International policy developments for light-duty efficiency 2014–2015
Fuel efficiency and GHG standards have a strong record of reducing fuel use and GHG emissions of light-duty vehicles (LDVs), which include passenger cars, sport utility vehicles, vans, and light trucks. Such standards were first implemented in the U.S. in the 1970s to reduce vulnerability to the price volatility of oil imports. In recent years, most of the largest markets have adopted or implemented mandatory standards that require vehicle manufacturers to meet targets for new vehicle fleets based on CO2, GHG emissions, fuel consumption, or fuel economy. In this publication, we use the term "efficiency standards" to refer to this collection of policies.
In 2014, 83% of new LDVs worldwide were sold in markets that have adopted LDV efficiency standards. As of January 2016, ten major markets have adopted such standards (Table 1), the latest of which require reductions in CO2 emission rates of new vehicles (in grams per vehicle-km) between 9% and 35% as measured on laboratory tests. In light of a growing gap between laboratory and real-world fuel consumption that has been documented in Europe, strong compliance programs are needed to ensure that regulatory requirements translate to real-world emissions reductions and fuel savings to consumers. While the EU has adopted new test cycle requirements that will go into effect in 2017, these are expected to only partially close the gap. Measures that could further close the gap include independent re-testing of in-use vehicles and enhanced authority of regulatory agencies to issue fines or require manufacturer recalls. Such requirements have been included in US programs but have yet to be adopted across all countries with vehicle efficiency standards.
|Region||Share of world LDV sales (2014)||Baseline Model Year||Implementation period||Reduction in average CO2 rate (g/km)|
|EU + EFTA||20%||2015||2020-2021||27%|
Seven major LDV efficiency standards were proposed, adopted, or first implemented between January 2014 and January 2016 (Table 2).
|Feb 2014||The EU adopted 95 gCO2/km standards for passenger cars with full implementation in 2021. |
|Mar 2014||The EU adopted 147 gCO2/km standards for light commercial vehicles with full implementation in 2020. |
|Apr 2014||India adopted the country's first passenger car efficiency standards, which take effect in 2018 and set a target of 113 gCO2/km by 2022. |
|Sep 2014||Canada adopted GHG standards for new LDVs model years 2017-2025 in alignment with US standards, with separate limits for cars and light trucks. |
|Nov 2014||The Kingdom of Saudi Arabia (KSA) proposed LDV efficiency standards that will start January 1, 2016 and be fully phased in by the end of 2020. The standards have since been adopted.|
|Dec 2014||South Korea adopted 97 gCO2/km standards for passenger cars and its first 166 gCO2/km standards for light commercial vehicles with full implementation in 2020. |
|May 2015||China released rules for calculating corporate average fuel consumption of passenger cars to support enforcement of Phase 3 efficiency standards, which target a fleet average fuel consumption of 6.9L/100km in 2015. |
|May 2015||China adopted Phase 4 fuel consumption standards for new passenger cars, setting a target of 5L/100km by 2020. |
|Sep 2015||China proposed Phase 3 fuel consumption standards for light commercial vehicles with full implementation in 2020. The standards have since been adopted. |
The ICCT has compared corporate average vehicle efficiency requirements for the new fleet across countries that have adopted efficiency standards or comparable fiscal instruments (Figure 1 and Figure 2). To date, the U.S. and Canada have adopted the longest regulatory timeline for LDV efficiency standards out to 2025. For the EU, China, India, Japan, and South Korea, the stringency of new standards for the 2021-2025 period could determine the global leader in new LDV efficiency. In Brazil and Mexico, the next several years are a critical period to determine whether these will keep pace with other top vehicle markets.
Figure 1. Global comparison of passenger car efficiency standards (Source)
Figure 2. Global comparison of light truck efficiency standards (Source). While North American standards include separate limits for passenger cars and light trucks within the same regulation, the EU addresses passenger cars and light commercial vehicles in separate regulations.
Impact assessment of light-duty vehicle efficiency policies
The Global Fuel Economy Initiative (GFEI) is a partnership of the IEA, UNEP, ITF, ICCT, ITS-Davis and the FIA Foundation that seeks to double the fuel economy of new LDVs worldwide by 2030, and halve the average CO2 rate of in-use LDVs by 2050. Figure 3 compares global progress under LDV efficiency standards adopted to date with the 2030 GFEI target, compared to a 2005 baseline. Among regions that have adopted LDV efficiency standards, the sales-weighted average CO2 rate of new LDVs is forecast to be 34% lower in 2030 than in 2005 (without additional standards).
Figure 3. Global progress toward the 2030 GFEI target
As shown in Table 3, reaching the global GFEI target would require continuous improvements in regions with existing policies and expansion of these policies to cover the remaining 21% of worldwide new LDV sales (forecast in 2030).
|Region||Projected share of world LDV sales (2030)||Reduction in new LDV CO2 rates with adopted standards (2005–2030)|
|Regions with efficiency standards||80%||38%|
|Regions without efficiency standards||20%||4%|
|World sales-weighted average||100%||27%|
Figure 4 compares projected LDV CO2 emissions under three scenarios:
- Business as usual: Considers improvements in LDV efficiency up until 2015, but no further improvements after 2015. This scenario serves as a baseline for estimating the impacts of standards implemented after 2015 (e.g. 2020 targets).
- Adopted: Reflects improvements in LDV efficiency that are required under all adopted policies, but no additional improvements beyond the requirements of these policies (summarized in Table 1).
- Efficiency potential: Considers the impacts on LDV energy use and CO2 emissions if all vehicle markets adopt standards that reduce average CO2 rates of new vehicles by 3-5% per year from 2020 to 2030, and 2-4% per year from 2030 to 2050 according to the efficiency potential estimated by the National Research Council. Achieving the efficiency potential estimated by the National Research Council could reduce the global average new LDV CO2 rate by 50% in 2030 compared to 2005 as targeted by GFEI.
Compared to a business as usual scenario without improvements in LDV efficiency after 2015, standards adopted to date will reduce annual lifecycle emissions by 1.4 billion metric tons carbon dioxide (GtCO2), equivalent to 8 million barrels of oil per day (mbd) in 2050. Achieving the technology potential for LDVs could further reduce emissions by 3.4 GtCO2 in 2050, equivalent to 18 mbd, compared to a scenario with adopted policies.
Figure 4. Impact of LDV efficiency standards on global lifecycle CO2 emissions. (Estimated using ICCT's Global Transportation Roadmap model).
Cost-effectiveness of light-duty efficiency standards
In addition to climate and energy security benefits to society, vehicle efficiency standards result in fuel savings to consumers and vehicle operators that pay back the incremental cost of technologies that improve vehicle efficiency. The length of time it takes for fuel savings to pay off the initial incremental cost is commonly referred to as the payback period. Regulatory agencies typically publish analyses of regulatory cost-effectiveness in support of their proposed rules, and these analyses are often supplemented by studies from independent research organizations.
Table 4 summarizes the findings of cost-effectiveness analyses of light-duty efficiency standards. As shown, the incremental cost of technology has ranged from $435 to $2,233 per vehicle, with payback periods of 1.5 to 5 years. The length of payback is determined by various region-specific factors including technology cost, annual vehicle mileage, fuel prices, and the discount rate used to put future costs and benefits into present value terms.
|Rule||Per-Vehicle Cost||Payback Period||Source|
|U.S. LDV 2017–2025||$1,957||3.5 years||EPA (2012)|
|U.S. LDV 2012–2016||$1,086||3 years||EPA (2010)|
|California Advanced Clean Cars Program 2017–2025||$1,486–$2,040||3 years||ARB (2011)|
|Canada LDV 2017–2025||$2,233||2–5 years||Canada Department of the Environment (2012)|
|Canada LDV 2011–2016||$1,165||1.5 years||Canada Department of the Environment (2010)|
|European 95g CO2/km Standard 2020||$1,160||4–5 years||International Transport Forum (2008)|
|India LDV 2020||$435–$652||2–3 years||Bansal & Bandivadekar (2013)|