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Is Electrifying The Freight Rail Network Cost Prohibitive?

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Is Electrifying The Freight Rail Network Cost Prohibitive?

While electrification might suit such transportation modes as trucking, many say rail might not be a good fit.

Much of the effort to decarbonize the U.S. freight rail industry has focused on the use of battery-electric or hydrogen-powered locomotives. The industry is also looking into increasing network capacity via technology as a way to improve rail service and encourage more volumes to rail from truck.

But should the electrification of the freight rail network be viewed as another way the industry can reduce greenhouse gas emissions and address climate change? 

Within the freight rail community, that answer might be "no" because of the high costs associated with electrifying the rail network. Others say that decarbonizing freight rail must include efforts toward electrification. Meanwhile, pro-environmental interests appear to be prioritizing curbing the transport of potentially explosive materials, such as liquefied natural gas (LNG), over freight rail electrification.

AAR: Electrification Costs Would Be Prohibitive

Electrification of the rail network is more prevalent in Europe, with countries such as Switzerland making the decision around World War I to electrify its rail networks. 

But in the U.S., the freight rail industry, which includes the railroads and equipment manufacturers, doesn't see the electrification of the U.S. freight rail system as a viable option because of the estimated high costs to install catenaries, which are the overhead wires that would be used to provide electricity to the freight trains.

Industry observers have varied on how much freight rail electrification would cost. Estimates go as high as $4.8 million per track mile, according to a 2012 study looking at freight rail electrification in southern California. 

Because of these high costs, the freight rail industry should focus on more cost-effective options to reduce greenhouse gas emissions, its leading trade association said.

"Catenary electric is not a viable solution for the nation's long-haul rail network for a variety of technical and logistical reasons." the Association of American Railroads (AAR) told FreightWaves. 

AAR's March report on the freight rail industry's response to climate change mentions the industry's objections to electrification; AAR also wrote a December 2020 fact sheet describing the challenges to electrify the freight railroads.

"Rail has long been the most environmentally friendly and fuel-efficient way to move freight and people over land, and the industry is working to further reduce its footprint. While climate change is an economywide challenge, lasting, sustainable progress on the issue must ultimately be executed sector by sector. More specifically, what works for some sectors may not be able to generate sufficient power and range long-haul freight service demands," AAR said.

Rather, freight rail should focus on low-carbon options, such as exploring the use of alternative fuel sources, including biofuels, hydrogen fuel cells and zero-emissions battery cells, to power freight locomotives, AAR said.  

Should Costs Be The End Of The Story?

But some contend that the emphasis on the high costs fails to consider a number of factors that could influence those costs. 

For instance, more meaningful cost figures might be found by looking at specific routes, according to rail economist Jim Blaze. This might lead to more informed cost estimates since a railroad would base its decision to electrify a rail line on the line's volume density. Calculating costs this way enables the railroad to determine whether it can get an adequate and eventual return on investment to pay back its debt structure, Blaze said. That investment may include the installation of catenaries and substations, as well as the purchase of diesel-electric locomotives. 

"Previous rail company reports showed clear circumstances whereby overhead electrification could work — and could be financed with reasonable internal rates of return," Blaze wrote in a January opinion piece for FreightWaves on freight rail electrification. "Previous privileged reports demonstrated that specific route studies are the best determinants of a business case for alternate rail freight fuels. That analytical approach has been true for long trains, heavy axle loadings and overhead clearance business case evaluations. It should therefore be true for electrification or selective route battery locomotives."

Activist Bill Moyer, author of Solutionary Rail, a 2016 book that argues why the U.S. should electrify the freight rail network, said the costs that the industry gives don't reflect an adequate picture of the actual costs. 

Moyer suggested that high-volume freight rail corridors be the ones with catenaries, and in places where installing catenaries would be too cost-prohibitive, the battery-electric locomotive, such as the one developed by Wabtec (NYSE: WAB) and BNSF (NYSE: BRK), can run on battery power. 

Battery-electric locomotives "allow us to bring down the costs of electrifying the system by allowing batteries to supplement catenary power," Moyer said.

Moyer also countered that the $4.8 million per track mile figure is related to the most expensive areas to electrify a rail line, such as on an overpass. He estimates initial installation costs to be around $2 million per track mile and $2.5 million per double track mile.

Blaze estimates that of the 90,000 to 95,000 route miles operated by the Class I railroads in the U.S., roughly 15% to 30% could be electrified. 

Although the initial costs to install electrification would be high, the costs could be flat once the systems are installed.

"That starts to create a more realistic number for the cost of electrifying our major freight corridors," Moyer said. "The $4.8 million per mile is an artificially inflated number from my perspective to discourage conversation around the implementation of technology that's being used around the world."

The costs also don't take into account the long-term benefits that freight rail electrification might provide to reducing greenhouse gas emissions, according to Moyer. Electrifying BNSF's northern and southern transcons lanes could serve a dual purpose for the transmission of renewables-generated electricity to population centers east and west of those corridors. 

"The railroads in my opinion are attempting to do a Jedi mind trick. … ‘We are not the droids you're looking for.' They're exactly the droids we are looking for. The railroads are critical national infrastructure. They own the critical right-of-way that's needed for efficient movement of goods and people, as well as the right-of-way that can be used for transmission," Moyer said.

In its December 2020 fact sheet on freight rail electrification, AAR argued against piecemeal electrification of the U.S. freight rail network because of the operational challenges that could result. 

"Railroads would face major costs, delays and inefficiencies associated with interchanging freight to and from diesel locomotives at the edges of the electrified territory. Moreover, locomotives often travel on tracks owned by other railroads. Creating captive fleets of unique locomotives serving small geographic regions would work against this practice, harm the efficiency of railroad operations and likely cause a shift of freight to trucks," AAR noted.

"Specific-area electrification would limit rail flexibility to respond to changing market conditions. Rail volumes in any given area often change substantially over time, meaning the economics associated with partial electrification would change drastically too. This would further increase costs and distort capital planning and investments as additional areas might require electrification."

AAR also said allowing electrification in certain areas could lock that area to use electrification even when other more cost-effective alternatives could be developed. 

In addressing the question of whether it's economically viable to electrify the freight rail network, the question about ensuring the electric grid has the ability to supply power to the railroads also pops up. Another question is what fuel sources generate that power: solar and wind sources or natural gas and coal.

AAR's take: "The demands of this catenary system may exceed the capacity of available electric grids in certain areas throughout the rail network. As a result, electrification would likely require building new power plants in areas where existing electrical supply is inadequate and constructing countless transmission substations to deliver uninterrupted electricity supply."

Moyer's view: "As we saw with the recent [winter blackout] events in Texas and the collapse of the transmission infrastructure, climate change is a national security threat. … The resilience of our supply chain and the hardening of our transmissions infrastructure should be a national security priority. The interstate railroads hold the keys to solving both of those problems. They are in a sense a solution hiding in plain sight, and we need to do our best to bring public attention and the attention of our elected officials to the interstate railroads as a climate solution as well as an economic engine for local prosperity."

What Should Be The Priority?

The freight rail industry is prioritizing the development of alternative-fueled freight locomotives as one way to address decarbonization.

Environmentally minded groups may also be prioritizing which freight rail-related issues to tackle. 

While minimizing freight railroads' greenhouse gas emissions is one goal, some wonder whether that goal would be futile if the railroads continue to ship hazardous materials, such as LNG, via the railroads for export, according to Richard Nunno, a science and technology policy analyst with the Environmental and Energy Study Institute.

"Even if we were able to do this monumental task of bringing all the sectors together to raise billions of dollars, do we even want to do that? We should be extracting less fossil fuels, not more, and we need to reduce our environmental footprint," Nunno said. Nunno wrote about Solutionary Rail's ideas in May 2018, and he said the piece focused more on passenger rail. 

The Biden administration could consider the electrification of rail, especially passenger rail, if there is political will to do so. But Nunno told FreightWaves his chief concern was that an electrified freight rail network could still be used by export-bound trains carrying potentially explosive and hazardous materials through cities.

"People don't want explosive trains running through their neighborhoods," Nunno said. 

Indeed, a number of environmental groups are focused on asking President Joe Biden to roll back Trump-era initiatives aimed at increasing LNG exports, including executive orders and rulemakings regarding the transport of LNG by rail

The groups asked Biden in an April 14 letter to require projects to construct LNG export facilities to be subject to U.S. Department of Energy review via the National Environmental Policy Act, among other requests.

"The development of gas has a footprint of destruction across the nation from cradle to grave — from extraction to transport to methane liquefaction to export terminals and to its eventual burning overseas — devastating communities, polluting the environment and compounding the climate crisis. The Biden administration can put an end to this continual disaster by stopping the export of LNG and the industry's grip on our global energy future, instead pivoting to truly clean, renewable and independent energy sources," said Tracy Carluccio, deputy director of the Delaware Riverkeeper Network

Carluccio's group last year objected to plans by a New Jersey export terminal to export LNG. The LNG would have traveled by rail from its origins in the Marcellus shale in Pennsylvania.

Meanwhile, for its part, the Federal Railroad Administration said it hasn't yet embarked on any formal strategic initiatives centered around the electrification of passenger and freight rail. 

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