The push to make modes of transportation more environmentally-sustainable has been in full force for several years now. From electric cars to ships that use low-sulfur fuels to vehicles that automatically shut off when idling, the number of “green” initiatives has proliferated right along with the number of consumers who are demanding them.
The railcar industry is no exception. In August, six U.S. representatives proposed a new tax credit for freight railcar owners that supports the manufacture and refurbishment of safer, greener railcar equipment in the U.S.
Known as the “Freight Rail Assistance and Investment to Launch Coronavirus-era Activity and Recovery (RAILCAR) Act,” H.R. 8082 offers freight railcar owners a time-limited 50% tax credit for purchasing new freight railcars or refurbishing existing freight railcars that result in improving capacity or fuel by at least 8%, Railway Age reports.
The act also “provides separate tax credits for scrapping railcars based on their depreciated value and for capital expenditures on equipment or technology enhancements that improve environmental standards or the safety, quality, or efficiency of railcar manufacturing and repair operations,” the publication points out.
The bill provides a separate tax credit for the scrapping of a railcar based on the depreciated value of that particular asset, and a 50% tax credit for capital expenditures on equipment or technology enhancements in railcar-related manufacturing or repair shops, Railway Age states. To be eligible for the credit, railcars being replaced must have been in service during the 48 months prior to enactment of the bill and must be permanently taken out of service.
According to Progressive Railroading, the credit encourages freight railcar owners to modernize their fleet to better meet precision scheduled railroading standards, accelerate the industry's production of new tank cars to meet improved safety standards, and to increase the efficiency of the fleet by use of more energy-efficient rail cars.
Prior to the COVID-19 pandemic, the freight railcar manufacturing industry directly supported 65,000 U.S. jobs, with average salaries exceeding the national average by 40 percent. The Railway Supply Institute, which worked with the bill’s sponsors and railcar builders and owners to write the legislation, reminded Congress that passing the bill quickly would help overcome some of the impacts of the pandemic and subsequent economic downturn.
“The Freight RAILCAR Act will help incentivize private investment in the freight railcar manufacturing industry to preserve thousands of American jobs, reduce our carbon footprint, and ensure the integrity of our critical rail supply chains,” RSI’s Nicole Brewin said in a press release.
“Railway suppliers are facing increasingly difficult economic circumstances as a result of the COVID-19 pandemic and many have been forced to significantly reduce their manufacturing workforces,” Brewin added. “We thank the [representatives] for introducing this bill to help restore and maintain the tens of thousands of jobs that depend on this industry and urge Congress to advance this legislation quickly to help railway suppliers cope with the economic fallout of this pandemic.”
By its very nature, rail is one of the most sustainable transportation options available in the U.S. According to the Association of American Railroads, rail is environmentally-friendly due to these factors:
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