credentials, the government is keen to continue to encourage modal-shift to rail freight and intends to set a specific growth target for the sector.

Market opportunities for rail freight

The rail freight market has changed significantly over the last 20 years, transforming from being dominated by the transport of coal to having a broader range of intermodal and construction traffic flows. 

The White Paper acknowledges the potential of freight shown during the pandemic, when new express freight services were introduced for bringing essential food and medical supplies to the UK. This was in part assisted by reduced passenger services releasing capacity on the network.

The government is keen to build on this and continue to encourage modal shift to transporting freight by rail. It has established the Mode Shift Revenue Support grant scheme which may lead to other goods being transported by rail.

Market trends and opportunities

  • De-carbonising operations and supply chain - As businesses seek to ‘build back better’ as they recover from the pandemic, many are looking to make greater use of rail freight. For example, major supermarkets are investing in rail network connecting their distribution centres to depots across the country.
  • Consumer demands - Consumer demand for next day deliveries has grown. With increased public focus on the net zero agenda and climate change, there is demand for goods to be delivered quickly and in the most environmentally friendly way possible. Some companies are looking to revive the parcels and light goods business, using electric passenger rolling stock to take light goods and parcels from ports and airports into central urban areas by rail (e.g. from London Gateway port terminal to London Liverpool Street). Not only is this a low carbon option, it avoids congestion charges and traffic that could impact on costs and delay delivery times.
  • Freight and passenger operators working in partnership – There are recent examples of rail freight companies and train operators working together to use spare space on high-speed passenger trains to transport essential goods such as medical supplies across the country. There may be greater scope for this in the future and we may see a rise in the number of passenger train operators applying for freight licences from the ORR.
  • Use of freight for the delivery of construction materials for major infrastructure projects – The proposed use of rail freight to transport aggregates, cement, reinforced steel and containerised goods for the construction of major infrastructure projects continues to be a critical aspect of the Environmental Impact Assessment required under planning regulations for many major infrastructure developments.

What does freight need to meet this demand and exploit new opportunities?

Rail freight being a priority

The White Paper announced that the newly established Great British Railways (GBR), the ‘guiding mind’ of the rail sector, would have the need to serve freight customers at the heart of its mandate. In particular, it would:

  • have a statutory duty to promote rail freight
  • a national freight co-ordination team to support freight operators and customers and focus on facilitating investment in strategic rail freight interchanges
  • work to achieve the rail freight growth target set by government.

Capacity on the network and good connectivity with other transport modes

The Plan acknowledges that extra capacity needs to be built on the rail network to meet growing freight demand. Investment in improving the capacity and capability of the network for rail freight will focus on improved connections to key ports and strategic rail interchanges.

The government invested over £235 million in the Strategic Freight Network between 2014-2019 to improve freight capacity and capability, and further funding is being made available through the Rail Network Enhancements Pipeline.

During the pandemic rail freight was able to utilise capacity on the network released by the reduction in passenger services. As passenger services return and may be adjusted to meet a different pattern of demand (for example, less commuter demand but greater long distance and leisure demand post pandemic) fitting in capacity for freight is again on the table. Major rail infrastructure projects such as HS2, Crossrail and the Transpennine Route Upgrade should also lead to more capacity being available on the classic network in the future.

In the meantime, it may be that existing capacity can be more efficiently utilised. Under the plans set out in the White Paper, GBR will control the timetable and determine the passenger services to be delivered by train operators under new Passenger Service Contracts. This may enable GBR to identify more efficient use of train paths and therefore, enable opportunities to be identified to support freight growth.

Assurance regarding track access rights on the main-line network

The White Paper sets out plans for the existing track access arrangements to be reformed. A rules based access system will be established, with appeals being made to ORR where fair access to the network has been prevented. Legislative proposals for the new regime are expected in 2022 and will be critical to establishing how the balance of demand between freight operators and other uses (including efficient maintenance and passenger use) is determined and how freight access rights can be used to justify investment in new commercial opportunities. 

The White Paper criticises the delay attribution process under the current track access regime. It remains to be seen how potential performance impacts on freight operators will be addressed under the new regime.

What are the plans for the decarbonisation of rail freight?

Electrification of the network

The government plans to create a net zero rail network by 2050. An ambitious programme of electrification is required to enable electric rail freight to run on more routes. The Plan confirms that more electrification schemes will be announced in line with Network Rail’s Traction Decarbonisation Network Strategy. Short 'infill' electrification projects are being considered (particularly on routes connected to key ports and terminals) as those schemes may quickly enable rail freight operators to switch to using electric rolling stock.

It is hoped that the development of a long-term strategy for GBR and a comprehensive electrification programme, will enable GBR to electrify the network in a more efficient and cost-effective way.

Remove diesel rolling stock

The Plan sets out the government’s aim to remove all diesel-only trains from the network by 2040. The replacement of diesel rolling stock with electric traction will have a significant impact given that around 90 per cent of in-use freight rolling stock is currently diesel-only.

Decarbonisation of rail freight terminals and depots

The government will also work with the rail freight industry and GBR to encourage the decarbonisation of operations within rail freight terminals and depots.

What’s next?

The Plan and the White Paper recognise the importance of rail freight in meeting net zero targets as we recover from the pandemic. Provided that the necessary capacity can be released, there are likely to be opportunities for the freight market to develop in new directions.

The detail on how this potential will be unlocked now needs to follow. Further announcements regarding electrification are expected soon and we should have greater clarity on the timetable for implementing the reforms set out in the White Paper by the end of the year. The Rail Environment Plan and legislative proposals for track access reform are expected to follow in 2022. In the meantime, the government continues to work on its Future of Freight programme. 

Burges Salmon’s industry leading transport and energy lawyers have experience of advising freight operators, freight customers and infrastructure developers using freight to transport construction materials on a range of regulatory and commercial matters. We also have extensive experience of advising on rolling stock procurement and leasing arrangements. If you would like to discuss any aspect of this note, please do not hesitate to get in touch with Lydia Cullimore, Brioney Thomas or a member of our rail team.

This article was written by Lydia Cullimore and Brioney Thomas.

Key contact

Lydia Cullimore

Lydia Cullimore Partner

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