Story of the month
Rail transport now accounts for 10% of passenger traffic and 7% of freight traffic worldwide, according to the International Energy Agency. The rail market in its broadest sense (infrastructure, rolling stock, signalling) benefits from structural growth drivers such as demographics, urbanisation, global trade and proactive public policies. It is also a key lever in the development of sustainable mobility, as trains are the motorised means of transport with the lowest CO2 emissions and the most efficient per passenger or tonne of freight transported. With a global annual investment requirement of around $475 billion, the rail market offers numerous opportunities for the ODDO BHF Green Planet fund.
STRUCTURAL GROWTH DRIVERS
The development of passenger rail transport (conventional train, high-speed train, metro) is linked to four main factors:
- Demographics, in terms of both volume and age pyramid, is the main driver of growth in passenger transport. Trains are the most efficient means of transport in terms of passenger-kilometres travelled and generally allow people with reduced mobility (including the elderly) to get around easily.
- Urbanisation is the second growth driver, particularly for the metro, as it generates mobility needs over short distances (up to 50 kilometres) and with high frequency.
- Geography is also an important factor, as trains become less attractive than planes once they have covered more than 1,000 kilometres. This factor partly explains the higher level of development of passenger rail transport in Europe compared to countries such as the United States and Australia.
- Finally, regional planning policies have a role to play in accelerating the development of rail, as seen in Europe (2030 objectives based on the Trans-European Transport Network and European Rail Traffic Management System plans), China (objective of extending the high-speed network to connect 80% of the country’s major cities), and India (based on a low-carbon strategy designed to increase passenger and freight traffic by 7% a year between 2017 and 2025).
In terms of freight transport, the main growth driver for rail is the dynamics of world trade. Although rail’s share of other modes of transport is expected to remain stable between now and 2050, at 5% to 7% (far behind ships and trucks), rail freight is set to double in terms of freight kilometres by 2050. The use of rail is particularly efficient in large countries with a high level of industrial activity, as it enables large quantities of goods to be transported as close as possible to production sites, commercial ports or logistics sites. So it is hardly surprising that China, India, Russia and the United States alone account for 80% of the world’s rail freight.
MASSIVE INVESTMENT NEEDED IN RAIL BY 2050
According to the IEA, in a baseline scenario incorporating the targets and support policies announced in the main geographical areas, growing demand for rail transport will require the global rail network to be extended by around 430,000 kilometres of track by 2050 (i.e. around 25% more than in 2020). In addition to infrastructure, the sector needs to invest in many other areas, particularly rolling stock (renewal and modernisation of conventional, freight, high-speed and metro trains) and signalling. The overall average annual investment requirement is USD 475 billion, including USD 315 billion for infrastructure (network construction, including electrification of new and existing conventional rail networks).
ENVIABLE CARBON FOOTPRINT AND ENERGY EFFICIENCY IN THE TRANSPORT SECTOR
The transport sector is responsible for around 23% of global CO2 emissions related to energy consumption, with road transport accounting for 80% of the total. Rail transport, on the other hand, only contributes 3% (i.e. around 0.7% of global emissions) and has already proven to be the least emissive form of motorised transport. Despite major disparities between geographical areas and the energy sources used for rail networks (coal, oil, fossil, renewable energy or nuclear power), trains are, on average, 12 times more energy-efficient than road and air transport in terms of final energy per passenger. Additionally, they are 8 times more efficient than trucks per tonne of freight transported.
