In November, the European Commission published its proposal for updating the Combined Transport Directive which emphasises the need for intermodal transport by shifting road traffic to sustainable transport modes (rail, inland waterways and short sea shipping) in order to increase the competitiveness of intermodal transport, to achieve emission reduction targets and for economic development. The analysis of the different options has led to a preferred option, whose measures can lead to a sustainable and flexible transport system.
All EU policies, legislation and regulation are based on achieving the Green Deal target of a 2050 emissions-free horizon, for which one third of the EUR 1.8 trillion investment in the NextGenerationEU Recovery Plan and the financial year 2021-2027 supports action to this end.
The set of proposals and actions adopted by the European Commission directly address the climate, energy and transport sectors because a reduction in greenhouse gas emissions of at least 55% below 1990 levels is needed in the next seven years, and achieving this can pave the way for the European Union to operate in a different barometer in 2050 – climate neutral, where the economy is fully sustainable.
In the case of the transport sector, the various policies and regulations that have been addressed and adopted argue for a 90% reduction in GHG emissions over about three decades, with an emission-free transport system, no dependence on fossil fuels, and extremely low noise pollution.
To this end, the Sustainable and Smart Mobility Strategy was developed and published (in December 2020), which aims to increase sustainability in all modes of transport, to create a green multimodal system and to encourage a shift of traffic to sustainable modes of transport to rail, inland waterways (IWW) and short sea shipping. The strategy aims for rail freight to increase by 50% by 2030 and to double by 2050, while inland waterways and short sea shipping traffic should increase by 25% over the next seven years and by 50% within three decades. Another target is for 75% of the freight currently carried by road to be shifted to rail and inland waterways.
As a result of these initiatives, the European Commission has come up with the updated Combined Transport Directive which needs to be amended in the light of today’s traffic and future targets. This, approved in 1975, was last amended in 1992, and subsequently came up with two proposals to update it (in 1998 and 2017) which were withdrawn because no agreement was reached with the co-legislators.
The revision of the Directive will increase the efficiency and competitiveness of intermodal transport, focusing on supporting operations that reduce negative externalities by more than 40% compared to road transport operations from origin to destination alone. The proposal also sets a competitiveness target for Member States to reduce the average door-to-door operational costs of combined transport by at least 10% within seven years and calls for the development and implementation of policies to meet these targets.
Currently, under market conditions, intermodal transport is not cost competitive compared to road transport, which requires policies to address the situation to the benefit of a sustainable transport system. The cost problem arises because the external costs of road transport are not fully internalised and the negative impact of road transport on society is not reflected in prices, and in addition to these elements, intermodal transport services involve additional costs and disadvantages in terms of transhipment time and costs, and limited connectivity options. This highlights the inequity between transport modes and then the need to address these elements in a way that is beneficial to society and the environment.
The objective of the revision of the Directive is to facilitate an increase in the share of rail transport as well as to stimulate the development of short sea shipping and inland waterways transport, which will reduce negative externalities and the level of energy consumption, as well as reduce dependence on fossil fuels.
The proposed revision of the Directive aims to develop intermodal transport at EU level through measures based on eligible criteria necessary to ensure the benefits of this regulation.
As 81% of intermodal transport operations are cross-border within the European Union, Member States are free – under their own state aid legislation – to support intermodal transport activities through support measures, but which may not be equally accessible to all operators. Under these circumstances, a set of harmonised measures on type of support and eligibility will contribute to creating a level playing field for all operators and simplifying administrative procedures.
The volume of freight transport in tonne-km in the EU increased by 36% from 1995 to 2020 and the biggest contribution to this increase was made by road transport, which increased by 54% over the period.
In 2020, total freight volume decreased by 3.6% y-o-y due to the pandemic, and road transport including the intermodal road-legs segment accounted for 53.3% of total freight transport in tonne-km, up from 51.3% in 2005.
From 2005 to 2020, total freight transport increased by 5.7% and road traffic volume by 9.9% to 157 billion tonne-km. and road transport still has the highest growth share in the EU in the freight segment.
In contrast, over the same period, rail transport volume decreased by 4.4% and inland waterways by 5.5%, including intermodal operations, which if not included would make the situation of these two modes worse. Only short sea shipping (SSS) increased by 9.5% according to the Statistical Pocketbook (2022), EU Transport in figures.
In 2020, the share of road freight transport is 74.4% in intra-EU inland transport and 53.3% in all intra-EU transport and is the main mode of transport with high negative externalities – CO2 emissions, noise and air pollution – and high energy consumption. According to the European Commission, the total external cost of freight transport in the EU is around EUR 203 billion per year of which 38% is generated by heavy goods vehicles (HGVs), with accidents and congestion being the largest components for any HGV in operation, totalling EUR 37.6 billion per year.
In comparison, the annual external cost of rail is EUR 0.013 per tonne-km and that of inland waterways is EUR 0.019 per tkm, three times lower than the average external cost of HGVs which is EUR 0.042 per tonne-km. This gap is expected to narrow as European policies call for decarbonisation of road transport leading to lower air pollution. However, the external costs of road transport will remain high due to congestion and accidents, although there are sets of measures to improve safety, but this is difficult to fully internalise as they are specific to this mode of transport.
In terms of energy consumption, road transport also dominates as it consumes 0.146 kWh per tonne-km, while rail only consumes 0.02 kWh per tonne-km and inland waterways 0.046 kWh per tonne-km.
According to the Comparative study on CO2 emissions in door-to-door combined transport, published in 2021 by the UIRR, and carried out by d-fine, it shows that on ten intermodal routes (analysed), on average, the energy savings of door-to-door intermodal transport are between 54 and 71% compared to road transport.
The study also shows that door-to-door combined transport has the potential to save between 63 and 90% of the CO2 equivalent of unimodal road transport.
Apart from road transport, the other modes are the most sustainable, and encouraging growth and de-emphasising the shift of traffic to these modes is vital for a sustainable transport system that meets the European Union’s objectives. In addition, the figures show that intermodal transport is key to developing and increasing the share of sustainable transport modes that can be combined with road transport to provide greater flexibility as sustainable transport modes (rail, inland waterways and short sea shipping) cannot offer full door-to-door delivery in most cases.
Combined Transport Directive. Favourite option
In the proposal for the revision of the Directive, three options have been analysed, some of them with sub-sections, all of them including solutions to the problems raised but differing in the extent of EU intervention.
Of all the options, the one selected as optimal is B2a. Option B obliges Member States to support measures that are chosen and developed by them and encourages Member States to provide initial support and proposes a new regulatory measure, i.e. exemption from the ban on driving heavy good vehicles carrying out eligible operations. If sub-option B1 proposes eligibility by saving 25% greenhouse gas savings, sub-options B2a and B2b propose eligibility by saving 40% of a set of external costs. In case B2b, only international intermodal operations are included, while in sub-option B2a (the preferred one) all intermodal operations are included.
In the case of the preferred option B2a, under the thematic area “providing support to a wide range of operations under efficient eligibility conditions”, the policy measures include all intermodal operations (reducing costs by 40%) when using intermodal operations instead of road-only and establish a common dataset to prove eligibility (by implementing eFTI platforms). As a result, only intermodal operations that can achieve significant external cost savings will be eligible under the revised Combined Transport Directive.
Under the theme “ensuring better support by optimising reporting on multimodal or intermodal transport, option B2a aims at a reporting by the Commission with revised monitoring data and reporting period, including a review clause for the reassessment of the support scheme set out in the Directive, obliging Member States to notify ex ante their support schemes, which the Commission has to make available on a common website. Under #increasing the competitiveness of multimodal/intermodal transport, option B2a involves mandatory non-harmonised support where state aid applies where relevant – i.e. Member States are required to have at least one operational support instrument in the Toolbox with the aim of reducing door-to-door costs for intermodal operations including modal shift. Also included under this thematic chapter are four other policy measures including voluntary state aid support which requires Member States to provide start-up support, they are required to have at least one support measure for technological upgrading from the Toolbox, limiting direct financial support only to short and medium-long operations which are not cost-competitive with road-only transport, and exempting eligible road-legs operations from weekend and holiday driving bans.
On the segment of “improving transparency and cooperation as well as simplifying market entry”, option B2a requires terminal operators to publish information on the services and facilities available at each terminal and to list the mandatory information to be set out in an implementing act. This also includes a policy measure to provide a possibility to establish the framework of terminal categories based on minimum requirements of available services and facilities, also through the implementation of an act.
Preferred option B2a can ensure the highest degree of modal shift and external cost savings through a good benefit-cost ratio and also ensures consistency, proportionality and subsidiarity. This option is also the most effective and coherent policy to address externalities that are specific and important in road transport such as congestion, pollution and accidents, and is a balanced approach to achieve a fair level between transport modes, the Commission Staff Working Document states.
The measures included in the favourable option are mainly supported by stakeholders, with a robust eligibility criterion allowing all modal combinations to be addressed and treated equally.
The preferred option would increase intermodal transport by 5.3% in 2030 and by 6.6% by 2050. Taking into account the baseline scenario, for the period 2025-2050, the benefits of the preferred option lead to a total cost reduction of EUR 21.9 billion, of which external costs will be reduced by EUR 15.3 billion due to increased market share and thus significant use of sustainable transport modes as part of the intermodal service chain. These are indirect benefits to society as shifting traffic from road to intermodal leads to external cost savings in GHG emissions, air pollutant emissions, noise, accidents and congestion.
Of the total cost savings, EUR 4.3 billion would mean savings in administrative costs for business. This will result from the simplification of administrative procedures due to the use of eFTI platforms for proving eligibility and for reporting eligible operations in support of the application process, as well as easy access to information on future schemes, the beneficiaries of which will be transport organisers.
EUR 2.3 million represent cost savings for public authorities. Mandatory use of eFTI platforms for eligibility will reduce road-side check time. The latter two cost savings involve the use of electronic freight transport information (eFTI) platforms. This is an EU-approved regulation and establishes a legal framework that allows economic operators to share with the competent authorities information in electronic format on road, rail, air and inland waterway freight transport within the European Union. This regulation entered into force in August 2020 and applies from August 2024.
Also over the same period, the costs of this option are estimated at EUR 7.5 billion, which will largely be borne by the governments of the Member States that choose to provide additional support for operations. Member States will have to provide financial support which may take the form of state aid for certain types of transport operations. A small part of these costs, estimated at EUR 6.9 million, will be borne by the business environment represented by terminal operators for compliance with transparency requirements, by eFTI platform providers for updating platforms and by the organisers of operations for the use of platforms. In return, the European Commission will bear costs of EUR 2 million (also over the period 2025-2050) for an additional study to assess whether a framework on terminal categories will be needed and for regular studies every five years on the intermodal market.
Another benefit of option B2a is the reduction of energy consumption over the period 2025-2050 resulting in a reduction of 10.5 million tonnes of oil. The impact of this option in terms of contribution to GDP translates into an increase of 0.1% in 2030 and 0.3% in 2050 as increased competitiveness of intermodal transport will have positive effects on the whole economy.
As the issue of jobs is also one that has been intensely addressed especially in recent years, which have been defined by crises, the shift towards intermodal transport operations involving more than one mode will generate job creation, which would imply the employment of an additional 24,000 people by 2030 and 83,000 by 2050.
Impact on three SDGs
The proposal for the revision of the directive also includes the United Nations Sustainable Development Goals (SDGs), which are intended to address all the challenges the world is currently facing, from poverty and inequality to climate change, environmental degradation and justice issues. Of the 17 Sustainable Development Goals, option B2a has a relevant impact on three SDGs (7, 9 and 13).
SDG7 refers to the provision of affordable, reliable, sustainable and modern energy, essential for the development of the agriculture, communications, education and healthcare, transport and business sectors. Energy consumption is one of the largest contributors to climate change and accounts for 60% of total GHG emissions.
According to the UN, more than 733 million people currently face the problem of access to electricity, although over the period 2015-2021, the percentage of the population with access to electricity increased from 87% to 91%. In addition, by 2030, about 2.3 billion will rely on polluting fuels and polluting technologies for cooking.
Ensuring energy access by 2030 involves accelerating electrification, increasing investment in renewable energy, optimising energy efficiency and developing policies and regulatory frameworks to help achieve this goal. To achieve universal electricity, the UN estimates that between USD 35-40 trillion per year needs to be invested by 2030.
It is worth noting that renewable energy sources cover 30% of energy consumption in the electricity sector, but the biggest challenges remain in the heating and transport sector.
The proposed revision includes this SDG (7) under energy intensity measured in terms of primary energy and GDP (indicator 7.3.1). To this end, replacing road transport with intermodal transport will mean reducing energy consumption per tonne-km by the 10.5 million tonnes of oil as traffic will be shifted to other sustainable modes of transport – rail, inland waterways and short sea shipping, which are energy efficient (also per tonne-km) due to their high capacity to transport large volumes of goods.
The impact of the review will also take place through achieving SDG 9 which involves building a resilient infrastructure, promoting sustainable industrialisation and stimulating innovation through technological innovation. Investments in transport infrastructure including regional cross-border infrastructure, energy, information and communications technology are key to the development of communities, regions and states, and inclusive and sustainable industrialisation, together with innovation and infrastructure, have the potential to shape a dynamic and competitive economy that drives job creation and income growth. The review has an impact through the indicator that refers to passenger and freight volumes by mode of transport.
Developing and increasing intermodal transport will mean shifting road traffic to other sustainable transport modes, and through preferred option B2a it is estimated that intermodal transport volumes will increase by 6.8% in all modes of transport expecting road for the period 2025-2050.
SDG 13 covers addressing urgent measures to combat climate change and its impacts, with a 50% reduction in emissions by 2030 being essential to limit global warming to 1.5°C (as per the Paris Agreement) above pre-industrial levels. To this end, countries need to significantly transform their energy and transport sectors to achieve the global warming target. As the directive’s proposals strengthen intermodal transport, this means focusing on shifting road traffic to sustainable modes, which will reduce CO2 emissions. As a result, by implementing the measures as part of option B2a CO2 emissions from freight transport will decrease by 0.7% for the period between 2025 and 2050.