## Main

Scientific consensus asserts that global greenhouse gas (GHG) emissions must be reduced by 45% from 2010 levels by 2030 to limit global warming to 1.5 °C and minimize climate catastrophe1. The US freight rail sector provides a unique opportunity for aggressive near-term climate action. It transports more goods than any other rail system in the world2 and depends on diesel fuel, which accounts for over 90% of the rail sector’s total energy consumption3. Currently transporting 40% of national intercity freight4, its capacity is projected to double by 20505. Without substantial changes to its propulsion system, the US freight rail system will be responsible for half the global diesel used in the freight rail sector by the same year2. These diesel locomotives emit 35 million tonnes of CO2 each year and produce air pollution that causes about 1,000 premature deaths annually, accounting for approximately US$6.5 billion in health damage costs per year6,7. Despite being more fuel efficient than trucks, these locomotives produce close to twice the air pollution damages compared with heavy-duty trucks per unit of fuel consumed owing to less stringent pollution controls on locomotives6,8. Since 2015, new and remanufactured locomotives have been required to install a catalytic converter, reducing nitrogen oxides (NOx) and fine particulate matter (PM2.5) emissions by 80–90% by 20409. Notably, these measures do not impact GHG emissions. Efforts to identify zero-emissions pathways for freight rail are underway, with national sector-wide emissions-reductions targets and more stringent Environmental Protection Agency (EPA) emissions-reductions requirements for the US freight rail sector10. A few viable pathways have emerged for achieving zero emissions: rail network electrification via catenary, hydrogen fuel cells and battery-powered locomotives. The catenary approach involves electrifying part or all of the rail network via overhead lines coupled with grid-scale storage of renewable energy and it has been more thoroughly investigated11,12. Hydrogen fuel cells have also received increased attention13,14,15, although their zero-emissions potential depends on the source of hydrogen and the process used to extract it16. Nearly all hydrogen is currently produced with fossil fuels17. We consider the battery-electric pathway on the basis of leveraging recent technological advances to add battery cars to existing diesel-electric locomotives. This approach allows rail operators to exploit existing surplus renewable energy sources at low prices. Three recent developments support a US transition to battery-electric rail: plummeting battery prices, increasing battery energy densities and access to cheap renewable electricity. Between 2010 and 2020, battery energy densities tripled and battery pack prices declined 87% (ref. 18). Average industry prices are expected to reach US$100 kWh–1 by 2023 and US$58 kWh–1 by 2030, with some automakers already achieving lithium-ion battery pack prices of US$100 kWh–1 (ref. 19). At the same time, electricity from renewable sources costs about half as much as electricity from fossil fuels20. A few studies have considered battery-electric rail propulsion, but their price estimates are outdated owing to the rapid innovation in battery technology and none consider the effects of charging-infrastructure capacity use on infrastructure costs2,21. Prior studies have also relied on average service-level electricity tariffs, which overestimate charging costs because they do not account for potential to charge batteries when surplus renewable electricity is available or consider economies of scale of transmission- or distribution-level services on routes with high travel volumes.

### Sector-wide net present value

We investigate the NPV over 20 years to the freight rail sector of converting diesel-electric locomotives to battery-electric, comparing the capital and operating costs along with costs of damages from CO2 and criteria air pollutants. Whereas the TCO compares each propulsion technology separately, the NPV compares the sector-wide savings of battery-electric relative to diesel. The NPV of the baseline battery-electric scenario leads to a US$15 billion cost without environmental considerations, US$44 billion in savings when accounting for criteria pollution abatement and US$94 billion in savings with CO2 emissions reductions. The main determinants of the economic returns are the station use rates and the price of diesel fuel. Our analysis shows that battery-electric trains are cost-effective today if diesel-electric trains internalize the costs of environmental damages, even at battery prices of US$250 kWh–1 and low station use rates of 25%.

We analyse the sensitivity of our results from the baseline battery-electric scenario to changes in battery price, charging station capacity use, diesel price, battery lifetime and the inclusion of environmental damages. Figure 4 depicts the range of NPV per locomotive over 20 years for each input category. The largest uncertainty in NPV is driven by charging station use rates and the price of diesel.

## Comparison with alternative zero-emissions technologies

Electrification via catenary is widespread in Europe and Asia. However, the context is not directly transferable because US freight trains tend to pull ten times more payload than European freight trains, dramatically increasing the average electricity infrastructure requirements32. Historically, electrification has been estimated to be about twice as expensive in the United States compared with Europe but these costs are highly uncertain owing to the limited number of observations42. Furthermore, the frequent use of double-stack containers in the United States makes catenary requirements problematic; infrastructure would need to be 7 m higher than the tracks to accommodate such trains32. Recent US cost estimates for catenary construction range from US$5.1 million km–1 (ref. 43) to US$31 million km–1 (ref. 21), excluding the cost of the locomotives. However, these estimates are only available for passenger rail. International estimates are notably lower, with the Norwegian government paying US$1.76 million km–1, for example, for freight rail electrification13. One advantage of battery-electric diesel locomotives is that batteries could simply be attached to existing locomotives with an extra tender car, rather than purchasing new locomotives or upgrading tracks. However, the cost of charging infrastructure makes up a substantial portion of initial capital expenditure. The most recent estimates find that hydrogen fuel cell locomotives are nearly half the price of battery-electric locomotives in the United States today but would cost the same by 2050, using more conservative assumptions for the battery tender cars (US$320 kWh–1 battery prices, 1,500-cycle battery lifespan and 5.1 MWh maximum capacity per tender car)13.

## Discussion

Our analysis provides initial evidence that—given near-future battery prices and access to wholesale electricity tariffs—retrofitting diesel-electric locomotives with battery-electric technology could save the US freight rail sector billions of dollars while yielding environmental, health and grid-resilience benefits. The average emissions intensity of the US power mix is 383 kg CO2 MWh–1 (ref. 44), which is projected to decrease to 90% by 203545. Because battery cars can charge predominantly when renewable electricity is available, they can exploit low-cost, zero-emission energy. The ability of tariff policies, such as real-time pricing, to enable use of low-cost renewable electricity for battery-electric trains must be evaluated further. To achieve diesel parity in the short run, such low-cost tariffs are necessary. Alternatively, a commensurate air pollution damage charge or strict air pollution standards that minimize these damages could enable a transition toward battery-electric trains. Such policy options must be evaluated in more detail.