Biomass traffic set for hike in track access charges
Extra charges look imminent for biomass traffic after a review by a consultant working for the Office of Rail and Road (ORR) found that the market could bear an increase in track access charges.
The consultant, Cambridge Economic Policy Associates (CEPA), reached that conclusion on the basis that biomass plants at Drax and Lynemouth and ports serving them had invested heavily in rail and so were not likely to switch to lorries instead. However, it noted little overall growth in biomass with a lack of government subsidies for the fuel. It concluded that subsidies would have a far greater influence on the market than any supplementary rail access charge and said that it considered, with some caution, that the market could bear an extra ‘freight specific charge’ (FSC).
The charge already applies to coal traffic for power stations. Despite recent reductions in such traffic, CEPA recommends that ORR keep the FSC. It suggests that little traffic will switch to roads and that the charge makes little difference to the overall difference between the costs of electricity production from coal and gas.
If the ORR takes CEPA’s conclusions forward into its final determination of track access charges (of which FSC forms a part) for Control Period 6 (2019-2024), then freight specific charges will remain for nuclear waste traffic and iron ore, but remain unlikely for aggregates or containers.
CEPA found considerable competition between quarries to supply aggregates and competition between road and rail to carry stone to distribution centres, from where road is the usual transport. This makes it easy to switch entirely to road haulage, the consultant argued. With this competition, it concluded that aggregates could not bear extra charges.
The picture for intermodal trains carrying containers was more mixed, with CEPA suggesting that some flows might be able to bear extra charges while others could not. Although the container market has grown on rail, up 8% to 6.7 billion net tonne kilometres (ntkm) between 2013 and 2016, the railway had been expecting higher growth and planned on 18bn ntkm by 2023, which Network Rail describes now as challenging.
Rail competes with road and shipping feeder services from deep-sea ports, and with road between inland warehouses. CEPA found that rail was more dominant on some routes than others, for example on long-distance routes from England’s south coast. With ORR defining freight markets by commodity and applying charges to markets, CEPA concluded that charges would not be justified for some flows within a market and so should not apply to any.