Source: Massivt statsstöd till godstågen - Järnvägar (jarnvagar.nu)

Massive state aid for freight trains

Freight train companies will receive over SEK 1 billion in environmental compensation this year. The aim is to move more transport from road to rail. Almost 60 percent goes to Green Cargo.

FOTO: Kaspar Dudzik

"It really came as a surprise to us," says Ted Söderholm, CEO of Gren Cargo. "But it is valuable as we continue our transformation and when we increase the share of fossil-free transport in Sweden."

Environmental compensation for the years 2021-2025 is already up to SEK 450 million per year.

In November, as part of the autumn amending budget, the Riksdag also decided to repay a large part of the track fees paid by rail transport companies to the Swedish Transport Administration during the corona pandemic from 1 March 2020 to 30 September 2021.

SEK 1.37 billion for train companies – Railways

The refund would be a compensation for reduced travel and sharply reduced revenue during the pandemic. Freight train companies were not hit very hard by the coronavirus pandemic, but still received over half of the reimbursed track fees.

FOTO: Kaspar Dudzik

An additional SEK 697 million to the freight train companies

Now the government proposes that the environmental compensation for freight transport by rail be strengthened by an additional SEK 697 million in 2022. The aim is to increase the shift of freight transport from road to rail. The environmental compensation can be applied for by train operators for all freight transport by rail except for the transport of iron ore.

This means that freight train companies will receive over two billion SEK in targeted support from the Swedish state over two years.Of these just over SEK 2 billion, Green Cargo has received or will receive approximately SEK 1.3 billion in 2021-2022. In addition, the state-owned Swedish freight train company will receive an additional approximately SEK 800 million in 2023-2025.

Shareholder contribution went up in smoke
In 2020, the government proposed that Green Cargo would receive SEK 1.4 billion in capital injections in the face of the threat that the company would be forced to draw up a control balance sheet, the financial situation was very strained.

SEK 1.4 billion to Green Cargo – Railways

But last winter, the government gave up trying to give Green Cargo a shareholder contribution after the European Commission indicated that it would not approve one.

No state aid for Green Cargo – Railways

Now the Swedish government is on its way to support Green Cargo with approximately the same amount in 2021-2022 and additional grants in 2023-2025. In the bargain, however, Green Cargo's competitors receive just over SEK 1 billion in environmental compensation and repaid track fees.

"The environmental compensation shows that the government wants to invest in rail transport, it will benefit all freight train companies," says Ted Söderholm.

FOTO: Kaspar Dudzik

70% of aid to state-owned companies

Mats Nyblom, independent train traffic specialist and former CEO of Hector Rail and development manager in SJ's freight transport division, has calculated that 57 percent of the environmental compensation falls to state-owned Green Cargo, 20 percent Hector Rail owned by a British venture capital company, nine percent privately owned Swedish train companies, primarily Tågab, six percent state-owned Norwegian Cargonet, four percent TX Logistik owned by the state-owned Italian FS,  three percent CFL  cargo owned by state-owned Luxembourgish CFL and steelmaker Arcelor Mittal and two percent state-owned German DB.Green Cargo's Board of Directors will apparently shortly give the go-ahead to the purchase of new locomotives and new wagons and the development of various IT systems.

"New locomotives are the number one priority," says Ted Söderholm. "We are seeing an increased demand for rail transport and we plan to order new locomotives in the near future."

Real Rail will take over the lion's share of the train routing of its own trailer trains from December this year. This means that Green Cargo will be stripped of the assignments to run Real Rail's trains Gothenburg-Umeå, Gothenburg-Luleå, Helsingborg-Nässjö-Umeå and Helsingborg-Nässjö-Luleå.

Sandahl to run his own trains – Railways (jarnvagar.nu)

"It suits us just fine," says Ted Söderholm. "We don't really want to be just train pullers, we want to take care of the whole deal with the freight buyer." According to Söderholm, Green Cargo is preparing a number of new transport arrangements and has applied for train paths from the Swedish Transport Administration for them.

Train companies welcome the compensation

Tågföretagen is the industry and employer organization for the train transport companies in Sweden. Gustaf Engstrand, Head of Industrial Policy at Tågföretagen, welcomes the Government's proposal for enhanced environmental compensation.

"Of course it's a good thing," says Gustaf Engstrand. "Of course, the compensation is welcome for freight train companies."

But at the same time, Tågföretagen believes that it would be more appropriate to create conditions through different regulations for all modes of transport to bear their social costs.

"At the principle level, it would be better if all modes of transport paid the costs they give rise to," says Gustaf Engstrand. "Road transport does not pay for all the costs it incurs in the form of environmental degradation and climate change."

"But if society were to internalise all the costs of trucking, transport would be more expensive for the business community and thus for consumers. Obviously, the government is choosing instead to subsidize freight rail services in order to have fairer competitive conditions."

"It's good for freight buyers and consumers, but it may not be sustainable in the long run," says Gustaf Engstrand.

Author: Ulf Nyström