Presentation delivered to the ACEEE 2018 International Symposium on Energy Efficiency, 28 June 2018, in Washington DC.

1. Vehicle Fuel Economy
Standards and Feebate System
Zifei Yang
Researcher
ACEEE International Symposium on
Energy Efficiency
Washington DC, June 26, 2018

2. What is ICCT?
2
§ ICCT is an independent non-profit research organization
that provides technical support on transport efficiency
and emission policies in major auto markets

3. 1
Motivation of reducing
vehicle fuel consumption
3

4. Vehicles make up more than 20% of
greenhouse gas emissions …
TRANSPORT EMISSIONS
≈ 8.8 GtCO2
ROAD TRANSPORT
EMISSIONS
≈ 6.5 GtCO2
THE TRANSPORT SECTOR
A 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-model
IPCC (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
Transport
23%
Other
77%
4

5. Integrated vehicle efficiency policy portfolio
5
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
encourage
AUTOMOAKERS
tobuildefficient
products
encourage
CONSUMERS
todemand
efficient products
anddriveless
Market-based approach
Information measure
Smart way
Labeling

6. 2 Fuel efficiency standards
6

7. 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
Fueleconomy(l/100km)
NewpassengercaraverageGHG(g/km)
Historical performance
Future target
National FE
standards
California FE
standards
7
U.S. fuel economy/GHG standards
(2017-2025)

8. Technology innovation continues to lower projected
costs of compliance with 2025 standards
8
§ 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
8
http://www.theicct.org/US-2030-technology-cost-assessment

9. Consumer acceptance of energy efficiency technologies
demonstrated by best selling cars
9
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
Fueleconomy(mpg)
Vehicle footprint (ft2)
2014 4-cylinder sedans
2010 4-cylinder sedans
Fusion
2012
2013
2014
2015
2016
Accord
Camry
Mazda 6
Mazda 6
i-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.
9
Source: https://www.theicct.org/publications/how-things-work-omega-modeling-case-study-based-2018-toyota-camry

10. Status of passenger car fuel economy
standards, normalized to U.S. CAFE
102017 G lobal update: Light-duty vehicle greenhouse gas and fuel econom y standards
https://www.theicct.org/publications/2017-global-update-LDV-G HG -FE-standards

11. 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.

12. 3
Fuel efficiency fiscal
policies
12

13. Fuel consumption-based feebate program
§ Feebates = fee + rebate
§ Higher fuel consumption vehicles receive rebates
§ Lower fuel consumption vehicles pay fees
13
0
Rebate
Fee
(Pivot point)
Fuel consumption

14. The design of the feebate function matters
14
§ 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

15. Gradually optimized system
15

16. US: fuel economy related tax and incentive
16
§ 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

17. Electric vehicle could be cost-competitive
to conventional vehicles
17Slowiket al (2016). Evolutionof incentivestosustainthetransitiontoaglobal electric
vehiclefleet. http://www.theicct.org/evolution-incentives-electric-transition

18. 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

19. 4 Back up slides
19

20. Real world emissions are an issue that
needs to be addressed
20
Japan: JC08 phase-in
U.S.: introduction of
5-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
Divergencebetweenofficialandreal-world
CO2
emissionvalues
https://www.theicct.org/publications/laboratory-road-intl

21. New Zealand
China
India
Chinese Taipei
Singapore Saudi Arabia
Chile Vietnam Thailand
South Korea
Japan
Australia
Netherlands
Austria
Germany
UK
Brazil
US Canada
1990 1995 2000 2005 2010 2015 202019991988
MANDATE
VOLUNTARY
Market size
covered by
program
1978
Implementation of vehicle fuel economy labeling scheme
21