The European Commission has approved Germany’s plans to provide €500 million (£445m) of public funding to promote energy efficient rail transport.

Under the scheme, companies providing electrically powered rail transport services could be compensated for up to 50% of expenses incurred from implementing greener technologies, such as energy-saving hybrid locomotives.

The firms must, however, demonstrate a year-on-year improvement of 1.75% in their energy efficiency – and from 2020, it should increase by at least 2% to be eligible for support.

The scheme, which will run from 2018 to 2022, is expected to promote the shift of freight traffic from road to rail and contribute to a reduction in carbon emissions.

The Commission said: “The Commission found that the scheme is beneficial for the environment and for mobility because it supports and promotes rail transport, which is less polluting than road transport. The Commission also found that the measure is proportionate and necessary to achieve the objective pursued, namely to support the modal shift from road to rail.”