Fuel Economy State of the World 2014: The World is Shifting into Gear on Fuel Economy

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2 Fuel Economy State of the World 2014: The World is Shifting into Gear on Fuel Economy BAQ Integrated Conference of BAQ 2014 and Intergovernmental 8th Regional EST Forum in Asia Session Topic: Doubling Fuel Efficiency of Vehicles in Asia 19 November 2014 Dr. Lewis Fulton, NextSTEPS Program, UC Davis H 2

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4 Typical national objectives related to transportation/fuels policies 4 Reduce oil dependence (diversify fuels) Improve balance of payments Reduce pollutant emissions Reduce greenhouse gases Promote domestic economies/jobs 4

5 IEA WEO 2012: heading toward 2 billion cars OECD is fairly saturated, but rest of the world is not.: 5

6 Deep Transport CO 2 Reductions in ETP Degree Scenario (2DS) Fuel economy improvement plays largest role, particularly through 2030 OECD/IEA 2012

7 What is fuel economy? Vehicles use energy, and fuel economy measures energy per unit of vehicle travel. It is the RATE of energy use. Litres per 100km (Europe) Km per litre (Japan) Miles per gallon (United States) Fuel economy, fuel efficiency, fuel intensity are all fairly interchangeable terms. But fuel economy always refers to fuel use relative to distance travelled. 7

8 What is fuel economy? (2) Fuel economy improvement can be achieved through Technical changes to vehicles Changing the types of vehicles bought Improving vehicle maintenance Changing the way vehicles are driven (ecodriving) Reducing traffic congestion Fuel economy improvement to vehicles should be part of a broader strategy: Traffic management City and regional planning Promotion of public transit Etc. 8

9 GFEI Targets 9

10 Meeting GFEI targets can stabilize global light-vehicle CO 2 emissions, despite more than a doubling of vehicle fleet.

11 Potential Fuel Economy Improvements to 2030 From the U.S. NRC 2013 report: Light-weighting of up to 25% in 2030, 50% in 2050 relative to 2010 High efficiency accessories (e.g. air conditioning, lighting, tires) High efficiency engines (including but not limited to hybridization) E.g. 25% improvement from turbocharged, downsized direct injection gasoline engines Overall Impacts: By 2030, potential for 50% reduction in fuel consumption/co2 per km at $ per vehicle (through hybridization) 66% reduction by 2050 at somewhat higher cost 11

12 LDV efficiency improvements still have tremendous potential CO2 g/km Litres / 100km Gals / 100 mi ICE potential, through hybridization and lightweighting (NRC, 2013)

13 Fuel Economy Improvements are Costeffective Fuel savings more than pays for fuel economy improvements in light-duty vehicles $7,000 Vehicle cost and value of fuel savings $6,000 $5,000 $4,000 $3,000 $2,000 $1,000 $0 Diesel Gasoline Fuel savings 0% 10% 20% 30% 40% 50% 60% Percent improvement in fuel economy Source: IEA Fuel Economy Roadmap, July 2012 OECD/IEA 2012

14 Improving efficiency can save $billions Countries could dramatically cut their fuel import bills in the future Source: IEA World Energy Outlook

15 Global Benefits to 2050 from Hitting GFEI Targets (Compared to a frozen baseline; based on IEA ETP 2014 Projections) In Cumulative Fuel savings (trillion Litres) CO 2 reduction (gigatonnes) Cost savings (USD trillions) $ 1.2 $ 27 15

16 Fuel economy improving, but not fast enough 16

17 FE trends & market size Sales France Italy Japan India Turkey United Kingdom Germany Indonesia Thailand South Africa Chile Argentina Malaysia Egypt Ukraine Brazil South Korea Russia Mexico China Canada USA Australia World EU 27 OECD Non-OECD Lge per 100km Significant fuel economy improvement if policies are in place Size shift vs. technology evolution moderates Non-OECD improvement Growth of markets with worse fuel economy affects global trend OECD/IEA 2012

18 Passenger Car CO 2 Standards Globally Grams of CO 2 per kilometer normalized to NEDC test cycle Solid lines: historical performance Dashed lines: enacted targets Dotted lines: proposed targets or targets under study S. Korea 2015: Mexico 2016: 153 Brazil 2017 [3] : 146 China 2020 [1] : 117 India 2021: 113 Japan 2020: 105 EU 2021: US US 2025 [2] : 103 Canada 2025:103 [1] China's target reflects gasoline vehicles only. The target may be higher after new energy vehicles are considered. [2] US standards GHG standards set by EPA, which is slightly different from fuel economy stadards due to low-gwp refrigerant credits. [3] Gasoline in Brazil contains 22% of ethanol (E22), all data in the chart have been converted to gasoline (E00) equivalent [4] Supporting data can be found at: Canada Mexico EU Japan China S. Korea India Brazil

19 Progress towards 2030 GFEI target (We re about half way there; next several years are critical)

20 Fuel economy policies 4 keys Fuel economy labeling Based on tested fuel economy Need to make available to consumers before purchase (internet, car window stickers) Fuel pricing Taxation system should at least internalize externalities CO2 tax will help differentiate fuels as well as encourage fuel economy 20

21 Fuel economy policies 4 keys Fuel Economy Standards Typically corporate average standards Typically either vehicle mass or size based Could be applied to 2 nd hand vehicles Vehicle purchase taxes Sales tax, registration tax, import duties Can be differentiated by fuel economy or CO2 emissions Germany also differentiates by pollutant emissions levels 21

22 United States Fuel Economy Standards Mid/Full Size sedans in the US market have substantially improved their fuel economy. Competition is intense. 22

23 Electric vehicles v. gasoline/diesel, with declining power plant CO2 emissions Vehicle CO2 emissions g/km BEV, more efficient BEV, modest efficiency Power plant CO2 emissions, g/kwh Efficient ICE LDV, 2014 Best HEV, 2020? Best HEV, 2050? BEV modest (0.25 kwh/km) BEV efficient (0.15 kwh/km) Battery electric vehicles will probably be needed to get below 50 g/km, but we will also need deeply decarbonized electricity generation (Based on NRC, 2013 assumptions for fuel economy) 23

24 Some Conclusions Fuel economy improvement is very cost effective; using social discount rates the GFEI targets are cost effective Strong fuel economy improvements will save enormous amounts of energy, CO 2 and fuel costs over the next 35 years Fuel economy could get us half way to a low carbon LDV system, but we will likely need PEVs and other solutions to get the rest of the way, especially after Enacting and maintaining strong policies around the world will be the key 24

25 Thank You! Lew Fulton

26 The next 2-decades will likely be ICE-driven, even with rapid Plug-in Vehicle (PEV) growth Note: this aligns with the IEA ETP DS Scenario except with only 5 million PEV sales by 2020 instead of 20 million. 26

27 European Standards CO 2 Emissions of Selected Vehicle Models by Technology (2013) 27 27

28 Types of Air Pollutants Air pollutants affecting human health NOx Non-methane hydrocarbons particulates carbon monoxide Toxic emissions (e.g. benzene) Heavy metals Methane Black carbon N 2 0 Air pollutants affecting the climate CO 2 Fuel quality / tailpipe controls Fuel economy improvement 28

29 IEA 2-degree scenario: fuel economy has much bigger savings than the cost of PEVs Fuel economy improvements save $2.4 Trillion in the same time frame when PEV s have incremental purchase cost of $500 Billion 29

30 Looking at CO2 tells a similar story Fuel economy improvement provides bigger and cheaper CO2 reductions though Then PEVs prevail CO2 savings from ICEs (Gt) CO2 savings from PEVs (Gt) Cost from ICEs ($/t) $ (143) $ (212) $ (214) $ (215) $ (198) Cost from PEVs ($/t) $ 211 $ (81) $ (143) $ (175) $ (201) Well-to-wheel CO2-eq emissions, cumulative over each 5 year period. Assumes 2.7 kg/l liquid fuels, 400 dropping to 200 g/kwh for electricity. 30

31 The IEA has recently created a fuel economy readiness index Countries are at various points in developing fuel economy policies Relevant policies to improve fuel economy are in place. Some progress has been made in implementing fuel economy policies Few policies for fuel economy improvement are in place. Source: IEA Fuel Economy Roadmap, July 2012 OECD/IEA 2010

32 Last thought of the day: We need data to develop good policies How many vehicles of what types? New v. 2 nd hand vehicles Information on origins of vehicles Vehicle characteristics (sizes, fuel economy) Make/model details National registration databases are very useful 32

33 Gasoline and Diesel fuel CO 2 emissions v. fuel economy 33

34 What is fuel economy? (2) Important relationship: there is about 2.4 kg of CO 2 emitted per litre of gasoline burned, 2.6 for diesel. The only way to cut CO 2 emissions is to burn less fuel (you can t capture it at the tailpipe). For gasoline vehicles, 8 L/100 km = 189 g/km CO2 emissions, 7 L/100 km = 165 L/100km, etc. It s a fixed relationship. If you reduce improve vehicle fuel economy, you: Save fuel Reduce costs Cut CO 2 emissions Don t help air quality very much (though complex and important topic) 34

35 European CO 2 Passenger Vehicle Standards Demonstrates importance of government policy to support fuel economy improvements 35

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