Rolling forward: the case for rail investment in a low-carbon economy

Gauging progress: the hard stuff is still to come

Following years of rapid progress, the climate transition is now in a reflective phase. It has faced interlinked challenges post-pandemic, including geopolitical tensions, inflation, and constrained public finances. While some sectors have made significant strides, transport remains a stubborn laggard. Rail stands out as a bright spot, though, offering scalable emissions reductions, improved mobility, and economic growth.

Mind the gap: the transition’s stubborn sector

Transport accounts for over 25% of greenhouse gas emissions (GHG) in the UK and Europe. While energy-sector emissions have fallen sharply, transport emissions haven’t – and they’re only projected to fall below 1990 levels by 2030 . The EU’s Green Deal targets a 90% reduction in transport emissions by 2050, with the UK pursuing similar goals. Achieving this will require €1 trillion in investment across the EU.

Rail: a platform for growth

Rail represents just 1% of transport emissions, despite facilitating 6% of journeys in Europe  . Emissions per passenger kilometre are four times lower than cars and nine times lower than domestic flights. With urban populations forecast to reach 92%  in the UK and 84%  in Europe by 2050, rail will be essential to avoid congestion and emissions growth. 
Passenger demand in the UK is projected to grow by 37% to 97% by 2050 , depending on policy ambition. Even the lower bound implies significant infrastructure and rolling-stock investment. With an economic multiplier of 2.5  for rail, investment delivers strong societal returns.

Gaining traction: the need for new and better trains 

Meeting demand will require up to 12,000 new vehicles over 30 years – nearly doubling the current UK fleet. The average UK train is 17 years old, with some dating back to the 1970s  - a fact all too familiar to many rail users. By 2030, 2,600 vehicles will be over 35 years old . Currently, 40% of the UK network is electrified, with a target to eliminate diesel-only trains by 2040. They would be replaced with fully electric, bi-mode, and battery alternatives. Electrification offers 60% lower emissions, better reliability, and lower operating costs. 

New trains bring major efficiency gains. Digital signalling (European Train Control System) and regenerative braking (recovers energy and coverts it to electricity) can cut energy use by up to 45%. This reinforces rail’s role as a climate solution.

The rail opportunity for investors 

The investment case for UK rolling stock is compelling and increasingly urgent. With the ageing fleet and demand projected to grow by up to 97% by 2050, the need for fleet renewal is clear. Electrification targets and the diesel phase-out by 2040 further reinforce the opportunity. 

For investors, rolling stock delivers long-term, inflation-linked cashflows through lease structures. It can also support national decarbonisation goals and improved passenger experiences. Aberdeen Investments’ economic infrastructure business has already deployed capital into six fleets across the UK and Germany. Given the strong operational performance, we expect to make more tenders. With over £13 billion in procurement anticipated over the next decade, the sector offers scale, stability, and sustainability, which makes it a standout opportunity in infrastructure.

We look forward to supporting these goals for decades to come, and we are excited about expanding our presence in the sector.

You can read more about our portfolio and our approach to sustainability in our latest sustainability report below. 
Sustainability report document link here.