COMMISSION STAFF WORKING DOCUMENT …

1 EN EN EUROPEAN COMMISSION Brussels, SWD(2013) 535 final COMMISSION STAFF WORKING DOCUMENT impact assessment Accompanying the DOCUMENT Proposal for a Council Regulation establishing the Shift2 Rail Joint Undertaking {COM(2013) 922 final} {SWD(2013) 534 final} Disclaimer: This impact assessment commits only the COMMISSION 's services involved in its preparation and does not prejudge the final form of any decision to be taken by the COMMISSION . 2 TABLE OF CONTENTS 1. INTRODUCTION ..5 Policy context ..5 Scope of this impact Procedural issues and consultation of interested impact assessment Inter-Service Steering Group ..8 Review by the impact assessment Board.

2 9 Consultation and Results of the stakeholder consultation ..10 2. PROBLEM Key challenges in the EU rail The main problems that require action ..12 Problem Fragmentation of R&I efforts ..14 Low leverage of EU rail R&D investment ..16 Limited and uncoordinated participation of stakeholders along the rail value High costs, risks and lead times of R&I investments ..19 Most affected stakeholders and needs The railway community ..19 Other industrial sectors ..20 The European COMMISSION and the Members States ..20 Passengers, users and EU citizens ..20 Academia, research community and SMEs ..21 Baseline scenario ..21 Subsidiarity ..22 Legal basis ..22 Necessity and EU added value.

3 22 3. General objectives ..23 Specific objectives and operational objectives ..23 4. POLICY OPTIONS ..26 Option 1 Baseline Horizon 2020 Collaborative Research Projects ..26 Option 2 Contractual PPP ..26 Option 3 Institutional PPP ..26 Option 4 Coordination within ERA ..27 3 5. ASSESSING THE General approach to the assessment of impacts ..27 Input impacts and cost-effectiveness ..28 Economic, social and environmental Input impacts and cost-effectiveness ..29 Focus and coordination of research Leverage of EU rail R&I funding ..30 Broad stakeholder participation and sustained Mitigation of innovation risks ..34 Operational performance ..35 Economic, social and environmental Risk assessment .

4 42 6. COMPARING THE Comparison of the Preferred option ..47 Proposed governance structure ..48 7. MONITORING AND 8. Annex I: Abbreviations ..53 Annex II: Key developments in the rail sector ..53 Annex III: Overview of existing EU rail R&I projects ..53 Annex IV: EU rail R&I objectives and key priorities ..53 Annex V: Results of the Public Consultation ..53 Annex VI: Schematic comparison of the key governance elements of the options ..53 Annex VII: Summary of the cost-effectiveness Annex VIII: Technology Readiness Levels (TRL) ..53 4 Executive Summary Sheet impact assessment accompanying the proposal for a Council Regulation establishing a Shift2 Rail Joint Undertaking A. Need for action Why? What is the problem being addressed?

5 Maximum 11 lines Innovation throughout the full rail value chain is a strategic enabler both to complete the Single European Railway Area which is crucial to making rail a more attractive mode and encouraging a modal shift from road and air and to boost the competitiveness of the European rail sector, confronted with increasing competition from the US and emerging Asian countries. Yet, past rail R&I efforts at EU level have not succeeded in supporting new technologies enabling the further integration of diverse national railway ecosystems and of different rail subsystems. This is namely due to the high level of fragmentation in national standards, the lack of a systems approach to research funding, and the difficulty in ensuring broad and coordinated participation of the different stakeholders along the rail value chain (manufacturers of rolling stock, infrastructure and signalling equipment, railway undertakings and infrastructure managers).

6 Furthermore, the market uptake and impact of EU rail R&I projects under previous framework programmes has been low and slow, due to low operational margins of the rail industry, long product lifecycles, and funding gaps in the innovation cycle. What is this initiative expected to achieve? Maximum 8 lines The initiative is expected to accelerate the penetration of technological innovations that will support the creation of a truly integrated and interoperable EU railway market, thereby increasing the competitiveness of the EU rail sector, vis- -vis both other transport modes and foreign competitors. This will, in turn, contribute to raising the quality, reliability and cost-efficiency of EU rail services.

7 This can be achieved by effective and efficient governance mechanisms better aligning EU rail R&I efforts to support the completion of the SERA. These mechanisms include the development of a common, long-term, innovation-driven R&I agenda, with improved coordination of all key actors from the rail sector across Europe. It should also put in place adequate pathways for a more rapid commercial exploitation of research results. What is the value added of action at the EU level? Maximum 7 lines Levels of rail R&I funding have historically been low and what investment does take place suffers from fragmentation and inefficiencies, due to significant differences among national programmes and railway systems.

8 The pooling and coordination of R&I efforts at EU level stands a better chance of success given the transnational nature of the infrastructure and technologies to be developed in support of the SERA, and the need to achieve a sufficient mass of resources. Action at EU level will help to rationalise research programmes and ensure interoperability of the systems developed. This standardisation will open a wider market and promote competition. B. Solutions What legislative and non-legislative policy options have been considered? Is there a preferred choice or not? Why? Maximum 14 lines The present analysis uses H2020 Collaborative Research as a baseline against which the different forms of governance are analysed.

9 The baseline entails a continuation of the FP7 Collaborative Research model, while integrating H2020 improvements, such as simplified monitoring arrangements and more emphasis on demonstration. The contractual PPP (cPPP) option entails the establishment of a flexible contractual agreement between the COMMISSION and private partners to work towards a common programme, based on a roadmap drawn up by the latter, using standard collaborative research and innovation projects. The institutional PPP (iPPP) option involves creating a dedicated administrative structure for coordinating rail R&I, in the form of a Union body under Article 187 of the TFEU, thereby providing a framework for public and private players to work together and take joint decisions.

10 The option of putting the European Railway Agency (ERA) in charge of R&I coordination entails a modification of the Agency's founding Regulation to enable it to undertake R&I activities next to its role as a regulatory authority. The four options are compared along a range of key parameters, such as focus on SERA, leverage, participation, operational performance and cost-effectiveness. The analysis concludes that, despite the longer set-up time, the iPPP option provides the most appropriate governance structure to ensure long-term strategic vision, broad participation and firm commitments. Who supports which option? Maximum 7 lines The public consultation reveals that there is strong and broad-based support for the iPPP option, which is 5 judged to be nearly twice as effective as any other option, and emerges as the preferred option regardless of the type of organisation or the field of activity.