Reducing our carbon emissions, increasing efficiencies, and creating a responsible energy management culture.
The efficient use of energy is critical to the running of today’s railway. Network Rail provides the energy for the whole of the UK rail industry and manages those contractual arrangements with its corporate suppliers. In addition to that key responsibility, Network Rail is a very large consumer in its own right. The information and tools within these pages will help to address the challenges we face and will enable Network Rail to continually reduce energy use and carbon emissions.
Network Rail is a complex organisation and the way in which the railway has evolved over many years means that our network of utilities provision is particularly complicated. Often utility supplies will be shared between different organisations, or the origin of supplies may not be known. Until very recently, management of utilities was carried out centrally which meant that local knowledge was limited. In the past couple of years, responsibility for management of utilities has been devolved to the Routes and work has been undertaken to provide services, tools and training in order to help Routes to start to manage their energy and water use effectively.
The key challenges of effective and responsible energy and carbon management are environmental impact, security of supply and excessive costs; these are outlined below and shown in the Energy Trilemma diagram below.
1. Environmental Impact
Energy use is one of the major contributors to greenhouse gas emissions, the primary cause of climate change. The Office of Road and Rail (ORR) has placed regulated targets upon Network Rail to reduce the most harmful gas emission carbon dioxide, or CO2, from its operations by 25% over the course of CP6. In future years, Network Rail will have a responsibility to further reduce greenhouse gas emissions to align with, and contribute to, national targets and Government initiatives. The Climate Change Act 2008 sets the Government’s long-term goal to reduce CO2 emissions by 34% by 2020 and 80% by 2050, by placing legislation to reduce UK emissions over time through a system of UK carbon budgets. We have a responsibility to align our efforts to these targets and in doing so we can limit the risks associated with the Energy Trilemma. Our target for CP6 is to reduce emissions by 25% and work has commenced to develop long-term targets beyond CP6 to 2050 to align our corporate response to the Climate Change Act and COP21 agreements.
2. Security of supply
To meet our environmental obligations we must reduce our energy use. However, ambitious electrification programmes and the broad deployment of digital technologies means our consumption of electricity could increase. To allow for this, our targets in CP6 and beyond will be normalised to allow for such business growth however this growth brings with it other complications. Powering trains with electricity to move trains rather than diesel produces fewer emissions, but the impact of this on the already stretched national electricity infrastructure network presents a different challenge. As demand from activities such as wider rail electrification increases, this squeeze on the UK electricity industry will continue, and supply security risks intensify. As electricity generation in the UK moves away from coal and to more sustainable sources, the closure of coal-powered stations presents supply squeeze that is unprecedented. The risk of blackouts and brown-outs becomes more prevalent – a critical risk to a rail network that relies on energy delivery. To help combat these challenges, we are developing responses to the new Electricity Market Reform and energy storage initiatives that have been introduced nationally, not only to secure our energy supply and keep our operations running but to also maximise the opportunities for income generation that these initiatives can bring.
A major reason for managing energy use effectively is cost. We are one of the largest single consumers of electricity in the UK and a significant consumer of gas and water. Our electrical contracts for traction (£300M PA) and non-traction (£48M PA) are, not surprisingly considering their size, market leaders in terms of their conditions and added benefits. But these long-term contracts with two of the biggest suppliers in the UK need close management to ensure compliance. We are careful about how we purchase our energy and have a strategic risk management strategy that hedges our exposure.
Despite careful management of our contracts and purchasing energy, energy prices continue to rise due to increased non-commodity charges, such as taxation and other ‘green’ levies, as well as transmission, distribution and grid balancing costs that are associated with the use of electricity. Business efficiencies applied at the beginning of CP5 meant that ~£40m was removed from the total utilities budget – presenting a cost challenge of 20%.
The devolution of utilities budgets to the Routes mean that tighter, local control will reduce consumption. However the energy and utilities landscape is not an easy one to understand or to operate within. The Central Energy Management team is responsible for providing the strategic vision and tools to assist all business units reduce their energy and water use, carbon emissions and costs.