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Who will pay for the Green Revo­lu­tion?

- Business · Transportation · Industries · East Coast · London · London Heathrow Airport · Cambridge · Cambridge, MA · Peterborough · Welsh Assembly Government · Transport for London · London and North Eastern Railway

The costs of cut­ting car­bon.

THE cost of the fur­ther COVID wave will be a huge con­straint on the Govern­ment’s abil­ity to fund rail projects that are now in the pipe­line to boost eco­nomic out­put and re­duce pol­lu­tion.

The lat­est es­ti­mate is that the gap between fall­ing tax re­ceipts and the cost of sup­port pack­ages such as fur­lough­ing will reach £400 bil­lion in this fi­nan­cial year.

A sum of this mag­ni­tude dwarfs the cost of high-pro­file projects such as HS2, where the most re­cent es­ti­mate for con­struc­tion of the com­plete route is £88bn. Stake­hold­ers are des­per­ate to en­sure that Phase 2b is built in full to reach Leeds and pro­vide con­nec­tion to the East Coast Main Line, but var­i­ous op­tions are be­ing eval­u­ated to cut back the length of the line.

Other big-ticket projects are the North­ern Pow­er­house Rail pro­posed in­fra­struc­ture up­grade, for which a bud­get of £39bn over 20 years has been sought, and fu­ture costs to im­ple­ment find­ings from the Union Con­nec­tiv­ity Re­view.

There is also break­ing news that the de­layed Cross­rail project in Lon­don can­not be com­pleted with­out a fur­ther £80 mil­lion in­jec­tion of funds.

Var­i­ous rea­sons have been quoted for this, in­clud­ing the need for so­cial dis­tanc­ing on build­ing sites and the de­layed test­ing of train move­ment con­trol safety sys­tems. With­out any in­jec­tion of money, Trans­port for Lon­don has said the project could be moth­balled. This may not be an idle threat, given the fu­ture de­cline ex­pected in Lon­don and South East com­mut­ing.

In this event, new Trans­port Com­mis­sioner for Lon­don Andy By­ford has said that if the project can­not be com­pleted, re­spon­si­bil­ity should be trans­ferred to the Govern­ment. What­ever is de­cided, it is clear that Cross­rail 2 must be re­garded as a non-starter for the fore­see­able fu­ture.

Sig­nif­i­cant rail projects have been moth­balled be­fore in the face of changed cir­cum­stances - in par­tic­u­lar, the LNER Wood­head project which was post­poned due to wartime con­di­tions and not re­vived un­til 1948, as money be­came avail­able after na­tion­al­i­sa­tion.

On a smaller (but no less im­por­tant) scale we have the pledge to re­open closed routes and sta­tions, and to al­lo­cate money to spe­cific ‘ac­cel­er­a­tion’ projects.

Many worth­while pro­pos­als did not make ei­ther of these lists, and it isn’t clear whether this is ra­tioning based on the money the Govern­ment ex­pects to have avail­able or a re­luc­tance to im­ple­ment the mar­ket-led in­vest­ment ini­tia­tive launched in 2018 and which iden­ti­fied the po­ten­tial for ex­ter­nal fund­ing as an al­ter­na­tive.

The Chan­nel Tun­nel was pri­vately funded, as was the cre­ation of the Heathrow Air­port branch and the pro­vi­sion of rolling stock to run ser­vices. There is no sug­ges­tion that any op­er­a­tional con­cerns have re­sulted in the use of pri­vately owned in­fra­struc­ture, al­though there was an is­sue over the level of pro­posed track ac­cess charges for Cross­rail ser­vices that will serve Heathrow in the fu­ture.

The ar­gu­ments that favour public sec­tor fund­ing are well-known. They are headed by the abil­ity of the Govern­ment to bor­row at a lower cost, whereas fund­ing by fi­nan­cial in­sti­tu­tions must re­flect a cost of cap­i­tal to at­tract in­vestors (al­though at present these re­turns are min­i­mal). The caveat is that Govern­ment fund­ing has a fi­nite ceil­ing which does not ap­ply to sources of pri­vate fi­nance.

One of the crown­ing glo­ries of pri­vati­sa­tion is the ex­ter­nal fund­ing of rolling stock pro­cure­ment and the whole-life man­age­ment of costs by leas­ing com­pa­nies. This has re­sulted in a younger fleet with high amenity stan­dards for pas­sen­gers, such as air­con­di­tion­ing, al­though there have been de­sign weak­nesses in the in­te­rior lay­outs with poorqual­ity seat­ing and the omis­sion of lug­gage space.

The new im­per­a­tive for in­vest­ment is the Govern­ment’s ob­jec­tive to se­cure car­bon­neu­tral trans­port emis­sions by 2040. Mea­sures an­nounced that only elec­tric cars and vans can be pur­chased after 2030 is only part of the so­lu­tion, as it is not pro­posed that such reg­u­la­tions will ap­ply to heavy goods ve­hi­cles.

Any modal trans­fer to rail (or to guided sys­tems in gen­eral) will mean a change to the rail­way sta­tus quo, which will re­quire sig­nif­i­cant ex­ter­nal in­vest­ment in in­fra­struc­ture, rolling stock and au­ton­o­mous sys­tems.

A pos­si­ble pic­ture of things to come is demon­strated by the Cam­bridge Au­ton­o­mous

Metro (CAM). This ground-break­ing pro­posal of­fers the po­ten­tial to be a tem­plate for smaller conur­ba­tions that do not jus­tify ei­ther heavy rail in­vest­ment or a con­ven­tional light rail al­ter­na­tive. It in­cludes a 12km (7.5-mile) twin bore tun­nel un­der the city cen­tre, with a 142km (88-mile) net­work reach­ing Water­beach, Haver­hill, Milden­hall, St Neots and Al­con­bury (Hunt­ing­don).

Ini­tial fund­ing was se­cured in Au­gust 2019, with the Cam­bridgeshir­e & Peter­bor­ough Com­bined Author­ity Board (which re­ports to the elected Mayor, James Palmer) ap­prov­ing a £1.7m grant to de­velop the Strate­gic Out­line Busi­ness Case - the first phase of the trans­for­ma­tional scheme.

This was ap­proved in March 2020, as it found that the project has an out­stand­ing Ben­e­fit: Cost Ra­tio with ev­ery pound in­vested worth up to four in the re­gion.

Prepa­ra­tion of the next phase of the project was au­tho­rised for de­vel­op­ment - in­clud­ing a strat­egy for pro­cure­ment, a tech­ni­cal study of ve­hi­cle tech­nol­ogy (to be bat­tery-pow­ered), and en­hanced trans­port mod­el­ling.

Con­tin­u­ing the car­bon-free agenda, the Welsh Govern­ment pub­lished a new draft Trans­port Strat­egy on Novem­ber 17 2020 pledg­ing a ma­jor re­duc­tion in car­bon emis­sions. In a re­fresh­ingly hon­est in­tro­duc­tion, it recog­nised that the hard­est part of any strat­egy is mak­ing it hap­pen.

Trans­port cur­rently com­prises 17% of Wales’ car­bon emis­sions, and there is a com­mit­ment to set new and stretch­ing five-year pri­or­i­ties to meet de­car­bon­i­sa­tion tar­gets.

The draft strat­egy, Ll­wybr Newydd - New Path, is in­tended to shape the trans­port sys­tem over the next two decades. It sets out a range of new ambitions to pri­ori­tise ac­tive travel (cy­cling) and public trans­port that will lead to fewer peo­ple need­ing to use their cars on a reg­u­lar ba­sis. It is hoped this new sus­tain­able trans­port hi­er­ar­chy will shape in­vest­ment to­wards greener trans­port op­tions.

The strat­egy recog­nises that cur­rent pat­terns of less com­mut­ing and more home work­ing are likely to con­tinue, re­flect­ing a long-term am­bi­tion in Wales for 30% of the work­force to work re­motely.

The risk this brings is that lower fare box in­come for public trans­port will di­min­ish the case that can be made for fu­ture public or pri­vate in­vest­ment.

“Any modal trans­fer to rail will re­quire sig­nif­i­cant ex­ter­nal in­vest­ment in in­fra­struc­ture, rolling stock and au­ton­o­mous sys­tems.”

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