CPKC and CSX announce planned collaboration to develop additional hydrogen locomotives

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Jun 22, 2023, 14:00 ET

CALGARY, AB and JACKSONVILLE, Fla., June 22, 2023 /PRNewswire/ - Canadian Pacific Kansas City (TSX: CP) (NYSE: CP) (CPKC) and CSX Corporation (NASDAQ: CSX) (CSX) today announced their intent to enter into a joint venture for the building and deployment of hydrogen locomotive conversion kits for diesel electric locomotives.

As an initial step in the collaboration, CSX plans to convert one of its diesel locomotives using a hydrogen conversion kit developed by CPKC. The conversion work will be done at CSX's Huntington, West Virginia locomotive shop.

"This innovative collaboration expands our hydrogen locomotive program beyond a single railroad and represents an exciting next step in proving the long-term viability of hydrogen as a solution to emissions reduction for our industry," said Keith Creel, CPKC president and chief executive officer. "Our hydrogen locomotive went from concept to reality in 24 months with the first zero emissions hydrogen locomotive having already pulled freight in revenue service. We look forward to this collaboration as we work to create a lower carbon future."

"CSX looks forward to working as a partner with CPKC in the development of the hydrogen locomotive program as it demonstrates our commitment to implementing alternative fuel solutions that could further enhance our emissions performance and offer our customers an even more environmentally-friendly transportation solution," said Joe Hinrichs, CSX president and chief executive officer. "This exciting initiative will greatly benefit from the expertise of CSX's advanced, large-scale facilities, where the locomotives will be built."

Nearly the entire freight locomotive fleet of all railway operators in North America consists of diesel-powered units, representing the industry's most significant source of greenhouse gas emissions. Rail has an important role to play in a lower carbon economy and the industry needs a long-term, effective alternative fuel solution.

In December 2020, Canadian Pacific (CP) announced plans to develop North America's first line-haul hydrogen-powered locomotive by retrofitting a diesel freight locomotive with hydrogen fuel cells and battery technology to drive the locomotive's electric traction motors. The prototype, designed and built by in-house CP engineers, made its first movement under its own power in late 2021. By the end of 2022, the locomotive had made its first revenue moves and now has accumulated more than 1,000 miles of testing in revenue service.

CPKC has deployed a second hydrogen locomotive for testing in terminal operations, a program expansion supported by funding awarded by Emissions Reduction Alberta and the Government of Canada Low Carbon Economy Fund. The second hydrogen locomotive is expected to enter service later in 2023.

Forward looking information

This news release includes certain forward-looking statements and forward looking information (collectively, "FLI") within the meaning of applicable securities laws in both the U.S. and Canada. Any statements about the parties' expectations, beliefs, plans, goals, targets, predictions, forecasts, objectives, assumptions, information and statements about possible future events, conditions and results of operations or performance are not historical facts and may be forward-looking. FLI in this news release includes, but is not limited to, plans or objectives of management for future operations; information regarding sustainability-related actions the parties plan to take in the future, including the parties' commitments and targets relating to GHG emissions reduction; plans and expectations regarding CPKC's integration of KCS; and the parties' ability to work with governments and third parties in our efforts to mitigate the impacts of climate change; and assumptions underlying or relating to any of the foregoing. FLI is often, but not always, made through the use of words or phrases such as "anticipates", "aims", "believes", "can", "could", "may", "predicts", "potential", "should", "will", "estimates", "plans", "projects", "continuing", "ongoing", "expects", "intends", "outlook", "guidance" and similar words or phrases suggesting future outcomes or statements regarding an outlook.

This news release contains forward-looking information relating, but not limited, to, the planned collaboration between CPKC and CSX to develop additional hydrogen locomotives, the anticipated impacts of the collaboration on levels of carbon emissions, the anticipated date the second hydrogen locomotive is expected to enter into service, and other related matters associated with providing an effective solution to diesel locomotives.

FLI is based on current assumptions about the parties' businesses and their strategies as well as economic, political, regulatory, market and environmental conditions affecting them. Although the parties believe the assumptions reflected in the forward-looking information presented in this report are reasonable as of the date hereof, there can be no assurance that they may prove to be correct. Readers should not put undue reliance on forward-looking information, as it is not a guarantee of future performance. Forward-looking information involves many inherent risks and uncertainties that could cause actual results to differ materially from the forward-looking information, including but not limited to the factors that are detailed from time to time in reports we file with the securities regulators in Canada and with the U.S. Securities and Exchange Commission (SEC) in the United States. Reference should be made to "Item 1A - Risk Factors" and "Item 7 - Management's Discussion and Analysis of Financial Condition and Results of Operations - Forward-Looking Statements" in CPKC's annual and interim reports on Form 10-K and 10-Q.

In addition, the parties' environmental, social, governance and sustainability priorities, policies, practices, programs, goals and objectives (including commitments and targets relating to GHG emissions reduction) remain under development as we continue to refine our analysis of and response to potential future climate and other risks and opportunities, and as the science, data and methodology underlying our analysis and strategy continue to evolve over time.

Further, as CPKC continues to integrate the operations of KCS into CPKC, CPKC is conducting additional data-gathering and intend to further assess the climate and other environmental, social, governance and sustainability strategies and initiatives for the combined company, and may make changes to our existing strategies and initiatives as a result.

For these reasons, in future disclosures, CPKC may include information that differs from those contained in this report. Unless indicated otherwise or the context otherwise requires, forward-looking information in this report speaks only as of the date hereof. Except as required by law, the parties undertake no obligation to update publicly or otherwise revise any forward-looking information, or the foregoing assumptions and risks affecting such forward-looking information, whether as a result of new information, future events or otherwise.

About CPKC

With its global headquarters in Calgary, Alta., Canada, CPKC is the first and only single-line transnational railway linking Canada, the United States and México, with unrivaled access to major ports from Vancouver to Atlantic Canada to the Gulf of México to Lázaro Cárdenas, México. Stretching approximately 20,000 route miles and employing 20,000 railroaders, CPKC provides North American customers unparalleled rail service and network reach to key markets across the continent. CPKC is growing with its customers, offering a suite of freight transportation services, logistics solutions and supply chain expertise. Visit cpkcr.com to learn more about the rail advantages of CPKC. CP-IR

About CSX

CSX, based in Jacksonville, Florida, is a premier transportation company. It provides rail, intermodal and rail-to-truck transload services and solutions to customers across a broad array of markets, including energy, industrial, construction, agricultural and consumer products. For nearly 200 years, CSX has played a critical role in the nation's economic expansion and industrial development. Its network connects every major metropolitan area in the eastern United States, where nearly two-thirds of the nation's population resides. It also links more than 230 short-line railroads and more than 70 ocean, river and lake ports with major population centers and farming towns alike. More information about CSX Corp. and its subsidiaries is available at www.csx.com.

SOURCE CPKC