The European Commission (EC) recently adopted the new Land and Multimodal Transport Guidelines, which will replace the 2008 Railway Guidelines on state aid rules to boost the modal shift. For rail freight, the new document brings significant changes as more segments and projects are now eligible. In addition, the aid may now reach up to 90% of eligible costs compared to the previous 50%.
Unlike their predecessors, the new guidelines will not only apply to railway undertakings but also to vehicle owners, logistics and shunting companies, forwarders and MTOs “to the extent that they choose to use rail instead of road”, the EC pointed out. Moreover, there are further provisions that increase the reach of the support, as they are now available for the launch of new services and interoperability projects.
The need for a new document on state aid eligibility stems from the Fitness Check carried out by the Commission in 2020, which concluded that the current framework is obsolete. More specifically, the new ones no longer include the conditions on cancelling historic debt directly linked to the activity of rail transport and the specific conditions for restructuring freight branches of railway undertakings.
New services and interoperability
Regarding new services, financial support can be provided for a maximum of five years to purely rail or inland waterways connections. New services involving more modes of transport will not be eligible. New services also include pre-existing connections that have not been in operation for at least three years, the document specified. When it comes to rail interoperability, financial aid can be provided for ETCS, FRMCS, ATO, DAC, rolling stock adaptation to different electrical systems, different gauges and to transport intermodal loading units.
No funds for infrastructure use, some funds for sidings
The new guidelines do not include direct aid for infrastructure use, but Member States can provide support “to reduce the external costs of transport (…) to cover the costs linked to” it. This support can be applied to sustainable multimodal transport. Moreover, some infrastructure projects specific to rail freight, such as building, renewing or replacing private sidings, are now eligible for state aid. “Private sidings play a key role in reducing the need for first-/last-mile road transport for freight”, the Commission highlighted.
Who cannot apply?
Despite extending their scope, the guidelines still have thresholds assessing eligibility. For example, railway undertakings in difficulty cannot benefit from this type of state aid. These are companies losing half of their capital, under restructuring or insolvency and with large debts. State aid guidelines for them are regulated with a specific and separate document. Furthermore, aid cannot be granted for transport services on routes that have established capacity constraints that would prevent the modal shift.
Harsh reality check
Other than explaining the new state aid scheme, the EC’s documents included a few statements that finally recognised the struggles of the rail freight industry and its stagnating situation. “The Commission observes that rail freight transport services cannot always be operated on a commercial basis”, it admitted.
From inadequate rail links to terminals and the traditional fragmentation of the EU which hinders rail coordination, such schemes are now a necessity not only to increase the share of non-road modes, but also to avoid a decrease, the EC urged. Rail freight has been on a downward trajectory for a few years now in Europe, while the road seems to continue to grow.