Is green electricity subsidising rail freight?

[lizmcp]

Aside from rail freight/mode shift grants etc., the fact that traction electricity is all from green sources (EDF nuclear currently), is this seen as an extra subsidy for rail freight, vs. e.g. shipping which can't use electricity, or road, which also primarily still uses diesel? Much of this capacity has come - either directly or indirectly - through govt-supported investments. Just trying to get an understanding of below-the-surface factors favouring one freight mode over another.

 

[The exile]

Very little rail freight is electrically hauled.

 

[100andthirty]

The overwhelming majority of freight in the UK is diesel powered - in the order of 95%. In addition some may think that traction energy comes from green sources, but in reality the network is connected to the national grid so the electricity comes from whatever generator mix is online at the time. Perhaps someone is paying for green (nuclear) energy but what they get is anyone's guess.

 

[tiptoptaff]

The overwhelming majority of freight in the UK is diesel powered - in the order of 95%. In addition some may think that traction energy comes from green sources, but in reality the network is connected to the national grid so the electricity comes from whatever generator mix is online at the time. Perhaps someone is paying for green (nuclear) energy but what they get is anyone's guess.

That's the same as any domestic customer though. You can sign up to "green" energy tariffs which claim all your electricity is renewable, but it all comes from the Grid.

It must be some sort of offset.

But to answer the OP's question - a lot of freight that used electric traction has returned to diesel haulage due to increased costs - DB stored all their 90s, FL use only a handful of theirs. So as to whether there's an additional Green subsidy I don't know, but if there is, it's not sufficient for the freight operators to cover the rising costs of energy, however it's produced.

 

[Recessio]

The overwhelming majority of freight in the UK is diesel powered - in the order of 95%. In addition some may think that traction energy comes from green sources, but in reality the network is connected to the national grid so the electricity comes from whatever generator mix is online at the time. Perhaps someone is paying for green (nuclear) energy but what they get is anyone's guess.

That's the same as any domestic customer though. You can sign up to "green" energy tariffs which claim all your electricity is renewable, but it all comes from the Grid.

It must be some sort of offset.

But to answer the OP's question - a lot of freight that used electric traction has returned to diesel haulage due to increased costs - DB stored all their 90s, FL use only a handful of theirs. So as to whether there's an additional Green subsidy I don't know, but if there is, it's not sufficient for the freight operators to cover the rising costs of energy, however it's produced.

I'm astonished it's as high as 95% - surely seems like a low hanging fruit the government could enforce all new freight stock to be bimode or trimode?

 

[RT4038]

I'm astonished it's as high as 95% - surely seems like a low hanging fruit the government could enforce all new freight stock to be bimode or trimode?

Only if the endgame is to transfer the freight to road haulage.

 

[cool110]

That's the same as any domestic customer though. You can sign up to "green" energy tariffs which claim all your electricity is renewable, but it all comes from the Grid.

It must be some sort of offset.

The way it works for "green" energy is that that the renewable generators are issued a REGO certificate for every MWh produced, these are then sold on the market alongside the electricity (of course since Brexit these can no longer cross the border). The net result of this being that the suppliers know that enough had been produced to cover their customers, and that amount is deducted from the declared mix for everyone else.

Nuclear isn't part of that scheme but can be accounted for in similar ways.

 

[tiptoptaff]

The way it works for "green" energy is that that the renewable generators are issued a REGO certificate for every MWh produced, these are then sold on the market alongside the electricity (of course since Brexit these can no longer cross the border). The net result of this being that the suppliers know that enough had been produced to cover their customers, and that amount is deducted from the declared mix for everyone else.

Nuclear isn't part of that scheme but can be accounted for in similar ways.

Interesting - thanks for the info. I guessed it would be something like that. Although I do know someone who is convinced it means none of his electricity comes from gas or coal. Gave up trying to explain how the Grid works after about 20minutes

 

[Bantamzen]

I'm astonished it's as high as 95% - surely seems like a low hanging fruit the government could enforce all new freight stock to be bimode or trimode?

They could, but then freight companies might not be in the market for them and continue to use diesel locos until such time that electric becomes economically viable again. Of course the government could also force freight operators to use electric locos where they can, but freight is a cost driven industry so raising the costs may drive freight off the rails altogether.

 

[tiptoptaff]

They could, but then freight companies might not be in the market for them and continue to use diesel locos until such time that electric becomes economically viable again. Of course the government could also force freight operators to use electric locos where they can, but freight is a cost driven industry so raising the costs may drive freight off the rails altogether.

And no one wants that.

Even with a "polluting" diesel on the front, rail freight is much greener than sending the equivalent load by road

 

[Bantamzen]

And no one wants that.

Even with a "polluting" diesel on the front, rail freight is much greener than sending the equivalent load by road

Exactly, which is why for now governments need to work on long term solutions to help bring the cost of electricity down, as well as increasing the wired infrastructure to allow for more electric traction use and not concentrating on forcing it through legislation.

 

[tiptoptaff]

Exactly, which is why for now governments need to work on long term solutions to help bring the cost of electricity down, as well as increasing the wired infrastructure to allow for more electric traction use and not concentrating on forcing it through legislation.

Agreed. I remember talk/plans of an "electric spine" from Southampton to Scotland, mainly for container traffic, so freight could run on electric on that route.

The two largest ports in the country have to be all diesel served. Huge volumes of IM freight alone that could be switched to electric if Southampton got its wires under the spine project, and Felixstowe was wired. (issues with OLE in terminals notwithstanding) but in order for there to be a desire to switch it has to be financially viable for the industry. And it seems that at the moment, diesel haulage is cheaper than electric. And it shouldn't be that way.

 

[furnessvale]

Aside from rail freight/mode shift grants etc., the fact that traction electricity is all from green sources (EDF nuclear currently), is this seen as an extra subsidy for rail freight, vs. e.g. shipping which can't use electricity, or road, which also primarily still uses diesel? Much of this capacity has come - either directly or indirectly - through govt-supported investments. Just trying to get an understanding of below-the-surface factors favouring one freight mode over another.

That doesn't fit with the fact that some railfreight companies who own both diesel and electric locos, have from time to time put their electric locos into storage and used diesels instead, because of the high price of electricity.

 

[al78]

That's the same as any domestic customer though. You can sign up to "green" energy tariffs which claim all your electricity is renewable, but it all comes from the Grid.

It must be some sort of offset.

Yes it is effectively an offset. With Good Energy they claim to supply the equivalent of what you consume to the grid in the form of renewables.

 

[eldomtom2]

And no one wants that.

Even with a "polluting" diesel on the front, rail freight is much greener than sending the equivalent load by road

Until electric trucks become widespread. The "oh you can't impose emissions regulations on us, trucking is worse" argument will not hold up soon, if it ever did.

 

[SamYeager]

Until electric trucks become widespread. The "oh you can't impose emissions regulations on us, trucking is worse" argument will not hold up soon, if it ever did.

Electric trucks are only ever going to cover local deliveries of stuff which would never have been carried on rail anyway. We've already seen freight companies suspending the use of electric locomotives bcause the the power cost was too high.

 

[D365]

That doesn't fit with the fact that some railfreight companies who own both diesel and electric locos, have from time to time put their electric locos into storage and used diesels instead, because of the high price of electricity.

*has seemingly withdrawn all their non-EMD locomotives.

 

[Krokodil]

They could, but then freight companies might not be in the market for them and continue to use diesel locos until such time that electric becomes economically viable again. Of course the government could also force freight operators to use electric locos where they can, but freight is a cost driven industry so raising the costs may drive freight off the rails altogether.

It's virtually impossible to buy new straight-diesel locomotives now so anything built new will have some sort of electric traction. Hence why re-engining obsolete locomotives is back in vogue and there are 60 year old class 37s still in daily use.

Until the government pulls its finger out and gets wiring (Westbury to Newbury, plus the reception lines of Acton Yard for example would electrify the jumbo stone trains), there will be no change in traction policy. At least wholesale energy prices have dropped from their August 22 peak.

 

[Class 317]

Electric trucks are only ever going to cover local deliveries of stuff which would never have been carried on rail anyway. We've already seen freight companies suspending the use of electric locomotives bcause the the power cost was too high.

I don't believe that will be the case.
Volvo already offer trucks with 280 mile range (4.5 hours driving at 62mph) which fits in with driver hours rules.Charging time is currently limited by use of 250KW DC charging to 2.5 hours but they are experimenting with 500KW DC charging as part of their involvement in the electric highway scheme. 500KW would give a charging time of around 75 mins for a full charge depending on how quickly it ramps up and down.

Assuming that few HGV runs would get close to maximum range due to time spent on local roads at each end of a truck haul and traffic etc charging required is unlikely to be a full charge and instead be closer to a 75% charge. This is likely to push the charging time close to the magic 45 mins break time every 4.5 hours required by law.

 

[edwin_m]

Green electricity would only be subsidising rail freight if Network Rail was paying substantially less for it than they would for non-green electricity. The market pretty much ensures that won't be the case - if a green supplier was charging less then supply and demand would push their price up to close to everyone else's. The workings of the electricity market complicate this considerably but I believe the basic premise remains true.

 

[DelW]

Electric trucks are only ever going to cover local deliveries of stuff which would never have been carried on rail anyway. We've already seen freight companies suspending the use of electric locomotives bcause the the power cost was too high.

One major difference is that AIUI railway locos run on untaxed red diesel. HGVs are required to use taxed white diesel (aka DERV) which is much more expensive. That means road vehicle operators have more of an incentive to go electric, especially if they can negotiate cheap off-peak tariffs.

 

[furnessvale]

One major difference is that AIUI railway locos run on untaxed red diesel. HGVs are required to use taxed white diesel (aka DERV) which is much more expensive. That means road vehicle operators have more of an incentive to go electric, especially if they can negotiate cheap off-peak tariffs.

Red diesel is not tax free. It pays a lower rate as a reflection of the fact it has traditionally not been allowed for use in road vehicles.

Although the duty on road diesel is not hypothecated, the higher rate paid by HGVs goes part way, but not fully, towards paying the cost of road provision for those vehicles.

HGVs also pay a comparatively small annual excise licence. On the other hand, railfreight pays a hefty charge per loco and wagon km for every km run on the network. This is called a track access charge, and unlike road fuel duty, which has been frozen for many years, the charge rises inexorably by the rate of inflation every year. This means the ability of railfreight to compete with road is costantly being eroded.

 

[tiptoptaff]

I don't believe that will be the case.
Volvo already offer trucks with 280 mile range (4.5 hours driving at 62mph) which fits in with driver hours rules.Charging time is currently limited by use of 250KW DC charging to 2.5 hours but they are experimenting with 500KW DC charging as part of their involvement in the electric highway scheme. 500KW would give a charging time of around 75 mins for a full charge depending on how quickly it ramps up and down.

Assuming that few HGV runs would get close to maximum range due to time spent on local roads at each end of a truck haul and traffic etc charging required is unlikely to be a full charge and instead be closer to a 75% charge. This is likely to push the charging time close to the magic 45 mins break time every 4.5 hours required by law.

Which would be fantastic if your 4.5hrs is exactly the same distance as the range of the truck - unlikely. And you always end your 4.5hrs at a service station - unlikely. Or you actually have a 45 - which isn't as common as many drivers split it 15/30 depending on their runs for the day.

So Electric trucks will still be impractical for anything but trunking, which isn't carried on rail anyway

 

[furnessvale]

So Electric trucks will still be impractical for anything but trunking, which isn't carried on rail anyway

Sad to say, this is true. Most trunking is done by road. With a few exceptions, FLL relies on international containers to and from the ports having abandoned their domestic network years ago. Same with Speedlink.

With the extra cost of electric HGVs, although given even more government subsidy, perhaps the time is approaching when a domestic network of container services between a select few centres could be viable again, but who will take the plunge?

 

[InTheEastMids]

To address the original question, it's arguably the other way around.

I don't know how Network Rail works out electricity costs to its customers, but Network Rail, as a customer, will have a bill for traction electricity cost that includes Climate Change Levy, and various schemes such as the Feed in Tariff with Contract for Difference that have been developed to decarbonise electricity generation. All rail operators are therefore be indirectly funding these costs.

Much of this capacity has come - either directly or indirectly - through govt-supported investments

This isn't quite right - Government hasn't funded much but has claimed a lot of credit for organising the market to support investment.
Renewables, nuclear (RO, FiT, CfD) and maintaining backup (Capacity Market), are funded by retail electricity suppliers who pass them onto customers' electricity bills (you, me and Network Rail to name 3). As an aside, this makes electricity comparatively expensive compared to gas. This didn't matter when electricity was relatively dirty and gas was clean, but now electricity is clean and fossil gas is dirty, so the approach we have is now actually against the intent of the policy. However shifting these costs to fossil fuels would cause other bills to rise so is not a nettle any politicians are currently willing to grasp.

Exempting railway traction electricity from Climate Change Levy (unless it's already exempt?) would be a small but presumably helpful nudge towards using electric traction, which is surely the best possible thing to achieve from the perspective of climate change (as well as air quality and reducing traffic).

Electric trucks are only ever going to cover local deliveries of stuff which would never have been carried on rail anyway.

So Electric trucks will still be impractical for anything but trunking, which isn't carried on rail anyway

The first credible electric car for mainstream use was the Nissan Leaf, which was launched in 2010, and back then a lot of people said electric cars would only ever be useful for short trips around town.
The electric HGV industry is around the same stage of development, the first decent products have arrived, or are about to.

So the companies that are both selling and starting to use them are identifying and starting to deploy based on what they can do, i.e. local deliveries and trunking.

Range improvements, cost reductions and a bit of regulatory change can all be expected to follow over the next 10 years or so
This means electric HGVs will start to have lower total cost of ownership.
Assuming the infrastructure appears (hoping we don't fall behind with HGV charging as we have with cars), and diesel will gradually get squeezed out.
This is happening with electric cars now.

 

[HSTEd]

Electric trucks are only ever going to cover local deliveries of stuff which would never have been carried on rail anyway. We've already seen freight companies suspending the use of electric locomotives bcause the the power cost was too high.

Well that's because railfreight has access to essentially untaxed diesel.

Electric lorries will absolutely crush diesel ones at the price that road hauliers are required to pay for diesel.
And betting against the range of lorries is not a great plan in the long run.....

And that's before we get to systems like eHIghway that would enable effectively total conversion to electricity for a few thousand lane-km of construction.

 

[furnessvale]

Well that's because railfreight has access to essentially untaxed diesel.

Electric lorries will absolutely crush diesel ones at the price that road hauliers are required to pay for diesel.
And betting against the range of lorries is not a great plan in the long run.....

And that's before we get to systems like eHIghway that would enable effectively total conversion to electricity for a few thousand lane-km of construction.

Once again you totally miss the true situation. No matter how much tax HGVs currently pay on their diesel, it still does not even cover the cost of road provision and is only sustainable by the cross subsidy of the private motorist.

Red diesel is not untaxed but it pays a lower rate than white. However, the duty on red rises inexorably every year as the duty on white has been virtually static for 20 years, reducing its value by inflation.

Instead of peying duty on its diesel, railfreight pays a track access charge on every km its locos and wagons move on the network.

If you believe any UK government will quietly forego the revenue it receives from road fuel duty as electrics take over you are sadly mistaken. Already moves are afoot to introduce a "road access charge", very similar to the charge already paid by railfreight

 

[HSTEd]

Once again you totally miss the true situation. No matter how much tax HGVs currently pay on their diesel, it still does not even cover the cost of road provision and is only sustainable by the cross subsidy of the private motorist.

Fuel duty receipts are about £24.7bn. On top of this road fuel users pay VAT at 20%. It is hard to get good stats but apparently road fuel sales are about £3.2bn per month, implying VAT charges of about £530m per month, or another £6.4bn per year. That's a total road fuel tax take of ~£31bn.

Road freight uses about 21% of total road fuel spend, which means HGVs pay about £6.5bn in fuel duty and VAT on fuel.
They also pay several hundred million more in vehicle excise duties and the HGV levy (which is at least several hundred million a year) but I can't easily get good stats on it.

HGVs probably pay something like £7bn a year.
National Highways, which operates the Strategic Road Network, only has a budget of £5bn per year.

It is difficult to get good statistics but all Government road spending is probably only about £12bn per year!
Given how ludicrously loaded towards motorways and other major roads lorry miles are, they likely pay pretty close to their share of the cost on the roads that they use.

There are lots and lots of roads that almost never see a HGV after all, and almost half of HGV road mileage is on motorways alone.

Red diesel is not untaxed but it pays a lower rate than white. However, the duty on red rises inexorably every year as the duty on white has been virtually static for 20 years, reducing its value by inflation.

Not only does it pay a far lower of fuel duty, it also pays VAT at a quarter of the rate that road fuel does.
Whilst a small amount of tax is payable it is functionally zero compared to the tax burden on road fuel.

Instead of peying duty on its diesel, railfreight pays a track access charge on every km its locos and wagons move on the network.

They pay a peppercorn rate, which last year amounted to a net payment of £11m to Network Rail.
It is negligible and represents roughly 0.1% of Network Rail's costs.

If you believe any UK government will quietly forego the revenue it receives from road fuel duty as electrics take over you are sadly mistaken. Already moves are afoot to introduce a "road access charge", very similar to the charge already paid by railfreight

A road usage charge will almost certainly be set at a level that encourages decarbonisation of road freight, unless the government doesn't care about decarbonisation at all.
And if they don't they won't do anything to drive railfreight adoption anyway so its all moot!

 

[Oxfordblues]

My view is that if the use of trunk roads and motorways were charged directly and there were to be toll-gates every 100km or so, then it could be argued that road haulage is not being subsidised. As things stand a haulier can take a 40ft box from Southampton to Glasgow without once encountering a toll-booth. The M6 Toll charges a commercial rate of £15.90 per HGV for a distance of 43km. Southampton to Glasgow is 690km, 16 times the length of the M6 Toll. Therefore if a charging regime were to be introduced each truck would have to pay 16 x £15.90 = £254.40. I would therefore contend that by failing to charge tolls the Government is effectively subsidising the journey in that example by £254.40.

 

[InTheEastMids]

And that's before we get to systems like eHIghway that would enable effectively total conversion to electricity for a few thousand lane-km of construction.

Government's gone extremely quiet on this - I personally think this will not happen in the UK because
- we lack true long-haul road freight of the kind you see on Mainland Europe & North America
- it's starting to look like the majority of HGV mileage in UK can be covered by battery electric with charging at depots etc.,
- Government (at least the one we have) lacks the appetite for this kind of public sector investment

they likely pay pretty close to their share of the cost on the roads that they use.

Stress on roads from vehicles is a function of a 4th power law. Some beermat maths:
Car estimate 1,500 kg, so 750 kg per axle
HGV might be 44 t on 6 axles, so 7,300 kg per axle
A difference of about 10 times. The 4th power law means that 10 times the weight leads to 10,000 times more road stress (and damage).
It also matters how far vehicles are driven. According to DfT stats at https://roadtraffic.dft.gov.uk/summary the figure for cars is 244 billion vehicle kilometres, whereas for HGV it's only 17.4 billion vehicle kilometres.

However, if each HGV km is 10,000 more damaging, then the relative damage to the highway is comparable to 174,000 billion vehicle kilometers travelled by cars. 244 is <0.1% of 174,000...

Now there's a lot of estimates here, but I think it's basically saying that nearly all road degradation not from age-induced decay or materials, vegetation or botched streetworks repairs is probably down to HGV.

The M6 Toll charges a commercial rate of £15.90 per HGV for a distance of 43km

...The M6 Toll operators know all about the fourth power law. So that price is set to a point that deters the majority of HGV traffic. There is probably a tipping point price below this where it would suddenly start to look like good value for HGV operators, and costs (from road damage) would increase much faster than revenue. Set it much higher, and suddenly people like regulators start getting interested and they don't want that.