EN Official Journal of the European Union C 226/54

Opinion of the European Economic and Social Committee on the Proposal for a Council Regulation establishing the Shift2Rail Joint Undertaking

COM(2013) 922 final — 2013/0445 (NLE)

2014/C 226/10

Rapporteur-general: Mr Mendoza Castro

On 11 February 2014 the Council decided to consult the European Economic and Social Committee, under Articles 187 and 188(2) of the Treaty on the Functioning of the European Union, on the

Proposal for a Council Regulation establishing the Shift2Rail Joint Undertaking

COM(2013) 922 final — 2013/0445 (NLE).

Given the urgent nature of the work, the European Economic and Social Committee appointed Mr Mendoza Castro as rapporteur-general at its 497th plenary session, held on 25 and 26 March 2014 (meeting of 25 March), and adopted the following opinion by 177 votes with 3 abstentions.

1. Conclusions and recommendations

1.1 The EESC supports the S2R initiative, which is an important contribution to the European rail industry.

1.2 The EESC emphasises the potential importance of S2R for employment, given that the entire rail system employs around three million workers.

1.3 In order to meet the long-term objectives set by the Union, the rail industry needs to change — not only technically but culturally.

1.4 The total planned budget for S2R is EUR 920 million, less than the investment required, which is estimated at EUR 1,4 billion; this will make it necessary to prioritise areas of research.

1.5 The EESC stresses the importance of S2R in enabling the European rail industry to compete in a global market valued at EUR 146 billion annually.

1.6 European companies are losing ground compared with their Asian competitors, who are investing massively in R+D. The global market is posing more and more challenges as a result of the growing number of participants in all products and segments.

1.7 The ERTMS signalling system demonstrates that the willingness to cooperate must overcome national interests.

1.8 The EESC considers that research must focus on activities connected with safety of persons, economic efficiency and information for rail users.

1.9 S2R's five innovation programmes (IPs) cover the main high-level areas and objectives.

1.10 The EESC considers it necessary to attribute ownership of the products of research. Intellectual property and patents are a key issue, which the Commission proposal does not address, however.

1.11 The industrial exploitation of the products of research financed by the Union should take place in Europe.

1.12 In contrast to the approach adopted by the Commission proposal, the European Railway Agency should have sole responsibility for laying down technical interoperability standards.

2. Summary of the proposal for a regulation and its background

2.1 The White Paper on transport policy (1) and the fourth railway package (2) create a framework for a single rail market (3).

2.2 One of the main aims of Horizon 2020 is to strengthen European industry through actions supporting research and innovation across a range of key industrial sectors.

2.3 The Shift2Rail Joint Undertaking (S2R), which will have the status of a ‘Union body’ (TFEU Article 187, Financial Regulation Article 209).

2.4 Moreover, S2R is necessary to tackle current serious problems: the dispersal of effort as a result of the diversity of national standards impedes the use of common industrial products on the railways and prevents the reciprocal authorisation of rail products; also the forced reduction of research activity in leading railway companies, the lack of public and private investment and increased financial risks.

2.5 The objectives of S2R are: — support for the Railway Technical Strategy, published in February 2014 by the European Railway Agency; — an overall reduction in life-cycle costs of up to 50 %; — a 100 % increase in the capacity of the rail transport system; — a 50 % increase in the reliability and punctuality of rail services; — improvements in interoperability; and — a reduction of negative factors such as noise.

2.5.1 A validation process shall be established in order to monitor quantitatively how upcoming deliverables of S2R precisely contribute to these high level objectives. Quality engineering and requirements management are state of the art approaches to enable a minimum progress monitoring on the objectives and therefore these approaches shall be established in S2R on a professional basis.

2.6 S2R activities will focus on four modes of rail transport: — Interoperable, high-speed passenger transport. — Interoperable regional passenger transport. — Non-interoperable urban/suburban passenger transport. — Interoperable freight transport.

2.7 Funding will be provided by the Union, with a maximum contribution of EUR 450 million, and by the other partners, who will have to provide at least EUR 470 million.

2.8 It is planned to last until 31 December 2024.

3. General comments

3.1 Importance of S2R

The EESC strongly backs the S2R initiative, which it sees as an important contribution to European industry in the strategic railway sector. The EESC also welcomes the close involvement of the railway companies in the project.

3.2 Employment

The EESC stresses the importance of S2R for employment. Throughout Europe an estimated 4 00 000 people are directly and indirectly employed by the supply industry. More than 1 3 50 000 others work for European infrastructure managers and railway operating companies. Employment on urban railways is probably of equal significance bringing the total number of jobs in the sector to around three million.

3.3 A major challenge for the European railway industry

The EESC would point out that in order to meet the long-term objectives set by the Union, a radical shift — not only technical but cultural — is required. As well as setting standards and adopting harmonisation measures, the EU must encourage a transnational framework for pooling efforts.

3.4 Funding

The EESC appreciates the financial effort involved in S2R. However, additional funds must be added to the planned overall budget — EUR 920 million — since S2R will require investment of an estimated total of EUR 1.4 billion. Otherwise, the various S2R activities will have to be ranked by priority.

3.5 Additional activities

Included in the total budget, there is a prevision of EUR 120 million concerning the contributions for ‘additional activities’. These are activities that the Joint Undertaking (JU) members will put on top of their R&D investment supported by EU funds. That amount will therefore not be funded by the European Union.

3.6 The global railway industry market

The EESC highlights the importance of S2R to maintaining the competitiveness of the European industry, which still produces more than 50 % of the world total of railway equipment and services (in Europe, 80 %). The market is estimated to have a total volume of EUR 146 billion annually, although the ‘accessible’ part of this market amounts to EUR 106 billion annually (4).

3.7 Europe is losing ground

It is well known that Asian countries are investing massively in R&D for their national rail industries. European companies are now under strong pressure from their Asian competitors. The world market is becoming increasingly challenging for the European rail industry as there are more and more actors in all products and segments. Whilst it is very difficult to compete with Asian companies on price, the European rail industry is still playing a big role in terms of research and innovation.

3.8 Role of SMEs

3.8.1 In order to bring innovation into the rail market the products have to be industrialised, hence the need of the world leaders/industrial giants — that will commercialise the innovative solution developed in S2R.

3.8.2 However, the EESC appreciates that SMEs will also play a key role in S2R in three possible ways: — By forming ‘clusters’ and applying for an associate member position, committing 2,5 % of the value of an IP (funded at 47,6 %). — By open calls for proposal (EUR 135 million available for this and funded at 100 %). — By becoming sub-contractors of one of the Joint Undertaking (JU) members (founding members or associated members). These activities will also have a 100 % funding rate.

3.9 The example of ERTMS

The ERTMS signalling system — set up with European Commission backing — demonstrates that the willingness to cooperate must come before national interests. ERTMS probably represents the greatest challenge to the success of the rail industry, as it has become the most widely-used system on railways not only in Europe but in many countries around the world, with the potential for full interoperability. Major investment will therefore be needed in order to achieve the objectives of full interoperability and increased capacity, along with lower costs of implementation.

3.10 In short, S2R is a step in the right direction

For the first time, major companies of the European rail industry (which compete with each other) have decided to cooperate and work on a common research agenda.

4. Specific comments

4.1 Research and development (R+D)

4.1.1 Mirroring the structure of the Interoperability Directive (5), the proposed R+D programme covers freight and passenger rolling stock, infrastructure, control-command and signalling.

4.1.2 The EESC suggests that the programmes should give priority to activities designed to increase the safety of persons and the economic efficiency of the railways. The new technologies must also improve information for rail users.

4.2 Innovation programmes

The EESC notes that S2R comprises five innovation programmes identified by experts whose work was coordinated by UNIFE. These innovation programmes (IPs) are:

4.2.1 (IP1) Energy & Mass Efficient Technologies for High Capacity Trains

4.2.1.1 The proposal is to create a future generation of lighter, more energy-efficient trains that cause less track damage and have less impact on the environment. The new technologies will include: traction drives, train control and monitoring systems (TCMS), car body shells with lighter materials, rolling stock, braking systems and doors.

4.2.1.2 High-level objectives of IP1 are: — Increase the physical capacity of vehicles and promote the enhancement of transport capacity of railway lines. — Reduce the travel disruptions for passengers by increasing operational reliability and availability of vehicles, either through the use of fundamentally more reliable components or system/subsystem architectures. — Reduce the life cycle cost of the vehicle (reduction of maintenance, energy consumption etc.) and of other subsystems interfacing with the vehicle (reduction of track damage etc.). — Increase the energy efficiency of the vehicle and reduce vehicle mass. — Increase the coupling capacity of units for greater operational flexibility.

4.2.2 (IP2) Advanced Traffic Management & Control Systems

4.2.2.1 The rail market historically has different mainline national solutions for signalling. In the signalling market, there are different solutions in order to respond to the urban needs (CBTC solutions) and S2R will investigate the possibility and capacity for a greater interoperability/standardisation/integration into ERTMS for those needs.

4.2.2.2 The high-level objectives for IP2 are: — Developing a new generation of signalling and control systems to enable intelligent traffic management with automatically driven trains and increase capacity, reliability and dramatically reduce the Life Cycle Costs for RUs and IMs. — Maintaining the dominance of ERTMS as a solution for railway signalling and control systems across the world by means of professional open specification methods aimed at full interoperability at an attractive price. — Extending synergies and interoperability with the urban and mass transit railway sectors. — Reducing travel disruptions for passengers by increasing operational reliability and availability of rail transport, either through the use of fundamentally more reliable components or system/subsystem architectures.

4.2.3 (IP3) Cost Efficient-High Capacity Infrastructure

4.2.3.1 There are four areas of research: — New Switches & Crossings (S&C): Improvement of existing S&C and new concept of train direction changing (Mechatronic S&C) to reduce the noise, the number of delays attributable to failures in such equipment and the maintenance costs. — Radically Innovative Tracks. Optimisation of the entire track: New design of the entire track in order to optimise the response of it to traffic loads and development/implementation of new technologies. — Smart and Intelligent Infrastructure Maintenance: New solutions for Rail Asset Registers, cutting edge measuring and monitoring tools, use based maintenance instead of condition based (maintenance engineering) and maintainability by design will further contribute to minimise cost, increase capacity and reduce noise. — Energy Efficiency: Innovative integration of regenerated energy, wayside energy storage devices, efficient usage of renewable energy, as well as the smart interaction with the electricity grid, will bring rail at the forefront of this technology.

4.2.4 (IP4) IT Solutions for a Seamless Attractive Railways

4.2.4.1 There are no intentions to develop a common platform, but an interoperability framework where anyone who wishes could simply ‘plug-in’ their developments, based on open interfaces, thus avoiding dependence on the Global Distribution System (GDS). This way the travel experience becomes the product. Current rail research and development activities will have to be integrated into the project.

4.2.5 (IP5) Technologies for Sustainable & Attractive European Freight

4.2.5.1 Main challenge of IP5: to define all technological and process breakthroughs necessary to contribute to the realisation of one of the key goals from the White Paper: 30 % of road traffic switching to rail and inland waterways by 2030 and 50 % by 2050. The EESC recommends — to increase the level of public support, particularly for rail freight — that research into noise reduction also be included in IP5.

4.3 System platform demonstrations (SPD)

4.3.1 The EESC notes that S2R goal is not only to produce prototypes but fully operational products for use in railway systems. The new technologies and innovations developed within the S2R Innovation Programme will be showcased in real and/or simulated operational conditions by means of Integrated Technology Demonstrators (ITDs). The System Platform Demonstrations of S2R propose to develop and demonstrate these technologies, bringing them to a technology maturity level for a new generation of railway systems.

4.3.2 The place where the ITDs will be installed it is not yet defined as it will be towards the end of S2R. In addition, this should be defined within the future JU Members (Founding Members and Associated members) and the European Commission. The SPDs virtual or physical assessment will mostly depend on the definition and results of the ITDs.

4.4 Patents

4.4.1 In the light of the multiple, composite financing system that has been set up and of the significant volume of Community resources involved, the EESC believes that it would be appropriate to define the use and allocation of the end products of the research to be initiated by Shift2Rail precisely. The question of intellectual property and patents is key in this connection. Their content and mode of operation should be the subject of an article in the operative part of the regulation. The failure to do this, and the attendant risks, were pinpointed by the EESC in its opinions on the Innovative Medicines, Clean Sky, ENIAC and Fuel Cells Joint Undertakings. In this JTI, this shortcoming could prove even more sensitive, insofar as the end product of the research will interest companies directly competing on the market (see point 3.10 of this opinion).

4.4.2 In any case, the EESC points out that inventions paid with public money should be preserved for the public interest. To this end, thought should be given to mechanisms conducive to generating a return on Community investment, and it should be ensured that the results of the research of the Joint Undertaking are exploited industrially in the EU.

4.5 Establishment of interoperability standards

4.5.1 The Statutes of the Shift2Rail Joint Undertaking (Annex I, point 2(h)) require that it: ‘pool user requirements and define interoperability standards to guide investment in research and innovation towards operational and marketable solutions’. The explanatory memorandum to the proposal for a regulation confirms this (see explanatory memorandum, point 3.3).

4.5.2 This should be rejected, as: — the establishment of standards cannot be outsourced to bodies set up on the basis of PPP with a very limited number of participants. The minimum requirement for technical specifications or standards is that they be established in cooperation between all interested stakeholders and with their consensus or general approval. The Statutes of Shift2Rail fundamentally contravene this principle. — the existing interoperability directive (Directive 2008/57/EC) already provides for a legal framework at EU level governing the establishment of Technical Specifications for Interoperability (TSI). Draft TSIs are drawn up by the European Railway Agency on the basis of an examination of subsystems, in cooperation with industry associations and the social partners. — the European Railway Agency only has observer status (point 11, Annex). It is involved in a number of coordination bodies, but in effect the Commission and the eight founding rail industry partners have the final say. The rationale for overlapping institutional responsibilities at EU level is not clear.

4.5.3 Consequently, responsibility for establishing Technical Specifications for Interoperability can only lie with the European Railway Agency.

Brussels, 25 March 2014 The President of the European Economic and Social Committee Henri MALOSSE

(1) Roadmap to a Single European Transport Area — Towards a competitive and resource efficient transport system COM(2011) 144 final.

(2) The Fourth Railway Package — Completing the single European railway area to foster European competitiveness and growth COM(2013) 25 final.

(3) OJ C 327, 12.11.2013, p. 122.

(4) Roland Berger ‘World Rail Market Study, forecast 2012-2017’.

(5) OJ L 191, 18.7.2008, p. 1.