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Turbulent Transports: The Greening of the Railroads


Buffett says rail is environmentally friendly, but look inside the cars for evidence to the contrary.

Editor's Note: This is one part of a three-part series on the transportation sector. Read more on infrastructure here and on mass transit here.

Warren Buffett's decision to buy the 131-year-old Burlington Northern Santa Fe (BNI) railroad is the biggest bet of his career, one which he called an all-in wager on the economic future of the United States. Earlier this week, federal antitrust regulators gave Berkshire Hathaway (BRK.A) the green light to purchase the 77% of the company it didn't own for $26.4 billion.

In announcing his decision, Buffett contended that railroads are the transportation for the future because they're generally more efficient and greener than trucks.

"It is the most efficient way of moving goods in the country," Buffett said of railroads in an interview with Charlie Rose. "It is the most environmentally friendly way of moving goods, and both those things are going to be very important." Railroads, he said, are "far, far more attractive in terms of global warming than using trucks, for example."

Buffett's environmental appeal makes sense. That said, for all their efficiency, railroads haul huge quantities of coal -- one of the dirtiest products out there. For example, about 10% of the electricity produced in the US comes from coal hauled by Burlington Northern, the railroad says.

"This is a $34 billion dollar bet that coal will remain the centerpiece of American energy policy in the future," Frank O'Donnell, the president of environmental group Clean Air Watch, wrote in a note to reporters. "Buffett clearly believes that coal use will remain strong."

So which is it: green or not? The answer, not surprisingly, lies somewhere in the middle.

The railroad industry has been making an environmental pitch to capture more freight volume from trucks. As Congress considers how to modernize the nation's infrastructure, the industry is jockeying for center stage. According to Burlington Northern's website, railways are four times more fuel efficient than trucks. The company says, "American railroads move 40 percent of our nation's freight, but account for just 2.2% of all transportation-related greenhouse gas emissions."
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