This article was originally published via https://www.fullyloaded.com.au/.
Pacific National CEO Paul Scurrah says the safeguard mechanism could have an undesired impact on attempts to decarbonise the freight industry
Pacific National CEO Paul Scurrah
Australian private rail freight company Pacific National has warned that current settings of the Safeguard Mechanism will result in more freight shifting from trains to trucks perversely increasing emissions, traffic congestion and road trauma incidents in the nation’s transport network.
Pacific National CEO Paul Scurrah says under the current Safeguard Mechanism, a major rail hauler of goods and commodities may incur significant additional costs, while tens of thousands of trucking companies are not required to comply with mandated emissions reduction targets.
"The quickest and most efficient way to decarbonise the national supply chain is to support the haulage of more freight by trains," he says.
"The current Safeguard Mechanism does the opposite by tilting the playing field in favour of more freight being transported by bigger and heavier trucks."
PacNat says compared to road freight transport, rail haulage is up to four times more fuel efficient and so provides a low-emissions transport solution for the Australian supply chain.
Rail freight transport also allows for reduced traffic congestion and better road safety outcomes.
Scurrah says although rail freight represents less than four per cent of total transport emissions, it is significantly over-represented in terms of the proportion of transport activity that is captured by the Safeguard Mechanism.
"Approximately 65 per cent of rail freight activity is captured under the Safeguard Mechanism against a mere two per cent for road freight transport," he said.
Scurrah says alternative-fuelled locomotives, like hydrogen fuel cell power, capable of long-distance heavy haulage operations are more than a decade away from being available commercially.
"In the meantime, to help comply with the Safeguard Mechanism to reduce emissions by 4.9 per cent year-on-year to 2030 and offset the need to buy a bundle of Australian carbon credit units capped at $75 a tonne, Pacific National has invested $330 million to purchase 50 new state-of-the-art freight locomotives which will yield a lower carbon footprint during operations," he says.
The new freight locomotives are being locally manufactured and assembled in Newcastle and will be delivered to Pacific National starting in 2024.
Pacific National is also investing millions to procure new rollingstock, including 110 tandem well wagons which allow for the double-stacking of shipping containers. When placed end-to-end, these new wagons are equivalent to 4.7 kilometres of new rollingstock.
Scurrah says if the Safeguard Mechanism is not carefully crafted, then technological constraints beyond the control of Australian companies will result in rail becoming less price competitive with road freight operations with are not captured under the Safeguard Mechanism.
"Large costs in procuring and deploying more technologically advanced locomotives and the need to offset any future emissions above mandated thresholds in the Safeguard Mechanism via the purchase of potentially millions-of-dollars of carbon credits each year will inevitably result in road freight operations becoming more cost competitive than rail haulage," he says.
Scurrah says the Australian rail freight sector is further boxed-in because electrification of the rail network nationally is cost-prohibitive and emissions intensity is influenced by the condition and alignment of track infrastructure, which is not owned or controlled by operators like Pacific National.
"Australian rail freight companies have no control over the condition of the track infrastructure they operate on or global technological developments in locomotives and rollingstock," he says.
Each week across Australia, 2,300 Pacific National frontline workers deploy 570 diesel-powered locomotives to carry out 800 rail freight services for more than 340 customers.
These weekly services include the rail haulage of approximately 570,000 tonnes of bulk freight like grain and steel and 18,000 twenty-foot equivalent shipping containers filled with tinned and refrigerated food, beverages, white goods, electronics, furniture and machinery parts.
Scurrah says the result of more freight being transported by trucks is increased emissions, traffic congestion, and road accidents. It means taxpayers and ratepayers are forking out more money to repair and maintain roads and highways.
"It also means added costs in the national rail supply chain which are ultimately paid for by Australian families at the supermarket checkout, adding to the pain they are feeling from inflation and rising interest rates," he says.
Scurrah says the political class needs to do its homework when to comes to the unique and demanding characteristics of Australian supply chain operations.
"For instance, our vast continent is not like a small European nation – in Australia, we haul massive volumes of goods and commodities over some of the harshest, most remote landscapes on earth," he says.
"Freight locomotives are highly specialised pieces of equipment and compared to the demand for new freight locomotives in North America, Australia’s market is small.
"This means our nation faces both scaling and technological hurdles when it comes to procuring, field-testing and maintaining new freight locomotives for deployment under unique Australian infrastructure settings and operational conditions."