The Electrified railways are Jambutty's pet hate and bio-fuel his pet alternative, as was discussed earlier in the year,
Use Less Electrical Energy.
I have a personal dislike of electrified railways but only from the point of view that all the overhead cabling looks untidy (but that is nothing to do with efficiency), Somehow 25% energy loss seems an extreme, as has already been mentioned all power supplies and cables suffer losses, but I suspect that the savings by having a few centralised generators would be of greater efficiency both in terms of power output and reduction of emissions than a system where each train is being pulled by an individual engine, perhaps if the 'bio-fuel' was used to power the generator plants, at least that would prevent the whole railway system from smelling like a chip shop?
