Ahead of the European Commission’s proposal—scheduled for July 17, 2026—on the revision of the EU Emissions Trading System (ETS), the rail sector and combined transport are sending a strong message: if the ETS is to remain a credible instrument of European climate policy, then a portion of ETS revenues for rail must be reinvested where the fastest emissions reductions can be achieved.
This is the main message of a joint position signed by eight European organizations active in the rail sector (AERRL, ALLRAIL, CER, ERFA, EIM, UIP, UIRR, and UNIFE). From the industry’s perspective, the carbon mechanism should not distribute resources evenly across all modes of transport, but should prioritize solutions that have already demonstrated climate performance.
This argument is supported by rail’s already well-established position within the European mobility landscape. Rail transport is by far the cleanest mass transit system in Europe and one of the most effective ways to reduce emissions, in both the passenger and freight sectors. In this context, the sector is calling for ETS revenues not to be diluted into a general fund, but rather strategically directed toward infrastructure, capacity, and interoperability.
Rail: A Proven Climate Advantage
Official data support the industry’s argument. Over 80% of rail traffic in the European Union is electrified, and rail transport accounts for less than 1% of the greenhouse gas emissions of the entire transportation sector. At the same time, road transport remains the main source of transport emissions in the EU, accounting for nearly three-quarters of the sector’s total in 2023.
The difference is not merely statistical, but structural. Railways operate largely on electricity, and as this energy source becomes increasingly cleaner, the climate efficiency of trains automatically increases. In addition, shifting freight from road to rail and choosing trains over cars or short-haul flights leads to rapid and substantial reductions in emissions. This is also the sector’s message: it is not about granting an artificial advantage, but about recognizing an advantage that already exists.
What the ETS Should Fund
For the industry, ETS revenues for rail should be viewed as investments in decarbonization, not as a general-purpose budget. The list of priorities includes high-speed, regional, and urban rail transport; freight corridors; the electrification of terminals and depots; power supply for traction; the modernization of rolling stock; and the digitization of operations.
Funding must be directed where every EUR invested can quickly lead to both emissions reductions and increased transport capacity. For this reason, the sector is pushing for the expansion of network electrification, connecting railways to ports, modernizing passenger and freight lines, and implementing ERTMS, FRMCS, and DAC technologies. All these measures share the same goal: to enable rail to take over more traffic from road transport and become an increasingly viable alternative to highly polluting modes of transportation.
Road and Rail Transport in the EU’s Emissions Equation
Road transport remains the main driver of transport emissions in the European Union, accounting for nearly 70–75% of the sector’s total greenhouse gas emissions, while electrified rail remains among the cleanest and most efficient modes of travel in Europe. According to the European Environment Agency, rail transport is responsible for just 0.4% of the EU’s transport emissions, even though it accounts for approximately 17% of freight transport and 8% of domestic passenger transport.
The data show that road transport continues to dominate both passenger and freight mobility, with passenger cars accounting for approximately 72% of transport activity in Europe, while public transportation has not significantly increased its share.
In 2023, road transport was responsible for nearly three-quarters of transport-related greenhouse gas emissions, amid a still-high dependence on fossil fuels, which covered over 90% of the sector’s energy needs. In addition, road traffic is the main source of transport-related noise, and 90 million people in the EU are exposed to noise levels above thresholds considered harmful.
In contrast, rail transport offers high energy efficiency and low emissions of both greenhouse gases and air pollutants, making it one of the best options for reducing the climate footprint of mobility, especially over medium and long distances. However, the European rail network remains fragmented, and limited cross-border integration continues to reduce its competitiveness relative to cars and airplanes. In freight transport, rail activity declined between 1995 and 2023, even though demand is expected to grow over the next decade.
Looking ahead, aviation and maritime transport are projected to account for an increasingly large share of Europe’s transportation emissions, with their combined contribution rising from about a quarter today to nearly half by 2050. This trend shows that the transition cannot be left to a single mode of transport alone, but requires constant investment, innovation, and rigorous enforcement of legislation already adopted, including the revised ETS and ETS2.
Where the Real Limitations Lie
The rail sector demonstrates that the problem is not a lack of demand, but infrastructure constraints. Currently, approximately 1,000 intermodal freight trains operate daily between some 1,300 terminals across Europe, and this system already reduces energy consumption by up to 70% per ton-kilometer and carbon emissions by 60–90%. However, the market share of rail freight transport remains below the European target of 30% by 2030.
The industry’s explanation is concrete. There is a lack of tracks capable of accommodating 740-meter-long trains, alternative routes are insufficient, cross-border interoperability is incomplete, and capacity for freight trains is not large enough. Added to this is insufficient funding for intermodal terminals. For this reason, the sector is calling for ETS revenues not to remain merely on paper, but to be transformed into investments that have a direct impact on the network.
How the reinvestment of revenues is justified
Essentially, the rail sector is calling for ETS revenues for rail to be intelligently redirected so that climate policy yields tangible results. The Innovation Fund, the Modernization Fund, the Social Climate Fund, and future ETS-based financial instruments should, in the industry’s view, prioritize projects that effectively reduce emissions and support the shift of traffic to rail.
The request also has an equity component. Rail transport already bears the indirect costs of the ETS through the electricity it uses. In other words, the sector already contributes to the carbon mechanism but does not benefit to the same extent from the resources it generates. In this equation, the issue is not one of privilege, but of balance between contribution and reinvestment.
Share on:
