On Wednesday, Norfolk Southern Corporation, the railroad operator that serves 22 U.S. states and the District of Columbia, along with every major container port in the Eastern United States, closed a $500 million green bond offering to fund investments aimed at reducing its own carbon emissions and helping customers reduce their supply-chain emissions. The issuance makes Norfolk Southern the first Class I railroad in North America to issue green bonds.
The move comes after Norfolk Southern committed in April to establish a science-based target to lower its carbon emissions in accordance with the Paris Agreement on Climate Change. Roughly 90 percent of Norfolk Southern’s greenhouse gas emissions originate from its locomotive fleet.
“Green bonds will enable us to deliver for our customers and the environment,” said Norfolk Southern Chairman, President and CEO James A. Squires. “In recent years our customers have avoided 15 million metric tons of carbon emissions annually by shipping their goods and materials with Norfolk Southern. Now we are committing to do even more to help customers reduce their carbon footprint, promote cleaner air, and drive long-term value for shareholders.”
Norfolk Southern says it can currently on average, haul a ton of freight for 440 miles on a single gallon of fuel. Rail currently moves 45 percent of all freight ton miles for long-distance shipping in the US and only produces 7 percent of freight carbon emissions. It argues that moving freight by rail lowers overall transportation emissions, relieves highway congestion, and reduces wear on the publicly funded interstate highway system.
Where your money goes
Proceeds from the green bond issuance will be used over the next three years to (among other things) improve the fuel efficiency of Norfolk Southern’s locomotive fleet, invest in intermodal terminals promoting the shift of freight from trucks to trains, investing in cleaner energy for company operations, increasing the use of energy-efficient buildings and technology, and supporting reforestation projects that restore natural landscapes and offset carbon emissions.
“Green bonds challenge us to reduce our environmental impacts and evaluate not only where we have been, but where we want to go,” said Norfolk Southern Chief Sustainability Officer Josh Raglin. “Through innovation and collaboration with our many partners, we aim to be the transportation industry leader delivering the low-carbon economy.”
According to Norfolk Southern, the company’s direct scope 1 emissions intensity for freight operations in 2020 was 16.97 gCO2 per net ton-kilometer (gCO2/t-km), below the 2030 emission threshold for freight activity (21 gCO2/t-km) deemed to be compliant with a decarbonization trajectory by the IEA Mobility Model, the International Energy Agency’s carbon emissions modeling tool for the global transportation industry.
