OMAHA, Neb. – Union Pacific has issued $600 million in green bonds to support investments that will reduce the railroad’s carbon footprint, including battery electric locomotives.
The bond deal was finalized on Sept. 9, UP said on Monday.
Proceeds will be directed to the purchase of battery electric locomotives, locomotive modernizations, expansion of intermodal terminals, new and extended passing sidings, and the development of onsite and offsite solar and wind farms for the generation and distribution of renewable energy.
UP already has announced the purchase of 20 battery electric locomotives from Wabtec and Progress Rail that will be used to test the technology in yard service. The railroad also is in the midst of a 600-unit locomotive modernization program with Wabtec that will reduce emissions from the upgraded units.
UP says the intermodal terminal projects will help shift truck traffic to rail, which reduces overall carbon emissions by up to 75%. The longer sidings allow UP to increase train length and reduce dwell time.
The railroad said the bond offering underscores its commitment to reduce greenhouse gas emissions from locomotive operations 26% by 2030 compared to 2018 and net zero by 2050.
“When it comes to finding ways to decarbonize our footprint, every idea is on the table,” CEO Lance Fritz said in a statement. “We are acting now on our most promising avenues to make progress toward reducing greenhouse gas emissions and investing in technology to support future initiatives.”
Infrastructure and rolling stock for routes dedicated to the transportation of fossil fuels do not qualify for proceeds from the green bonds, UP said.
A company I was working for issued revenue bonds instead of selling more authorized stock. 18 months later stock was just 10% of value before issuing bonds. Bond payments broke the company with it finally being liquidated.
This was just a short step with UP buying back stock. If it continus buying stock the bond payments will eventually block stock dividens.
Time for UP stockholders to bail
I get the idea of putting a green spin on some of these things but I believe Railroads like the Ports are starting to realize if you electricify the terminals like their doing dockside it becomes that much easier and simpler to automate. Automation will let them doing a lot more with the same number of people or maybe less. The container with standardization built in is ready made for this and I can see how a inland terminal in some respects becomes an oversize outdoor Amazon warehouse.
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Yes, if it your electricity comes from a renewable you can make a good point of being green but everything stated above is also a business decision to facilitate more automation in the long run. Don’t see anything wrong with it so why not own it as well.
Good financial move by UP, though beyond zero-emission/lower emissions locomotives and yard hostler trucks the “green” justification is getting a bit harder to accept.
The terminal improvements might help move trucks to rail, they might also help accommodate Schneider moving over from BNSF, which is not a conversion. Siding extensions are similar, they do, theoretically reduce dwell, but how much is that reducing overall?
Also, nothing on a railroad is “dedicated” to fossil fuel movement. Only coal cars and some facilities, and a few routes, neither of which UP would need to invest in.
They say net zero by 2050? I guess they will be net zero by 12:01 AM Friday Sept. 16 2022 when the strike starts. No trains moving no greenhouse gasses.
Hahaha! That was good!
I guess this wasn’t an idea from shareholders, they probably would have taken a onetime dividen pass to cover this expense and show they really care about the environment.
No, we would NOT have taken a pass on the dividend for any reason. Nevertheless, the question is the “green” label on the bonds. I suspect there is some sort of tax break or some other financial advantage to this.