KiwiRail is considering replacing all 17 electric trains on the main trunk line between Auckland and Wellington with diesel engines.
The decision would effectively mothball the electrified section of the North Island line from Palmerston North to Te Rapa near Hamilton.
That is one of three options being considered by KiwiRail managers who want to fix an inefficient and ageing service.
The Rail and Maritime Union has written to KiwiRail chief executive Peter Reidy urging him not to axe the electrified service and go all-diesel because of the negative impact on the environment.
Mr Reidy insisted no decision had yet been made.
The company's other two options were to buy new electric trains or upgrade the existing electric trains.
Mr Reidy said something had to be done because the electric trains' poor performance meant delays and undermined customers' confidence.
"The current electric trains are 35 years old. They are performing poorly, we have regular breakdowns. We have 17 locos but only 11 or 12 are actively operating. It's old technology - it's time to have a look at them."
The main trunk line, opened in 1908, was part electrified in the 1980s but the scheme was never completed for financial reasons.
That meant trains used a diesel engine from Auckland to Te Rapa, an electric engine from Te Rapa to Palmerston North and a diesel engine from Palmerston North to Wellington.
The inefficiencies that created were were compounded by the ageing trains.
The Rail and Maritime Union has launched a campaign to secure the electric train service, saying it saves four million litres of fuel and 10,800 tonnes of carbon dioxide emissions each year.
General secretary Wayne Butson accused KiwiRail of hypocrisy in accepting a recent environmental award while considering replacing electric trains with diesel ones.
But Mr Reidy argued even a diesel train service was better for the environment than a trucking service, so making KiwiRail efficient and attractive to customers would be a win for the environment overall.
"The more we can consistently deliver reliable services for our customers, the more opportunity we have to grow.
"That means more opportunity for people to put freight on rail as opposed to road, and trains are three to four times more efficient than trucks."
At this stage the matter is still under review and there are more meetings scheduled to debate this subject next month.
Meanwhile, Mr Reidy stressed that if diesel trains did replace electric ones, the company would still maintain the overhead wires used on the electrified section to protect future options. The wires would be kept live to deter thefts of copper.