Vehicle Fuel Economy Standards and Feebate System...Vehicle Fuel Economy Standards and Feebate System Zifei Yang Researcher ACEEE International Symposium on Energy Efficiency Washington

Vehicle Fuel Economy Standards and Feebate System

Zifei YangResearcher

ACEEE International Symposium on Energy EfficiencyWashington DC, June 26, 2018

What is ICCT?

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§ ICCT is an independent non-profit research organization that provides technical support on transport efficiency and emission policies in major auto markets

1 Motivation of reducing vehicle fuel consumption

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Vehicles make up more than 20% of greenhouse gas emissions …

TRANSPORT EMISSIONS≈ 8.8 GtCO2

ROAD TRANSPORT EMISSIONS ≈ 6.5 GtCO2

THE TRANSPORT SECTORA major contributor to global anthropogenic CO2 emissions

AVIATION ROAD MARINE HEAVY-DUTY VEHICLES

LIGHT-DUTY VEHICLES

Notes:Global anthropogenic CO2 emissions in 2010 based on IPCC (2014).Transport CO2 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:ICCT (2014). Global Transportation Roadmap Model. Available from http://www.theicct.org/global-transportation-roadmap-modelIPCC (2014). Summary for Policymakers. Climate Change 2014, Mitigation of Climate Change. Contribution of Working Group III to the Fifth Assessment Report of the Intergovernmental Panel on Climate Change [Edenhofer, O., R. Pichs-Madruga, Y. Sokona, E. Farahani, S. Kadner, K. Seyboth, A. Adler, I. Baum, S. Brunner, P. Eickemeier, B. Kriemann, J. Savolainen, S. Schlömer, C. von Stechow, T. Zwickel and J.C. Minx (eds.)]. Cambridge University Press, Cambridge, United Kingdom and New York, NY, USA.

4.6%

10.6%

73.9%

10.9%

46.5%

53.5%

GLOBAL ANTHROPOGENIC EMISSIONS ≈ 38 GtCO2

LEGEND

RAIL

Transport23%

Other77%

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Integrated vehicle efficiency policy portfolio

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Performance standards, economic signals, and technological innovation complement each other.

VEHICLE PERFORMANCE

STANDARDS

VEHICLE AND FUEL FEES AND

INCENTIVES

TECHNOLOGY INNOVATION AND

DEPLOYMENT

Reduce cost

encourageAUTOMOAKERS to build efficient

products

encourageCONSUMERS

to demand efficient products

and drive less

Market-based approach

Information measure

Smart way

Labeling

2 Fuel efficiency standards

6

0

3

6

9

12

15

0

50

100

150

200

250

300

350

1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025

Fueleconom

y(l/100km)

New

passengercaraverageGHG(g/km) Historical performance

Future target

National FEstandards

California FEstandards

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U.S. fuel economy/GHG standards

(2017-2025)

Technology innovation continues to lower projected costs of compliance with 2025 standards

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§ 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

8http://www.theicct.org/US-2030-technology-cost-assessment

Consumer acceptance of energy efficiency technologies demonstrated by best selling cars

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25

30

35

40

45

50

55

40.0 41.0 42.0 43.0 44.0 45.0 46.0 47.0 48.0 49.0 50.0

Fuel

eco

nom

y (m

pg)

Vehicle footprint (ft2)

2014 4-cylinder sedans2010 4-cylinder sedans

Fusion

201220132014

2015

2016Accord

Camry

Mazda 6

Mazda 6i-eLOOPAltima

Camry 2018

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.

9Source: 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

102017 G lobal update: L ight-duty vehic le greenhouse gas and fuel econom y standardshttps://w w w .theicct.org/publications/2017-global-update-LD V-G H G -FE-standards

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 fiscalpolicies

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Fuel consumption-based feebate program§ Feebates = fee + rebate

§ Higher fuel consumption vehicles receive rebates§ Lower fuel consumption vehicles pay fees

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0

Rebate

Fee

(Pivot point)

Fuel consumption

The design of the feebate function matters

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§ Tax-optimized vehicles

Link to the report: Optimizing to the last digit: how taxes influence vehicle CO2 emission levelhttp://www.theicct.org/sites/default/files/publications/Tax_Step_Analysis_201510.pdf

Gradually optimized system

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US: fuel economy related tax and incentive

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§ 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

Electric vehicle could be cost-competitive to conventional vehicles

17Slowik et al (2016). Evolution of incentives to sustain the transition to a global electric vehicle fleet. http://www.theicct.org/evolution-incentives-electric-transition

Final thoughts

§ Fuel economy standards are one of the most cost effective and politically attractive energy reductionmeasures§ US 2025 standards and onward

§ Emerging markets are considering adopting fiscal measures such as feebates (which are easier to development and implement), especially in thecontext of vehicle electrification

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4 Back up slides

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Real world emissions are an issue that needs to be addressed

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Japan: JC08 phase-in

U.S.: introduction of5-cycle method

U.S.: EPA label values(for U.S. consumers)

China: NEDC

U.S.: CAFE(for U.S. regulations)

EU: NEDC

Japan: JC08

Japan: 10-15 mode

−10%

0%

10%

20%

30%

40%

50%

60%

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Build year / Model year / Fleet year / Test year

Diverge

ncebe

tweenoffi

cialandreal-w

orld

CO

2em

ission

values

https://www.theicct.org/publications/laboratory-road-intl

New Zealand

China

India

Chinese Taipei

Singapore Saudi Arabia

Chile Vietnam ThailandSouth Korea

Japan

Australia

Netherlands

Austria

Germany

UK

Brazil

US Canada

1990 1995 2000 2005 2010 2015 202019991988

MANDATEVOLUNTARY

Market size covered by program

1978

Implementation of vehicle fuel economy labeling scheme

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