23 January 2017 Climate Change Newsletter
Fuel economy standards and practices
Overview of fuel economy standards
In the last few decades, fuel consumption and greenhouse gas (GHG) emissions have become a serious concern of researchers and policy makers. The transportation sector is the second largest energy consuming sector after the industrial sector and accounts for 30% of the world's total energy use. Within this sector, vehicles dominate oil consumption and energy demand. Since the mid-1970s, driven by mounting concerns over oil security, the expense of imported oil, and global warming, several industrialized countries including the United States, Japan, Canada, South Korea and Australia and the European Union, have adopted either voluntary agreements or regulatory standards to improve the fuel economy and reduce GHG emissions of their vehicles. The main objectives for fuel economy standards for vehicles is to allow consumers to get more information in purchasing decisions on the efficiency of motor vehicles, to help in raising awareness for fuel economy standards, and to encourage manufacturers to produce vehicles with higher fuel efficiency.
Fuel economy standards in China
As the largest auto producer and market, China won a round of applause from the rest of the world as the first developing country to adopt national fuel economy standards for vehicles in 2005. It was introduced by the National Development and Reform Commission (NDRC) and the General Administration of Quality Supervision, Inspection and Quarantine (GAQSIA), which has the authority for creating and managing national standards. These standards are mainly intended to alleviate China’s increasing reliance on foreign oil, and another objective is to promote foreign automakers to bring more fuel efficient vehicle technologies to the Chinese market.
Chinese fuel economy standards are distinctive because they set standards for each vehicle based on weight. Each vehicle to be sold will be classified into 16 weight classes and are required to meet their respective standards. The standards were designed to be “bottom heavy” which means they are relatively more stringent in heavier vehicle classes than in lighter classes. This helps to create incentives for manufacturers to produce lighter vehicles for Chinese markets. The whole fuel economy standards and targets from phase 1 to phase 4 are illustrated in Figure 1. Phase 3 and phase 4 standards are expected to reduce China’s fleet average fuel consumption of new passenger vehicles to 6.9L/100km in 2015 and 5.0L/100km in 2020, respectively. Vehicles with certain configurations such as automatic transmission and three-row seats qualify for looser fuel economy standards and targets.
Fuel economy standards in US and other countries
Globally, ten countries have established their own fuel consumption or fuel economy standards for passenger vehicles. These standards are different in terms of rationale and measurement methods. Previous studies compared the stringency of the standards among different countries by normalizing the measurement methods, as is shown in Figure 2. The stringency of China's fuel economy standards for passenger vehicles falls behind the US, Japan and the EU.
In 1975, the Corporate Average Fuel Economy (CAFE) program was introduced in the United States with the primary goal of reducing the country’s dependence on foreign oil. Each vehicle has a separate fuel economy target based on its size or footprint. There are separate mathematical formulas for cars and light trucks, which convert the footprints of individual models into fuel economy targets. In 2012, the Obama administration set new fuel economy standards with the approval of automakers. At the time the targets were 30.2 miles per gallon for cars and 24.3 for light trucks. The new plan combined the two categories for goals of 44.7 miles per gallon in 2021 and 54.5 miles per gallon in 2025. The new plan looked stringent and aggressive and automakers insisted on a “mid-term review” before 2018.
Despite claims that strong standards were too difficult to achieve technologically, the 2016 mid-term review report showed that automakers have in fact exceeded their regulatory targets, developing technologies that weren’t even anticipated or accounted for when the standards were written. But with a new president inbound on January 11th, the Environmental Protection Agency reaffirmed the fuel economy standards that would gradually increase the average miles per gallon requirements for cars to 54.5mpg by 2025. Once the rules are finalized, the Trump administration could roll them back, but it would take a lengthier rule-making process to undo them. So far the United States still maintain their lead in fuel economy standards around the world.
When it comes to the practice in other countries, fuel economy standards in Japan were established for gasoline and diesel powered vehicles in 1999. Standards were determined based on weight class. The latest update for implementation was from the model year 2015. As for the European Union, voluntary agreements were set during the 1990s to enhance energy efficiency. The EU target of 120 g CO2/km (or 46 mpg) by 2012 was to be met through an “integrated approach” between the EU and the association of car manufacturers. By 2015 all new cars were required to meet this standard. In Europe, the long-term goal for the fleet average of new cars is 95 g CO2/km (or 58 mpg) by 2020.
Fuel economy standards have proven to be one of the most effective tools in controlling oil demand and GHG emissions. Globally, many regions around the world have implemented or proposed various standards, including the United States, the European Union, Japan and China. The Chinese experience corroborates the lessons from developed countries. Such standards, when set at appropriate levels of stringency, could prompt auto industries to apply advanced technologies to improve fuel efficiency. The success of fuel economy standards is an encouraging but a small step to a more sustainable transportation future.
 International Council on Clean Transportation (ICCT), 2007. Passenger vehicle greenhouse gas and fuel economy standards: a global update.
 Oliver, H. H., Gallagher, K. S., Tian, D., Zhang, J., 2009. China’s fuel economy standards for passenger vehicles: rationale, policy process and impacts. Energy Policy, 2009, 37: 9-20.
 Wagner, D.V., An, F., Wang, C., 2009. Structure and impacts of fuel economy standards for passenger cars in China. Energy Policy, 2009, 37: 38–51.
 Wang, Z., Jin, Y., Wang, M., Wu, W., 2010. New fuel consumption standards for Chinese passenger vehicles and their effects on reductions of oil use and CO2 emissions of the Chinese passenger vehicle fleet. Energy Policy, 2010, 38: 5242–5250.
 Hao, H., Liu, Z., Zhao, F., 2017. An overview of energy efficiency standards in China’s transport sector. Renewable and Sustainable Energy Reviews, 2017, 67: 246-256.
 International Council on Clean Transportation (ICCT), 2015. Global passenger vehicle standards.
 Anderson, S. T., Pary, W. H., Sallee, J. M., Fischer, C., 2011. Automobile fuel economy standards: impacts, efficiency and alternatives. Review of Environmental Economics and Policy, 2011, 5(1): 89-108.
 Atabant, A. E., Badruddin, I. A., Mekhilef, S., Silitonga, A. S., 2011. A review on global fuel economy standards, labels and technologies in the transportation sector. Renewable and Sustainable Energy Reviews, 2011, 15: 4586-4610.