Use of Rail Green Points for

Modal Shift
Future Perspectives
Duke Biswas
Dy FA CMR WR
Rail Green Points
 Ministry of Railways introduced the Rail Green Points scheme in
March 2022.

 Registered freight customers are entitled to earn RGPs, which is the

amount of saving of carbon emission in Tonnes of CO2 on account
of transportation of goods by railways instead of road. The Rail
Green Points are estimated based on NTKM through booked route
and printed or RRs.

 There is no monetary value attached to the RGPs and the only

incentive to the customers is the feel good factor.
The Railways’ Edge

 Railways is a greener mode of transport. It has an edge over

roadways and airways as both modes of transport cannot turn to
green energy for a long time in the foreseeable future.

 The emissions intensity of Railways is substantially lower than road

transport. If converted to monetary terms, Railways might be able to
offset the disadvantage due to the inability to provide first mile, last
mile connectivity enjoyed by roadways.

 IR should monetise RGPs and pass on the benefit to customers. This

will help railways in bringing many more customers on board.
Carbon Trading Mechanism in India
 The Ministry of Power vide its gazette notification dated 28 June 2023 amending the Energy
Conservation Act, 2001, has instituted a Carbon Credit Trading Scheme in India.
 https://beeindia.gov.in/sites/default/files/CCTS.pdf

 Under this, various bodies have been created/nominated:

 National Steering Committee for Indian Carbon Market: A supervisory body in charge of
oversight and governance with representation from major ministries involved in power
consumption such as the Ministries of Coal, Steel, Petroleum and Natural Gas as well as
Agriculture and Farmer’s Welfare.

 It is only logical then, that Railways being a major power consumer, have representation on the
body so that we are able to put forth our perspectives for policy formulation.

 Bureau of Energy Efficiency: It has been envisaged as the administrator of the Indian Carbon
Market.

 One major function of the bureau in relation to this scheme which is of salience to the
Railways is “to identify sectors and potential for reduction of greenhouse gases emissions in
such sectors and recommend to the Ministry of Power to include such sectors in Indian carbon
market”.
Scope for Indian Railways
 Indian Railways, as a major consumer of electricity and as a
major player in the Indian power markets shall naturally be
included under this scheme.

 Under this scheme, efficiency parameters are to be laid out by

BEE, upon meeting which, tradable carbon credit certificates
will be issued which can be freely traded on the Indian
Carbon Market.

 Indian Railways should in coordination with Ministry of Power

and BEE arrive at an efficiency benchmark which appreciates
our efforts towards electrification.
 There are two categories of carbon markets:
• Compliance Market
• Voluntary Market

The current rules apply for the compliance market. The

majority of our customers are industries such a coal,
cement, POL etc.

They would have large obligations for CO2 emissions

reduction in the future under the cap and trade mechanism.
 The Energy and Resource Institute (TERI) has developed as
calculator for estimation of Green House Gas (GHG) emission
in tonnes of CO2 for road and rail based on tonne-km.

 As per latest details collected by CRIS/FOIS from TERI, the

following emission factor may be considered: (as modified
from time to time)
Proposed Methodology
Carbon credits earned via freight can be passed on under two schemes
based on customer preference:
Scheme 1
 A discount based on auction value
of carbon credits sold by railways.
 This will attract small players who
are unwilling to participate in
carbon markets directly.
Scheme 2
 Passing on carbon credits under
the RGP mechanism directly to
customers.
 They would be able to meet their
emission reduction targets under
cap and trade.
 They can monetise the carbon
credits by trading them.
 REMC Ltd can be the nodal agency for this activity as it
already has experience trading on power exchanges.

 Further assistance may be sought from private consultants.

Rail vs Road
 Total GTKMs for electric traction in 2021-22: 1,141,588,633,000

 Road vs Rail differential emission factor (as per TERI) :

1,141,588,633,000 (Gross tonne kms of electric traction as per ASS 2021-

22) x 0.031

=35,389,247,623 or 35.389 million tonnes of CO2

Monetary value = 35.389 million x 83.55 €( Avg carbon price in EU ETS for
2023)
= 2956.75 million Euros
= approx. ₹26,400 crores which is 13.8% of our gross revenue in FY 2021-22

Thus, the lateral contribution of IR to the Indian economy is to the tune of an

additional 13.8% of its gross revenue.
Takeaways
 This calculation highlights the unspecified contribution of IR to the economy.

 This revenue stream needs to be encashed.

 This will further strengthen our case for IRFC bonds to be listed as Green
Bonds for raising capital.