Environment & Transport

How to Make Long-Distance Work: Fixing Britain’s railways with open access

A new report by Adrian Quine, rail consultant and journalist, and Sophie Jarvis, Head of Government at the ASI, calls for the abolition of the current monopoly franchise system for trains and replacement with an Open Access system:

  • Open Access, by enabling competition between operators on the same route, drives down costs and ticket prices, improves passenger satisfaction, increases frequency, and encourages innovation. 

  • Fares are up to 55% cheaper on routes on Open Access routes compared to where a single monopoly franchise operates.

  • Open Access operators have the highest level of passanger satisfaction. Open Access operator Grand Central has had the largest increase of passengers of any train company, up 12% over 2017-18, discluding Transport for London services.

  • Under Open Access new routes have been opened by operators, giving smaller stations direct, fast, long-distance services without the need to change trains. These new rail destinations drive economic growth, social mobility and wider prosperity.

  • The running costs of Open Access operators is lower than the heavily unionised monopoly franchise operators, resulting in lower passenger fares.

  • In order to expand rail competition, this paper In order to expand rail competition, this paper recommends:

    • 1. Abolishing the current monopoly franchise system for long distance rail routes and replacement with an Open Access system.

    • 2. In the meantime, the creation a level playing field between Open Access and monopoly franchise operators by:

      • a. Abolishing the Not Primarily Abstractive (NPA) test, which limits which tracks Open Access operators can use. 

      • b. Introducing parity between the track access charges for monopoly franchise operators and the open access operators. 

    • 3. Reverse auctions to allocate operators and decide the subsidy level for less profitable stations.

Solar Power in Britain: The Impossible Dream

Supporters of renewable energy argue that wind- and solar-generated electricity can form the basis of a secure, affordable, low carbon energy supply for the UK and EU, despite the inherently variable and intermittent nature of these sources.

• This paper first contributes to the debate by estimating the output of a model UK fleet of solar farms rated at 8.4GW, by using ten years of half-hourly aviation weather reports as a data source.

• The key findings for such a solar fleet are that: 
- It has a capacity factor of just 9% when the panels are new, and so generates less than a tenth of its nominal output over the course of a year.
- It produces hardly any power in winter when demand is highest.
- Power output is severely intermittent, lying below 10% of installed capacity for 5,790 hours a year and exceeding 60% for only 7.

• The claim that a mixture of solar and wind generation can smooth out this intermittency is found untrue. Under this compounded system, power output falls below 10% of installed capacity 97 times a year for periods of between 6 and 141 hours.

• This study evaluates three other proposed solutions to the intermittency problem, and comes to the following conclusions:
- Pumped storage is currently the best and most cost-effective solution for large-scale energy storage, but would be enormously expensive on such a huge scale and have a severe environmental impact, even in the unlikely event that enough UK sites could be identified.
- Battery storage on this scale is likely to be even more expensive and batteries would require frequent replacement.
- Interconnectors to a northern European renewable-energy grid would be ineffective, because both solar and wind resources vary with time across the region in much the same way as for the UK.

• With the energy storage technology available for the foreseeable future, no combination of wind and solar energy with backup storage would be suitable to supply a significant proportion of grid electricity without full conventional backup being available.

• However, intermittent renewable energy could have a useful role to play if it was used primarily for domestic space and water heating. An option which has been successfully implemented in New Zealand in the past.

Read the full paper here.

Network Fail: Getting UK Rail Back on Track

  • Following last year’s decisive General Election result, this Paper addresses the key issues affecting the UK railways sector – and especially those relating to its financing. It advocates the need for concerted action on several railway fronts.        
  • Network Rail, with its £41.6 billion of net debt now on the public balance sheet, should be progressively sold down. An initial 49.9% sale to long-term investing institutions is proposed; in the interim, its finances need major over-hauling. The eventual aim should be to create a railway equivalent of National Grid - now worth over £40 billion - in the electricity sector. 
  • Whilst the re-imposition of vertical integration of the railway network would be immensely challenging, some smaller lines could be progressively divested by Network Rail as part of a local transportation policy. The Merseyrail structure offers a possible template. In the longer term, integrated regional railway companies could emerge. In the utility sector, National Grid’s sale of some gas distribution networks also provides a relevant precedent.   
  • Currently, open access concessions account for less than 1% of passenger journeys. However, this figure would rise sharply if the Office of Rail and Road (ORR) were more pro-active in promoting open access schemes – and made its abstraction formula less onerous to such applicants. Alliance Rail has been at the forefront of winning open access approvals.   
  • Although the much-criticised franchise system should be retained, the Department for Transport (DfT) and ORR should crack down hard on under-performing rail franchise holders. Substantial fines could be levied, senior management changes demanded or the ultimate sanction - franchise withdrawal - could be imposed.
  • The controversial £50+ billion High-Speed 2 project should be scrapped on grounds of excessive cost compared with the questionable benefits that may accrue. The numbers, including the projected Benefit/Cost Ratio, simply do not stack up. 
  • Instead, a far less grandiose, more piece-meal, investment approach is needed to deal with understandable concerns about the overcrowding at some peak periods on the southern parts of the West Coast Main Line (WCML). Overall seat occupancy on the WCML remains well below 60% compared with the near 90% figure achieved by leading budget airlines. 
  • The embryonic Northern Powerhouse initiative merits detailed study. Designing new railway infrastructure, centring on the Manchester/Leeds hub, is pivotal. In time, this should embrace points west at Liverpool and points east at Hull. It is important, too, that the delayed London to Sheffield Midland Mainline and the TransPennine Express electrification schemes are accorded a high priority.
  • With EU regulation creating far more opportunities for the railways sector, UK companies are planning to expand overseas. Indeed, Arriva – now owned by Deutsche Bahn - has recently won several train franchises in Europe. Network Rail is well-placed to develop a sizeable overseas business, given the UK’s extensive railway construction activities during the days of Empire.

Read the whole paper here

Power Up

As the new government considers its energy policy agenda, and in light of the Competition Markets Authority (CMA) review of electricity market competition, now is a good time to consider the effects of OFGEM’s current regulatory framework on actual market outcomes for consumers. Current regulations undervalue the effect of innovation on the benefits that consumers enjoy. The CMA’s provisional findings reflect an understanding of the beneficial potential of innovation.

Read this report.

The No Breakfast Fallacy

The depletion of mineral reserves poses no serious threat to society, this new report from the Adam Smith Institute concludes.

The No Breakfast Fallacy: Why the Club of Rome was wrong about us running out of resources argues that outcries over resource availability from environmentalist groups are based on a misinterpretation of numbers and a misunderstanding of what mineral resources actually are.

The monograph, written by Senior Fellow and rare earths expert Tim Worstall, says that groups that have warned about the world running out of rare mineral resources, such as The Club of Rome, have been using the wrong sets of data, mistaking the exhaustion of mineral reserves for the exhaustion of mineralresources.

Mineral reserves, the monograph explains, are simply the minerals that have been prepared for use for the next few decades; they are minerals that can be mined with current technology at current prices. Some reserves are going to run out in the near future, but this is a normal process. Every generation runs out of mineral reserves.

Mineral resources, however, refer to a concentration of minerals of a certain quality and quantity that have shown reasonable prospects for eventual economic extraction. These are much larger than mineral reserves.

Organic farming, for example, may be a useful idea, the monograph asserts, but the idea that it is a necessity because we’re about to run out of inorganic fertilisers is based on a falsehood. The reserves for minerals used in fertilizers may exhaust in the next few hundred years, but the exhaustion of resources is not estimated to occur for 1,400 years for phosphate and 7,300 years for potassium.

The report concludes that efforts to conserve and/or recycle mineral resources are wasteful and often end up being net harms to society, by diverting economic activity from more productive uses.

Read the report.


Wind Power Reassessed: A review of the UK wind resource for electricity generation

The UK wind debate assumes that wind farms operate at roughly their average output most of the time. According to Dr. Capell Aris’ new paper produced in concert with the Scientific Alliance this is not true. Power comes only extremely intermittently and variably and there are long periods of negligible efficiency in the long winter months when power is most needed. A 10GW wind fleet would need approximately 9.5GW of fossil capacity to guarantee its output.

Read the report.


No Way to Run a Railway

Rail's woes are due to bureaucracy, not privatization. It's time for the government to release the railway from its overburdening grip. A grip entrenched in regulation that has far too many officials, or any proper functionality. Iain Murray, the author, says that for the railways to work, "the train operation companies must be given more control, and have a major say in how station and track improvements are managed. This will lead to more customer-driven investment decisions," he insists, "providing in turn much more of what train users actually want."

Read it here.