Commission Approves €1.7 Billion German State Aid Scheme for Rail Freight Transport

In a significant move towards bolstering the rail freight sector, the European Commission has sanctioned a €1.7 billion state aid scheme proposed by Germany. This initiative aims to support rail freight operators engaged in single and group wagon transport, aligning with the European Green Deal and the Sustainable and Smart Mobility Strategy. The approval underscores the Commission’s commitment to enhancing the competitiveness and environmental performance of rail freight transport.

Details of the German Measure

The German government intends to implement a €1.7 billion aid scheme designed to subsidise rail freight operators managing single and group wagon transport services. The principal objective is to offset the high operating costs that these operators incur, thereby promoting a shift from road to rail transport—a more sustainable mode of transportation.

Single-wagon load transport involves consolidating individual wagons or groups of wagons from various consignors into a single train. Conversely, wagon group transport, which maintains a consistent composition from origin to destination, is eligible for journeys up to 300 km when operated by short block trains with a maximum of 15 wagons. Both transport types face economic viability challenges due to their operational complexities and lack of economies of scale.

The aid will be distributed as direct grants, with an annual budget cap of €320 million, accumulating to €1.7 billion over five years. The scheme is set to run until 2029.

Commission’s Assessment

The Commission evaluated the scheme under EU State aid rules, specifically Article 93 of the Treaty on the Functioning of the European Union (TFEU) concerning transport coordination and the 2008 Guidelines on State aid for railway undertakings. The assessment concluded that:

  1. Environmental and Mobility Benefits: The scheme supports rail freight transport, which is less polluting than road transport, thereby reducing road congestion.
  2. Necessity and Appropriateness: The measure is essential and suitable for achieving its goal of supporting the modal shift from road to rail transport, which faces high operating costs.
  3. Proportionality: The aid is confined to the minimum necessary, adhering to the thresholds established in the Railway Guidelines.
  4. Competitive Balance: The aid mitigates the competitive disadvantages of rail freight transport compared to road transport, ensuring no undue negative impact on competition and trade within the EU.

Based on these findings, the Commission approved the German aid scheme under EU State aid rules.

Background Context

Article 93 of the TFEU permits Member States to support transport coordination, including urban transport. The 2008 Railway Guidelines delineate the conditions under which aid to railway companies can be deemed compatible with the internal market and State aid regulations, based on Article 93 TFEU.

This decision follows the Commission’s prior approvals of other German schemes under the Railway Guidelines, which also provide support to rail passenger and freight operators (SA.110055), as well as schemes specifically aiding rail freight operators (SA.109540, SA.58046).

In summary, the Commission’s approval of the €1.7 billion German state aid scheme marks a pivotal step in reinforcing the rail freight sector, promoting environmental sustainability, and enhancing the competitiveness of rail transport in the European Union.