New funding options for ERTMS needed

ERTMS (European Rail Traffic Management System) is a signalling and train protection system that will be implemented in EU member states to harmonise and improve both railway safety and the robustness of train operations.

ERTMS lays the foundation for the digitalisation of railways, which will enable vehicles to travel, at higher speeds, along controlled train paths without the risk of accidents. The Swedish Transport Administration is working to digitalise signal interfaces and implement ERTMS along the railway in line with EU regulations, and this will bring significant changes to Swedish railways and its stakeholders.

ERTMS needs to be fully implemented by the 2040s to realise the benefits the system provides and to ensure the continued functionality of the Swedish railway. However, its implementation will bring a fundamental shift in infrastructure costs from the state to vehicle owners. In practice, this means that the cost for the additional onboard equipment, including retrofit and installment, will be borne by those who own the trains. Given the current economic situation in the industry with its low profitability, many players are struggling to finance vehicle conversions and the necessary installations. The situation is particularly acute for freight transport companies.

The implementation and rollout of ERTMS in Sweden requires all vehicles to be equipped with onboard equipment by 2029 to avoid jeopardising the Swedish Transport Administration's plans to ensure mobility and accessibility during the ERTMS rollout. That means new financing solutions have to be found.

In our report first published in 2022, PA set out the financing challenges involved in providing the onboard equipment needed for the implementation of ERTMS in Sweden. ERTMS is critical to ensuring a safe and competitive railway and contributing to a faster transition to meeting climate goals. The government’s decision, not to provide state aid and the lack of systematic financing tools, risks eliminating smaller players in the railway market and driving up costs. The report sets out a number of options for long term financing solutions which would enable operators to meet the goal of converting all vehicles by 2029.