Vehicle Fuel Economy Standards and Feebate System Zifei Yang Researcher ACEEE International Symposium on Energy Efficiency Washington DC, June 26, 2018
What is ICCT? ICCT is an independent non-profit research organization that provides technical support on transport efficiency and emission policies in major auto markets 2
1 Motivation of reducing vehicle fuel consumption 3
Vehicles make up more than 20% of greenhouse gas emissions GLOBAL ANTHROPOGENIC EMISSIONS 38 GtCO 2 TRANSPORT EMISSIONS 8.8 GtCO 2 ROAD TRANSPORT EMISSIONS 6.5 GtCO 2 4.6% 10.6% Other 77% Transport 23% 73.9% 46.5% 53.5% 10.9% LEGEND RAIL AVIATION ROAD MARINE HEAVY-DUTY VEHICLES LIGHT-DUTY VEHICLES Notes: Global anthropogenic CO 2 emissions in 2010 based on IPCC (2014). Transport CO 2 emissions in 2010 estimated by ICCT (2014) include the full fuel lifecycle, including direct emissions from combustion & upstream emissions from extraction, refining, & distribution of fuels. Sources: 4
Integrated vehicle efficiency policy portfolio Performance standards, economic signals, and technological innovation complement each other. VEHICLE PERFORMANCE STANDARDS encourage AUTOMOAKERS to build efficient products VEHICLE AND FUEL FEES AND INCENTIVES encourage CONSUMERS to demand efficient products and drive less Market-based approach Information measure Smart way Labeling Reduce cost TECHNOLOGY INNOVATION AND DEPLOYMENT 5
2 Fuel efficiency standards 6
U.S. fuel economy/ghg standards 350 15 New passenger car average GHG (g/km) 300 250 200 150 100 50 Historical performance National FE standards California FE standards Future target (2017-2025) 12 9 6 3 Fuel economy (l/100km) 0 0 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 7
Technology innovation continues to lower projected costs of compliance with 2025 standards Costs of compliance with 2025 standards (vs. 2015) have decreased dramatically 2012 rulemaking: $1800 EPA assessment (PD-2016): $1300 ICCT assessment (2017): $886 Consumer payback period is shortened EPA: 5 years due to lower oil price forecasts ICCT assessment: 3 years http://www.theicct.org/us-2030-technology-cost-assessment 8
Consumer acceptance of energy efficiency technologies demonstrated by best selling cars 55 50 2022 2021 Note: 2018 Toyota Camry does not rely on hybridization (not even stop/start), No weight reduction, no off-cycle, A/C or FFV credits. Fuel economy (mpg) 45 40 35 2016 2015 2014 2013 2012 Altima Camry Accord Camry 2018 Mazda 6 i-eloop Mazda 6 Fusion 30 2014 4-cylinder sedans 2010 4-cylinder sedans 25 40.0 41.0 42.0 43.0 44.0 45.0 46.0 47.0 48.0 49.0 50.0 Vehicle footprint (ft 2 ) 9 Source: https://www.theicct.org/publications/how-things-work-omega-modeling-case-study-based-2018-toyota-camry
Status of passenger car fuel economy standards, normalized to U.S. CAFE 2017 Global update: Light-duty vehicle greenhouse gas and fuel economy standards https://www.theicct.org/publications/2017-global-update-ldv-ghg-fe-standards 10
Heavy-duty vehicle GHG and fuel economy standards Five nations: US, Canada, Japan, China and India 11 Europe has released a proposal for establishing CO2 standards for HDVs. The standards are expected to run until 2030.
3 Fuel efficiency fiscal policies 12
Fuel consumption-based feebate program Feebates = fee + rebate Higher fuel consumption vehicles receive rebates Lower fuel consumption vehicles pay fees Fee 0 (Pivot point) Rebate Fuel consumption 13
The design of the feebate function matters Tax-optimized vehicles Link to the report: Optimizing to the last digit: how taxes influence vehicle CO2 emission level http://www.theicct.org/sites/default/files/publications/tax_step_analysis_201510.pdf 14
Gradually optimized system 15
US: fuel economy related tax and incentive Gas guzzler tax Passenger cars (only) Tax for a model type having fuel economy below certain thresholds: 22.5 mpg Very few cars fall below the taxable level of 22.5 combined city/hwy mpg (10.5 l/100km) Incentive for electric vehicles Federal subsidy- a one-time bonus, depending on the battery capacity of the vehicle (2,500 USD - 7,500 USD) State level incentives- fiscal, non-fiscal 16
Electric vehicle could be cost-competitive to conventional vehicles Slowik et al (2016). Evolution of incentives to sustain the transition to a global electric vehicle fleet. http://www.theicct.org/evolution-incentives-electric-transition 17
Final thoughts Fuel economy standards are one of the most cost effective and politically attractive energy reduction measures US 2025 standards and onward Emerging markets are considering adopting fiscal measures such as feebates (which are easier to development and implement), especially in the context of vehicle electrification 18
4 Back up slides 19
Real world emissions are an issue that needs to be addressed 60% Japan: 10-15 mode Divergence between official and real-world CO 2 emission values 50% 40% 30% 20% 10% 0% U.S.: introduction of Japan: JC08 phase-in 5-cycle method Japan: JC08 EU: NEDC U.S.: CAFE (for U.S. regulations) China: NEDC U.S.: EPA label values (for U.S. consumers) 10% 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Build year / Model year / Fleet year / Test year https://www.theicct.org/publications/laboratory-road-intl 20
Implementation of vehicle fuel economy labeling scheme MANDATE VOLUNTARY Japan China Market size covered by program US South Korea Canada Australia Germany New Zealand India Chile Vietnam Thailand 1990 1978 19951988 1999 2000 2005 2010 2015 2020 UK Austria Netherlands Chinese Taipei Singapore Saudi Arabia Brazil 21