THE European Commission’s (EC) High-Speed Rail Action Plan published in November 2025 offers an ambitious blueprint for a future interoperable and interconnected trans-continental high-speed network in Europe. Promising improved connections, seamless ticketing and major reductions in journey times, the plan positions high-speed rail as a viable alternative to air by developing a network comparable with only China in size and scope.
As always, the question of how such a vision might be delivered comes down to where the money is going to come from to pay for this new and upgraded infrastructure and the rolling stock that will use it. The plan estimates the baseline cost of completing a network able to offer speeds of 250km/h and above between major cities on the 78,000km comprehensive TEN-T network by 2050 at €546bn. This falls to €345bn to finalise the planned 51,000km core TEN-T network by 2040. Up to 3000 new trains will be required, potentially creating a boom in orders for the European rail supply industry, but raising further questions about how they will be paid for.
These are big numbers. And while it is expected that European Union (EU) member states will bear the majority of the investment burden, gaps will need to be plugged. With EU grant funding only going so far, the EC is keen to attract private finance to share the load wherever possible. With this in mind, the Commission is working to develop a coordinated financing strategy for the network. The High-Speed Rail Deal is expected to be released before the end of this year. It will be based on a strategic dialogue with member states, industry and private finance and will set out joint commitments to mobilise the necessary financial resources.
Ahead of publication, IRJ spoke with several financial institutions to gauge their views of the High-Speed Rail Action Plan and whether financiers have the appetite to support these projects on the scale and at the pace required, and if so, how exactly this support might be provided and the challenges they will face.
Overall, the action plan is considered an overwhelmingly positive development for the sector and was received optimistically by the industry. It forecasts that delivering the complete network will provide a net benefit of €750bn to society. Likewise, it addresses many of the factors that increase the risk for private finance when supporting high-speed rail projects in Europe.
As well as the financing deal, in 2027 the EC is planning to set binding targets to remove cross-border bottlenecks and to identify precisely where speeds of 250km/h and above might be achieved on each transport corridor, addressing concerns about project viability and attractiveness. In addition, last month the EC announced a proposal to enhance cross-border ticketing systems (p6). It is also seeking to develop a second-hand market for rolling stock and wants to accelerate the deployment of ETCS across the network. It is due to issue a revised ERTMS deployment plan while enforcing rollout obligations to finally resolve persisting issues with interoperability.
Concerns over network capacity management are being addressed through an updated Capacity Management Regulation, which was approved by the European Parliament as IRJ went to press. The legislation strengthens the role of the European Network of Infrastructure Managers (Enim) by developing a European framework for capacity management, which will support long-term capacity planning and path allocation, serving as a guide for national infrastructure managers. It will also develop a European framework to coordinate cross-border traffic, disruption and crisis management, again improving interoperability.
Financing deal
For the financing deal, the EC is actively engaging with the European project finance community, including export credit agencies, state-owned investment banks and commercial lenders. This includes the European Investment Bank (EIB). As the lending arm of the EU owned by each of the 27 member states, the EIB is set to play a critical role in financing future high-speed projects. Connecting people and connecting countries is a core principle of the EIB, which has provided a total of around €25bn for infrastructure and a further €22bn for rolling stock in the past 10 years.
As Claus Eberhard, lead economist in the Rail Infrastructure Division at EIB, points out, the bank is uniquely positioned to support rail infrastructure projects in Europe. As a public bank, EIB is able to offer lower interest rates than its commercial counterparts. It is also able to provide maturities of a length that are not otherwise available on the market, such as 30 or 50 years for a major tunnel project, with some even extending to 70 years. This makes EIB ideally placed to support long-lasting infrastructure projects. “This is not always possible for commercial banks,” Eberhard says.
“If we have a counterpart who is building an asset such as a tunnel, with an economic life of about 100 years, we will be able to offer long-term financing, potentially even up to 70 years,” says Matthias Woitok, head of the Project Finance East Division at EIB. “If we have concession-based financing, which is running let’s say for 40 years, we will be able to provide financing for close to that period, subject to availability of cash flow, of course, and reasonable structuring parameters such as cover ratios and debt free tail periods.”
“We need to have a clear vision on the economic justification for these projects.”
Matthias Woitok, head of the Project Finance East Division at EIB
The concept of mobilising private capital for major infrastructure projects in the form of public-private partnerships (PPP) became more popular in the 1990s. It was subsequently deployed most famously on the wave of design, build, finance and maintain public-private partnership (PPP) projects in France, such as the LGV Bretagne-Pays de la Loire high-speed project to connect Le Mans and Rennes, the Nîmes - Montpellier bypass and Sud Europe Atlantique high-speed line between Tours and Bordeaux. Portugal is also using a PPP to develop the Lisbon - Porto high-speed line while the model is also currently being explored for projects in Poland and the Czech Republic.
Of course, as banks, EIB and other prospective financiers are fundamentally committed to making a return on their investment. While high-speed projects are transformative for society overall, and have a strong track record of success, each project is assessed on the basis of its economic rate of return. Woitok says EIB wants to finance projects that make an impact and make sufficient economic sense.
“We need to have a clear vision on the economic justification for these projects,” he says. “We need to see in a plan how these services are operated, what types of journey time savings they will have, their usage rates, and so on.”
Bankability is also tied to the identity of the borrower. A state-backed infrastructure manager is considered a reasonably safe bet. And while size is important, it is not a defining factor, although some countries may struggle to access competitive finance due to their fiscal situation. Others might be constrained to a smaller funding pool by using their local currency.
“If you go for a large-scale PPP project and you want to have international construction companies, international banks and international institutional investors bringing equity, making them euro-denominated will provide a larger funding pool,” Woitok says.
Risk profile
PPPs can be attractive to governments because they can spread the cost of paying for a particular piece of infrastructure across the lifetime of the asset rather than providing it upfront, which can place pressure on annual or short-term budgets. Yet the structure, and where the risk lies, must be carefully considered and various forms of PPP are available, depending on the circumstances of the parties involved.
In the case of the French PPPs, these were developed as concessions that were procured by the state. The private party is bound to construct and maintain the infrastructure in return for renumeration, which is usually based on the availability of the asset. However, later French projects, for example, including Tours - Bordeaux, based payments on actual use of the new line.
“That proved to be more difficult because it is tough to predict traffic,” Woitok says. “It is very different to road where you have a relatively predictable network and can link it to economic growth rates. In rail, you are mostly dependent on one, possibly two operators, and the return is dependent on factors completely out of the control of the party building and maintaining the infrastructure.”
Likewise, HSL-South in the Netherlands was considered a successful PPP after the 125km Amsterdam - Schiphol Airport - Belgian border high-speed line was delivered on time, offering 100% infrastructure availability. Yet the project ran into difficulty due to technical problems with the AnsaldoBreda-built fleet of V250 trains for the short-lived Fyra cross-border service. The trains were eventually returned to the manufacturer, resulting in under-use of HSL-South infrastructure. “The project was ready, but not used because there were no trains,” Eberhard says. “Cooperation between parties, which is essential to manage all of the interfaces, created the main problem here.”
“In project finance the act of giving money is providing discipline.”
Matthias Woitok
Of course some projects will inevitably be politically-driven. Rail Baltica, the project to connect Lithuania, Latvia and Estonia to the European 1435mm-gauge network via Poland is an obvious recent example. However, some projects have commercial appeal and Europe’s case for pursuing PPPs for rail schemes is strengthened by a credible and highly experienced construction industry. Similarly, it has a broad range of financiers ready to finance projects. But they will only succeed in attractive private financial support if the plans are well considered and well thought through. Both Eberhard and Woitok are adamant that thorough upfront planning is critical for success.
“If you over-emphasise your capacity to deliver, or if you set too ambitious targets for delivery, you create expectations in the construction industry, in the financing industry, of things that are not going to happen,” Woitok says, adding that it is no coincidence that successful projects tend to have extremely long lead times, often many years and even decades before they come to fruition. Britain’s HS2 project is a prime example of a major project that went awry due to poor planning, as a recent review has found.
While there is no shortcut for adequate planning and preparation, it is sometimes possible to accelerate schemes for faster delivery. However, Woitok says such projects must be centred on a faultless economic case and a shared willingness to deliver. Poland’s current Port Polska project, which aims to develop a new network of high-speed lines centred on a new international hub airport within a delivery window of five to seven years, is a such a project trying to buck this trend. “If you commit to it, and if you really mobilise private capital, you have the means to accelerate the project,” he says. “But you must have thorough administrative capacity and a firm political commitment to deliver that outlasts a single government.”
The EU action plan places much emphasis on improving cross-border connections. This adds another layer of complexity, requiring shared buy-in on either side of the border. The Øresund Fixed Link, Channel Tunnel, the ongoing Fehmarn Belt and trans-Alpine base tunnel projects are examples of where these issues were overcome. Integrating high-speed infrastructure with the conventional network is also helping to improve the economic justification for projects by increasing their commercial appeal.
Involving the private sector can also bring a level of fiscal discipline to a project. “Money is not only there to buy things,” Woitok says. “In project finance the act of giving money is providing discipline and dividing the roles that every party has.”
“If you look at properly structured PPP, then you have obligations from the contractor, from the public sector, from the financier, from the equity. You have ideally everybody in charge of what they can best manage. If you have the risks of these counterparts properly defined, you lower the probability that a project will spiral out of control.”
Rolling stock
Infrastructure is not the only piece of the puzzle. The expanded network will require new high-speed trains and private financiers are again expected by the EC to support the fleet plans of current and prospective operators.
Liberalisation of long-distance passenger operations in Europe is encouraging more companies to explore the launch of new services, whether they are existing state-owned operators expanding into markets in neighbouring countries such as FS International (p28), or privately-owned new entrants seeking to compete with incumbents. Italo-NTV, FlixTrain and RegioJet are leading examples.
Financing rolling stock is more feasible for commercial banks than infrastructure due to the smaller investment required and shorter terms involved. Juliette van Enckevort, global lead for land transport and head of transport and logistics for the Netherlands at Dutch bank ING, says the bank wants to invest in rail due to its status as a sustainable means of transport.
Nevertheless, procuring the new trains required to offer a high-quality service is still extremely expensive - a new high-speed fleet could cost €1bn and above. And as van Enckevort explains, securing the necessary finance can often prove difficult, especially for new entrants that lack a credible credit rating. The situation is compounded by long lead times for fleet delivery, sometimes three or four years, along with the risks of operating on an open-access basis where the market is uncertain. The lack of interoperable infrastructure in Europe also restricts the use of some fleets to certain territories or lines, encouraging the production of bespoke trains and limiting their potential to be redeployed elsewhere, which for an asset with a 40-year life could be a problem.
“The question then is who can bear all of these risks?” van Enckevort says. “Who are the shareholders who bring the capital to the table, who have a long-term view and the balance sheet to deal with potentially volatile revenues?”
While not impossible for new entrants - as shown by Italo-NTV and French start-up Velvet, which unveiled the first of its new fleet of 12 Alstom-built Avelia high-speed trains last month - the situation is currently stacked in favour of the state-owned incumbents. “Eurostar is a cooperation between national rail operators and that is why they ultimately succeeded,” van Enckevort notes.
Potential solutions to the rolling stock conundrum include wider adoption of the Luxembourg Rail Protocol, which simplifies the financing and leasing of mobile assets, lowering borrowing costs and reducing the risk premium for private investors in new fleets. The EU has approved the protocol and it now needs to be ratified by individual member states, with Spain and Sweden the first to do so. Greater standardisation of infrastructure and assets and improved network interoperability would again help the situation and could increase the role of leasing companies by increasing the flexibility of rolling stock to operate in different territories. In conjunction with the protocol, this could help to reduce the barriers to entering the European passenger market, increasing the pool of operators able to offer services and improving network viability.
There is much riding on the EC’s chosen approach to addressing once and for all the challenges identified in the action plan. If it can get it right, and with the financing community ready to get onboard, the vision for a trans-continental high-speed network in Europe might finally leave the drawing board.
“We need to build on the errors of the past to formulate best practice within member states to standardise procurement, so that people know what they’re engaging with, what type of risk profile they’re actually paying,” Woitok says.
“If you do that, and if you have a credible pipeline, you will also bring unit costs down in terms of construction, and in terms of financing, because you will have a pool of investors who are interested in putting in equity and debt.”
