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The Canadian government recently implemented a plan to reduce the federal excise tax on diesel fuel from 4 cents to 2 cents over four years. The U.S abolished a comparable excise tax in January 2007.

The Canadian rail industry long has supported efforts to eliminate the federal excise tax on locomotive fuel to reduce costs for shippers and travelers, and contribute to Canada's environmental goals, said Railway Association of Canada (RAC) President and Chief Executive Officer Cliff Mackay in a prepared statement.

"This initiative will help our manufacturers and exporters compete domestically and internationally," he said.

Canada's railroads move 75 percent of the nation's freight and transport 65 million commuters and inter-city passengers annually, but generate only 3 percent of the country's greenhouse gas emissions, according to the RAC.