photo: Uwe Schwarzbach / Flickr/Trains and tracks at Kufstein train station in Tyrol, Austria
European rail organisations are urging the European Commission and EU Member States to redirect part of the revenue from emissions allowances back into rail. The funding would support electrification, cross-border technologies and the shift of passenger and freight traffic away from roads.
Eight European rail associations — UIRR, ERFA, CER, EIM, AERRL, ALLRAIL, UIP and UNIFE — published a joint statement on 14 July 2026 calling for a clearer role for rail in the distribution of revenue from the EU Emissions Trading System. They argue that rail should receive a defined share of EU ETS revenue because it already provides one of Europe’s lowest-emission forms of mass transport.
More than 80% of rail traffic in the EU is electrified, while rail produces less than 1% of transport greenhouse gas emissions, according to the statement. "Rail is not asking to be exempted from the ETS, but asks that some of what it pays return to support the use of its capacity," the associations said.
EU ETS Revenue Could Fund Rail Electrification and Technology
RAILTARGET examined the joint statement, which sets out two main priorities for the future allocation of EU ETS revenue.
The first is greater support for rail projects through the existing EU ETS Innovation Fund. The associations want the fund to finance infrastructure upgrades and further electrification of passenger lines, freight routes, terminals, overtaking tracks and connections between railway networks and ports.
They also want funding for technologies that improve cross-border operations. These include Digital Automatic Coupling (DAC), the European Rail Traffic Management System (ERTMS) and the Future Railway Mobile Communication System (FRMCS).
Aside from individual trains and isolated pilot projects, the proposals cover cover traction power supplies, the electrification of depots and terminals, rolling stock modernisation and digital tools intended to make better use of existing railway capacity.
According to calculations cited by the associations, electrified rail transport across the EU27 currently bears approximately EUR 571 million in ETS-related costs each year, based on a carbon price of EUR 79.36 per tonne of CO₂. If the price reaches EUR 110 per tonne, the annual cost could exceed EUR 790 million.
The sector’s argument is that at least part of this money should return to projects that allow railways to carry more passengers and freight without a corresponding increase in transport emissions.
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Rail Associations Want ETS Funding to Accelerate Modal Shift
The second priority concerns the ETS Investment Booster and the Industrial Decarbonisation Bank. The organisations want both instruments to support a faster shift from road transport and short-haul aviation to rail. Their reasoning is that developing cleaner technologies for aircraft and road vehicles takes time, whereas transferring an existing journey or shipment to rail can reduce emissions immediately.
The joint statement estimates that moving freight from road to rail and combined transport can cut energy consumption per tonne-kilometre by up to 70% and reduce carbon emissions by between 60% and 90%.
European intermodal rail freight already includes around 1,000 daily train departures connecting approximately 1,300 terminals. However, the associations say the sector’s growth is being held back by infrastructure constraints, including routes that cannot accommodate 740-metre freight trains, inadequate bypasses, weak cross-border interoperability and insufficient financing for intermodal terminals.
They therefore want ETS funding to support a functioning, high-capacity railway system rather than a collection of disconnected projects.
Every additional shipment moved to rail or combined transport delivers an immediate climate benefit, the associations argue, without waiting for zero-emission technologies in other transport modes to reach the wider market.
Demands to Redirect ETS Revenue to Rail Are Not New
Calls to reinvest emissions allowance revenue in rail have appeared at both national and European level for several years. In the Czech Republic, for example, the Czech Chamber of Commerce previously proposed using revenue from the EU ETS and ETS2 to support railway electrification, low- and zero-emission freight vehicles and combined rail-road transport.
A similar demand came from the Italian rail freight association Fermerci in July 2024. It asked the Italian government to allocate part of the revenue from emissions allowance auctions to Ferrobonus and Norma Merci, the country’s main support schemes for rail freight and combined transport.
The pressure over how ETS revenue is distributed is likely to grow as the EU prepares to launch ETS2 fully in 2028. The separate system will cover emissions from fuels used in road transport, buildings and additional sectors, mainly smaller industries not included in the existing EU ETS.
Under the current framework, fuel suppliers rather than individual motorists or households will purchase and surrender the allowances. All ETS2 allowances will be auctioned, with Member States required to spend the resulting revenue on climate action and social measures.
European rail organisations now want railway projects to receive explicit priority within these financial flows. Their position is that carbon pricing should not only make high-emission transport more expensive. It should also strengthen a lower-emission alternative that already exists and has the capacity to carry considerably more traffic.
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