How railways can be part of Canada’s climate change solution A submission by the Railway Association of Canada July 1, 2016 (originally submitted on May 31) Version 2 – update Version 2 – update Submission to Environment and Climate Change Canada Table of Contents 1 Canada’s railway sector .......................................................................................... 4 Climate change policy in the transportation sector ................................................................... 5 2 How railways can be part of Canada’s climate change solution ......................... 6 3 Policy considerations for the future ...................................................................... 9 4 Railway emissions management programs and performance .......................... 10 5 Our recommendations .......................................................................................... 12 Modal shift is a mitigation opportunity for Canada .................................................................. 12 Revenues collected from carbon pricing strategies should be reinvested into rail ................... 12 The Government needs to support clean technology and innovation in the rail sector ............ 13 6 Concluding remarks .............................................................................................. 13 Appendix A: List of RAC Members 2 Submission to Environment and Climate Change Canada Acronym Table AMT Agence métropolitaine de transport CO2e CO2 equivalent COP Conference of Parties CDP Carbon Disclosure Project GHG Greenhouse Gases MOU Memorandum of Understanding Mt Megatonnes PEET Programme d’efficacité énergétique dans le domaine du transport PETMAF Programe d’aide à l’améloration de l’efficacité du transport maritime, aérien et ferroviaire en matière de réduction ou d’évitement des émissions de gaz à effet de serre PREGTI Programme visant la réduction ou l’évitement des émissions de gaz à effet de serre par le développement du transport intermodal RAC Railway Association of Canada RTK Revenue Tonne Kilometer TTCI Transportation Technology Center Inc. U.S. United States 3 Submission to Environment and Climate Change Canada Please accept these comments on behalf of the Railway Association of Canada (RAC) and its members. RAC represents freight and passenger railway companies that move 75 million people and more than $280 billion worth of goods in Canada each year. As the voice of Canada’s railway industry, the RAC advocates on behalf of its members to ensure that the rail sector remains globally competitive, sustainable, and safe. This submission underscores that the railway industry is well placed to support Canada’s commitment to combat climate change and reduce transportation-related emissions. It recommends that: The pan-Canadian approach to addressing climate change should allocate $165 million (M) to support rail-infrastructure programs that incent modal shift and supports reoccurring emission reductions of approximately 1.2 Mt CO2e per year or 5.8 Mt over five years; A $10 M research program is created for Canada’s railway supplier and clean-tech community to enable access to the Transportation Technology Center located in Pueblo, Colorado; and Federal and provincial governments work together to develop a common framework for federally regulated railways, and develop modal shift protocols that can be linked across multiple jurisdictions. Appendix A provides a list of RAC members in support of this submission. 1 Canada’s railway sector Canadian railways provide multiple services to more than 10,000 customers each year by using finite resources, including track infrastructure, right of ways, yards, locomotives, and crews. More than 4 M carloads of freight are moved by approximately 2,700 locomotives and 33,200 dedicated railroaders across 43,000 kilometers of track that spans nine provinces, one territory and several points throughout the continental United States (U.S.). This impressive network consists largely of two Canadian owned and operated Class I railways, U.S. Class I carriers and more than 30 local and regional railways that intersect with multiple transportation service providers including ports, terminal operators, truckers and other logistics providers. As part of this complex network, Canadian freight railways strive to operate as efficiently as possible by operating 24/7 and 365 days a year. This involves maximizing long-haul movements and train lengths, and consolidating traffic flow, as well as minimizing car handlings, switching and the number of times a car must be handled in a yard. Passenger railways reflect services provided predominantly by VIA Rail, GO Transit, Agence métropolitaine de transport (AMT) and West Coast Express. Each year nearly 70 M people in the Vancouver, Greater Toronto, and Montreal areas commute to work by rail and an additional 5 million travel with VIA rail each year. 4 Submission to Environment and Climate Change Canada Figure 1: Canada’s rail franchise Management of this network results in immediate benefits for all customers who are served by it. These benefits include access to a highly efficient and safe railway network that enables economic competitiveness, and an emission friendly mode of transportation for travelling and commuting to work for all Canadians. Climate change policy in the transportation sector While Canada’s engagement in COP 21 and commitment to the Paris Agreement underscores the federal government’s intentions to play a more instrumental role in driving down emissions nationally and internationally, several regional climate change initiatives have emerged, and in doing so, have set a price on carbon that effects transportation carriers. Whether through the taxation-based system in British Columbia, or the market-based cap and trade approach underway in Quebec and soon to be implemented in Ontario (January 2017), carbon pricing aspires to reduce emissions at the lowest possible cost to Canadians. Under all systems, a railway is subject to compliance costs as a fuel user, which typically translates into increased fuel costs for railways and their respective freight and passenger customers. The rapid development of provincial initiatives has created two shortcomings that must be addressed in the context of developing a national vision for climate change that includes a comprehensive approach to reducing emissions produced by the transportation sector – which, as reflected in Figure 2, reflects approximately 30 per cent of Canada’s GHG emissionsi. 5 Submission to Environment and Climate Change Canada Figure 2: Canada’s emissions profile First, the approach to managing transportation-related emissions through provincial initiatives has been fragmented and is not receptive to the operational aspects of interprovincial railways. The resulting effect is a requirement for interprovincial railways to participate in a series of regional initiatives that lack cohesion and have not been introduced in a coordinated way. Second, market-based initiatives do not address all transported-related emissions within their jurisdictions, creating an uneven playing field for freight and passenger railways. For example, marine and air carriers are exempt from Quebec and Ontario’s cap and trade systems. Furthermore, while Quebec and Ontario’s cap and trade systems allow (or in the case of Ontario, intend to allow) for carbon offsets, only sectors not covered by the cap (e.g. organic waste management, forest projects, etc.) are allowed to create carbon offsetsii. As a result, railways cannot generate offset credits for shippers who choose to transport their products by rail over other more intensive modes of transportation. The underlying effect is that modal shift becomes an implicit rather than explicit instrument for driving down transportation related emissions in Canada. Additional information about the potential for modal shift to reduce emissions is presented in the subsequent section. 2 How railways can be part of Canada’s climate change solution The movement of goods and people by rail continues to be a highly efficient and GHG friendly mode of transportation. In Canada, rail can move one tonne of freight 215 kilometers on a single litre of fueliii. Furthermore, a single freight train is capable of removing over 300 trucks from our congested road and highway networkiv,v. 6 Submission to Environment and Climate Change Canada An evaluation completed by the U.S. Federal Railroad Administration in 2009 took a deeper look at the fuel efficiency of rail and truck. The study examined 23 freight movements and took into consideration multiple distances and commodities that could be moved by truck and railvi. For each movement, fuel consumption for each mode was estimated and circuity was taken into account. This evaluation concluded that rail was more fuel efficient than truck on all 23 movements and that fuel savings from using rail are significant. With respect to fuel savings, rail fuel efficiency varies from 156 to 512 ton-miles per gallon, while truck fuel efficiency ranges from 68 to 133 ton-miles per gallonvii. The rail-truck fuel efficiency ratios ranged from 1.9 to 5.5 for all movements (with circuity taken into account) and 0.8 to 8.5 (without circuity), with 3.7 and 3.9 as the respective averagesviii . For movements involving intermodal, the rail-truck fuel efficiency ratio was 4.0. In other words, transportation by rail was found to be roughly 4 times more fuel efficient than truck. Embracing modal shift as an option for reducing