European rail: more central than ever

This special issue of NIQ concludes the EU’s ‘year of rail.’ Over the past 30 years the EU has driven the transformation of the European rail sector with the aim of making it more efficient and more competitive vis-à-vis road. It has defined and actively pursued a liberalisation agenda through four railway packages. Recent policies to decarbonise the economy and the important role of transport in them have added both pressure and support. This special issue aims to document these efforts by giving the floor to some of the main actors in the process.

The first contribution, co-authored by Finger and Montero, presents the 30 years of rail reform from technical, financial and institutional perspectives.

Castelletti analyses developments in the rail regulatory framework, compares rail infrastructure and air-traffic management, and explains the role of railways in the modal shift.

Nash, Smith and Fitzová review the progress made by rail towards the modal shift, especially as a means of medium-distance passenger and long-distance freight transport.

Mazzola, Mussini and Pekin define the main priorities that will have to be set for rail to remain a central element in Europe’s mobility in the decades to come.

Infrastructure Investment Challenges: reconciling Competition, Decarbonisation and Digitalisation

Investment has always been a challenge in the network industries. Since the 1990s liberalisation has exacerbated this challenge, owing to the different time horizons between the interests of the private sector, the long-term nature of the infrastructure assets and their public service nature. Climate change and the need to decarbonise the infrastructures, as well as the recent focus on digitalisation have only added to the investment challenges in the different network industries.

How can we ensure investments in the context of competition, decarbonisation and digitalisation? What should be the role of governments and that of the private sector? How should the right incentives be set?

This special issue of the Network Industries Quarterly is dedicated to some of the best papers that were presented at the 10^th FSR Annual Conference on the Regulation of Infrastructures “Infrastructure Investment Challenges: reconciling Competition, Decarbonisation and Digitalisation’, which took place on June 10 and 11.

The first contribution, authored by Hernandez and Gençer, performs a flexible optimisation model that yields a large-scale hydrogen transmission network in the United States.

Bartlett Castellà, Gimeno de la Fuente and Majó Casas analyse the European and Spanish electricity regulatory framework to remunerate distribution system operators for the costs incurred to build and operate the grid, and make recommendations for improvement.

Gundes and Atakul explore the use of  Build-Operate-Transfer model in infrastructure investments through an assessment of the organisational and financial structure of the Eurasia Tunnel Project in order to draw lessons for future public-private partnerships in infrastructure.

Building and Governing EU Networks

The EU’s basic objective is to create a single European Market as a tool for political integration. This objective is being transposed into all economically strategic sectors, including at a data level in each of these sectors.

In the infrastructures, this objective translates into the unbundling of the network industries into a monopolistic infrastructure on the one hand and a market for services delivered on the basis of these infrastructures on the other.

Based on these unbundled infrastructures at the national level, the EU aims at creating interconnected infrastructures which offer full interoperability for all the services provided on these infrastructures. This aim is being implemented in a systematic way in electricity (“copper-plate Europe”), in railways (“Single European Railway Area”) and in air transport (“Single European Sky”). One could add to this road infrastructures and perhaps telecommunications infrastructures, even though unbundling does not take place there in the same way.

Of course, the implementation of this idea progresses differently in the different infrastructures, owing to technological specificities, national interests, and funding requirements, among others. In this NIQ we will look at energy, rail and air EU-wide infrastructures, how they have developed, whether they make progress, and what obstacles they encounter. In the last paper, we will also explore the idea as to whether this idea of an EU-wide infrastructure can also apply to digitalisation.

The first contribution by Pototschnig analyses energy network development planning and implementation. The author argues that optimally dimensioned and efficiently operated energy networks in Europe is the key to the integration of the EU energy market, the increasing penetration of renewable-based generation and security of supply.

Mastrodonato explores the creation of a seamless and competitive European railway network. He argues that the ongoing railway regulations’ revision should help to strengthen the coordination at the European level. The railway industry has to improve cross-border services and be ready to prioritise the needed investments.

Finger, Serafimova and Zeki reflect on the air transport, which unlike the other network industries has always been unbundled. Despite of that, the integration of the Air Traffic Management into one single European Sky is moving slowly; the currently most promising option to accelerate the process might be digitalisation.

Montero and Finger discuss digitalisation, which enables a new way of constructing the single market in the network industries. Digital platforms are in the position to build virtual networks on top of fragmented national assets and services managed by third parties, providing a seamless experience to users. In this sense, digital networks are a new tool to build a smarter single European market.

Matthias Finger

Greening of Infrastructure Assets

This special issue of Network Industries Quarterly is dedicated to the greening of infrastructure assets. Despite the unprecedented challenges brought about by the COVID-19 pandemic, the European Commission has reaffirmed its commitment to the objectives of the European Green Deal and to transforming Europe into the first climate neutral continent by 2050. Delivering this ambition will necessitate the revision of regulatory and taxation frameworks, as well as the deployment of clean and innovative technologies. These, in turn, will have to be supported by massive public investments and increased efforts to direct private capital towards climate and environmental action while avoiding lock-in into unsustainable practices and infrastructures. Though the specific approaches to ‘greening’ of infrastructure assets may vary across the network industries, a set of questions pertaining to technology, regulation and funding will have to be addressed in all of them.

In this issue of the Network Industries Quarterly, our invited contributing authors critically examine these questions by drawing on the specific challenges and opportunities faced by the transport sector, as illustrated by the specific cases of airports, railways and ports.

The first contribution by Serafimova frames the renewed interest in infrastructure spending in the aftermath of COVID-19 as an opportunity to accelerate Europe’s transition towards climate neutrality. Taking a broader perspective on transport infrastructure assets, this article illustrates the multiple angles greening can take throughout the different, though interrelated, phases of an infrastructure’s lifespan, from planning to construction, operation and decommissioning. The article argues that the ability of infrastructures to serve as enablers for wider sectoral, but also cross-sectoral, greening, can and should be amplified by means of a conducive and coherent EU regulatory, financing and taxation framework, which engrains sustainability at its core.

Schneider demonstrates the importance of infrastructures in the fight against climate change by taking a closer look at the concrete case of airports. In particular, he argues that the impact of infrastructures does not limit itself to infrastructures’ own operations but extends to their capacity to influence and shape their users’ behaviours.

Quinet shares his analysis on the greening of trains and railway infrastructure assets in view of their enormous associated societal benefits. This article underlines, in particular, the need for infrastructure managers to follow a progressive approach, whereby actions are to be deployed over time in the most cost-effective way, depending on the portfolio of clean technologies available and the life cycle of assets.

Birindelli, Radice, Bert and Guglielmi reflect on the Italian experience in shifting towards intermodal hubs as a means to green railway stations. Drawing on experiences from Italy, where major railway stations are currently undergoing a profound transformation, this article illustrates that stations are no longer single-purpose places where trains stop to load or unload passengers but are increasingly becoming complex people-centred hubs where visitors can do much more than merely catching a train.

Sauri, Sys and Vanelslander discuss the greening of maritime shipping and ports, which are critical gateways for the European economy and global trade but also important contributors to air emissions. Their article argues that while legislation is available at various policy levels, more solutions are needed that are in a further stage of development, taking into account also the economics of the various involved actors.

Matthias Finger

Teodora Serafimova