Frost: Environmental Awareness Fosters Euro Acceptance of Light Rail, Underground Transport

June 13, 2008 // Published as a news service by IHS

Growing awareness of global warming and climate change, coupled with efforts to reduce urban congestion, will drive market expansion.

Analysts said the rising potential for replacement orders and growth opportunities in the new European Union (EU) member states will also positively impact market prospects.

Recent analysis from Frost & Sullivan of the European light rail and underground market found the market will profit from rising environmental awareness, but will also be influenced by complicated funding questions.

"The revival of light rail in Europe will continue as public attitudes toward the image of rail-bound public transport have started undergoing a transformation," said Frost & Sullivan consulting analyst Patrick Rehlein.

Amidst the public debate about global climate change, Rehlein said light rail and underground transport are emerging as modern and stylish alternatives, making it incumbent on the industry and transport authorities to leverage this trend and persist with innovation and lobbying efforts.

Reports on climate change and rising energy costs have raised awareness about the shortage of fossil fuels, as well as the importance of a more environment-friendly lifestyle. Analysts said congestion and the lack of adequate parking spaces have encouraged people to overcome their reluctance to use urban public transport. Stable market growth will be predicated on continued innovation and the availability of government funding.

Despite a promising growth scenario, challenges remain. Analysts said most transport operators are public utility companies. Extensions to the network or the replacement of rolling stock require sizable investments. However, funding is a delicate and complicated process with many parties involved. European support programs, such as the Cohesion Fund 2007-2013, offer significant opportunities, especially for new EU member states.

"In most cases, decisions regarding investment in urban light rail or underground are political issues," said Rehlein. "Therefore, when a new mayor or city council gets elected, the changed balance of power may result in the cancellation of projects, which have been tediously negotiated with the previously elected authorities."

Ultimately, gaining access to available funding sources will be crucial to market development. Analysts said intensive lobbying will be required, particularly in Central and Eastern Europe, to boost awareness about the importance of modern light rail and underground networks.

Source: Frost & Sullivan.