The European Commission (EC) has approved €500m in funding to support railway companies investing in energy efficiency technologies.

According to the EC, the scheme is expected to support the shift of freight traffic from road to rail and help lower carbon dioxide (CO2) emissions.

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The public funding scheme, which was approved under the EU State aid rules, is scheduled to start this year and end in 2022.

“By promoting a shift from road to rail, the German scheme will contribute to meeting the EU’s environmental and transport objectives, without distorting competition.”

It follows a notification submitted by Germany proposing a scheme to provide public support for investment in technologies that ensure the creation of energy-efficient railways.

As part of the scheme, companies providing electrically powered rail transport services may receive a compensation of up to 50% on expenses incurred from energy efficiency measures, including the acquisition of the latest energy-saving rolling stock such as hybrid locomotives or automated solutions.

Investments in such technologies are expected to enable rail transport companies to increase their energy efficiency.

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In order to avail the scheme, companies are required to demonstrate a year-on-year improvement of 1.75% in their energy efficiency, which will be increased to 2% from 2020.

EC competition policy commissioner Margrethe Vestager commented on the need to have energy-efficient railways: “Electrically powered rail transport is one of the most environmentally friendly transport options.

“By promoting a shift from road to rail, the German scheme will contribute to meeting the EU’s environmental and transport objectives, without distorting competition.”