'It'll be the decade of rail': Country's $139b push to reduce carbon emissions

Germany launched an 86 billion euro ($139 billion) plan to modernise and expand its creaky railway system, a move billed as an effort to make transportation greener.

The 10-year plan is not only to upgrade rails, bridges and carriages but also build out capacity and electrify more routes so as to lure passengers from cars and planes. The federal government will finance 62 billion euros and state-owned Deutsche Bahn AG is to come up with 24 billion euros.

"It'll be the decade of the rail," Transportation Minister Andreas Scheuer said at a ceremony in Berlin.

The financing deal signed on Tuesday between Chancellor Angela Merkel's government and Deutsche Bahn is part of a broader push to beef up Germany's infrastructure and to reduce the country's carbon emissions, particularly from transportation and power generation. Other measures announced as part of a climate package in September include higher taxes for domestic flights, as well as grants and rebates to boost housing energy efficiencies.

The government this week may also decide on compensations for energy utilities to shut down lignite-fired power plants, and on possible aid for the auto industry, which is struggling with its transition from fossil fuel-powered vehicles to electric cars.

DB, as the railway operator is also known, has been under pressure in recent years to improve punctuality and service standards as its fleet of aging trains failed to keep up with rising passenger numbers and its federal owner kept up pressure on the company to secure dividends. Currently only 58 per cent of rails run on electricity and punctuality on long-distance trains was around 76 per cent in 2019, up one point from a year earlier.

Rail travel emits less CO2 pollution than air or road traffic. The company already slashed travel prices across the board by 10 per cent on Jan. 1, after the government ordered a cut in value-added tax on tickets.

By 2030, the country's major cities are to be connected by trains leaving in 30-minute intervals. Over the next decade, 2000 bridges are to be overhauled. Each year, DB wants to renew 2,000 kilometres of rail and 2,000 switches.

BLOOMBERG