European legislation states that rail access charges should be based on the marginal social cost principle and, thus, they may include specific environmental charges to internalize environmental impacts of rail transport. However, it is clearly specified that environmental charges should not result in an overall benefit for infrastructure managers unless such a charging scheme would be also applied to competing modes at comparable level. In this context, some railway administrations in Europe are already implementing an environmental differentiation of rail access charges.

This paper aims at contributing to correctly deal with the difficulties of implementing a practical environmental pricing scheme for railways and to do a critical review of the current European experience. A theoretical analysis framework is provided based on an extensive literature review. The relevant issues to take into account when defining an effective environmental charging scheme for railways are presented and particular emphasis is placed on the drivers of the railway operators’ response.

This framework is then applied to analyze critically the current implemented environmental rail charging systems. The state-of-the-art noise and pollution internalization schemes throughout Europe together with the corresponding abatement technologies are reviewed to assess their effectiveness to abate rail environmental impacts.