On December 20, 2023, the Railway Minister, while answering a question in the Lok Sabha, informed Parliament that the Railways has set a goal to achieve net-zero carbon emissions by 2030. This objective is critical not only in terms of environmental sustainability but also as a potential turning point for the Railways, promising positive returns and profitability.

Attaining net-zero involves implementation of various practices and projects, such as energy-efficient technologies and 100 per cent electrification. These have the potential to substantially reduce both energy consumption and associated costs. The Railways has already demonstrated its ability to improve energy efficiency and save costs through the government’s Perform, Achieve and Trade (PAT) scheme.

Similarly, considerable cost efficiencies can be realised by complete electrification of the railway network. Significant strides have been made on this front; around 94 per cent of the total broad gauge route (65,556 route kilometres) has already been electrified as of December 2023. This is expected to potentially save around ₹14,000 crore annually in reduced fuel expenses.

Carbon credits

In addition to the immediate cost-saving associated with net-zero goals, there are emerging opportunities for the Railways to generate additional revenue by capitalising on the incentives offered by international markets for industries adopting environment-friendly practices. One avenue involves leveraging the Clean Development Mechanism (CDM) outlined in Article 12 of the Kyoto Protocol to accrue tradable carbon credits.

This is not uncharted territory for the country, given its prior success in this realm. Notably, the Delhi Metro made history as the world’s first railway network to earn carbon credits from the UN by contributing to the reduction of greenhouse gas emissions through the CDM scheme.

Net-zero status will also provide the Railways with a notable competitive advantage over other modes of transportation. To thrive, the Railways must overcome what Theodore Levitt termed “marketing myopia” and recognise the necessity of competing with alternative transportation options such as roadways and airways. That the Railways has not been able to overcome this myopic vision is reflected in the decline in its modal share of in freight transport, dropping from about 80 per cent at the time of Independence to around 18 per cent now. Concurrently, the share of roads in freight transport has surged to 70 per cent, despite their higher carbon intensity. Net-zero presents an opportunity to reverse this trend.

A recent survey revealed that two-thirds of urban Indian consumers prioritise environmentally responsible actions taken by businesses. Consequently, businesses are actively working to reduce their product carbon footprint. The fact that the Railways would be significantly less polluting positions it as a preferred mode of transport for a broad audience. Understanding this trend, the Railways launched the Rail Green Point system in 2022. This shows customers the anticipated carbon emission savings they could achieve by choosing railways as the mode of goods transportation.

The competitive advantage gained and the shift in modal distribution have the potential to enhance the accumulation of carbon credits for the Railways, leading to increased revenue for infrastructure upgrades and improved customer facilities. Enhanced infrastructure will initiate a positive cycle of growth and development by attracting more customers and sustaining continual improvement.

The notification of the Energy Conservation (Amendment) Act, 2022, through which the government aims to set up an Indian carbon market, will provide further support to the Railways’ goal of achieving net-zero.

The writer is an Indian Railways bureaucrat. Views are personal