The 21st Century climate challenge

Box 3.8Vehicle emissions standards in the United StatesEstablished in 1975, the United States’ Corporate Average FuelEconomy (CAFE) programme is one of the world’s oldest regulatoryregimes on fuel efficiency. It is also one of the most important:the United States accounts for around 40 percent of oil-based CO 2emissions from transport.Where the United States sets its vehicle fuel effi ciencystandards registers in the world’s carbon footprint. In the 1970s,CAFE rules were instrumental in doubling vehicle fuel economy,spurring investment in new technologies. However, fuel economystandards have not been increased for passenger cars overthe past 20 years, and they have increased only slightly forlight trucks.As a result, the fuel effi ciency standard divide between theUnited States and the rest of the world has widened. Today, theUnited States’ standard is just over one half of the level in Japan.The 136 million passenger cars on United States’ roads contribute35 percent of national transport-based greenhouse gasemissions, and the 87 million light trucks another 27 percent.The design of CAFE standards has had an important bearingon transport-related emissions. Average fuel standards forcars (27.5 miles per gallon or 11.7 kilometres per litre) are higherthan for light trucks (20.7 mpg or 8.8 km/L). Rising demand forlight trucks has led to an overall decrease in the fuel economy ofnew light-duty vehicles. In 2002, the number of light trucks soldexceeded new passenger cars sold for the fi rst time. The upshot:fuel effi ciency today is lower than in 1987.CAFE standards are at the centre of an active national debate.The 2007 State of the Union Address proposed CAFE standardreforms to achieve a 5 percent reduction in gasoline consumption,based on projected future demand (rather than current levels). Nonumerical target for fuel effi ciency was identified.Would more stringent targets undermine employment andcompetitiveness? That question is at the centre of debates overCAFE standards. Research indicates that light-duty fuel effi ciencycould be increased by one-quarter to one-third at less than the costof the fuel saved—and without compromising vehicle safety. Overthe medium term, more stringent standards would create incentivesfor investment in advanced diesel engines, hybrid vehicles andhydrogen-powered fuel-cell vehicles.With oil prices and concerns over CO 2emissions rising, weakefficiency standards could send the wrong signals to the automobileindustry. While recent years have seen significant improvements inengine technologies and vehicle design, such improvements havebeen used to increase power, performance and safety rather thanto enhance fuel economy. One result is that fi rms in the UnitedStates have lost out to Japanese competitors in markets for morefuel-efficient models.More stringent CAFE standards in the United States could createa triple benefit. They would demonstrate United States leadershipin international climate change mitigation efforts, advance nationalenergy security goals by reducing dependence on imported oil andopen up new opportunities for investment in the automobile industry.3Avoiding dangerous climate change: strategies for mitigationSource: Arroyo and Linguiti 2007; Merrill Lynch and WRI 2005; NCEP 2004b; Sperling and Cannon 2007.the European Union has reduced overall emissionsof greenhouse gases by around 1 percent.However, emissions from road transport haveincreased by 26 percent. As a result, the share oftransport in overall emissions has climbed fromaround one-sixth to over one-fifth in little morethan a decade. 87 Road transport is the biggestsource of rising emissions, with passenger vehiclesaccounting for around one-half of the total.If domestic transport greenhouse gas emissionscontinue to rise with economic growth, theycould be 30 percent above 1990 levels by 2010and 50 percent by 2020. 88 Thus current trendsin the transport sector are not consistent withthe European Union’s commitment to achieving20–30 percent reductions in overall greenhousegas emissions by 2020.Aligning regulatory policies with morestringent climate change mitigation goals hasbeen difficult. Current approaches are basedon three pillars: voluntary commitments bythe automobile industry, fuel-economy labellingand promotion of efficiency through fiscalmeasures. The long-standing aim has been toachieve a fuel-efficiency goal of 120g CO 2/km.However, the target date for achieving this goalhas repeatedly been pushed back, initially from2005 to 2010 and now to 2012, in the face oflobbying by the automobile industry and oppositionin some member states. The interim targetis now 140g CO 2/km by 2008–09.As for the United States, where theEuropean Union sets the fuel-efficiency barmatters for international climate changemitigation. It matters in a very immediatesense because more stringent standards willcut emissions of CO 2. Over the 10-year periodto 2020, a 120g CO 2/km target would reduceemissions by about 400 Mt CO 2—more thanthe total emissions from France or Spainin 2004. That figure represents around 45percent of total current European UnionHUMAN DEVELOPMENT REPORT 2007/2008 139