The 21st Century climate challenge

3Avoiding dangerous climate change: strategies for mitigationMany governments now seebiofuels as a technologythat kills two birds with onestone, helping to fight globalwarming while reducingdependence on oil importsemissions from transport. More broadly,because the European Union is the world’slargest automobile market, tighter emissionstandards would signal an important changein direction to the global automobile industry,creating incentives for components suppliers todevelop low carbon technologies. However, theEuropean Union is not on track for achievingits long-standing target. As an assessment bythe European Commission puts it: “In theabsence of additional measures, the EuropeanUnion objective of 120g CO 2/km will not bemet at a 2012 time horizon.” 89Efforts to change this picture have produceda political deadlock. The European Commissionhas proposed regulatory measures to raise fleetaverage efficiency standards to achieve the longstanding120g CO 2/km goal by 2020. As inthe past, the proposal has attracted oppositionfrom the European Automobile ManufacturersAssociation—a coalition of 12 global automobilecompanies. Some European governments havesupported that opposition, arguing that morestringent regulation could undermine thecompetitiveness of the industry.This is a position that is difficult to squarewith a commitment to the European Union’s2020 targets. Arguments on economiccompetitiveness are also not well supportedby the evidence. Several companies in theglobal automobile industry have lost out infast-expanding markets for low-emissionvehicles precisely because they have failed toraise efficiency standards. With supportingpolicies, it would be possible for the EuropeanUnion to sustain progressive improvements inefficiency standards consistent with its climategoals, with fleet average standards improvingto 80g CO 2/km by 2020. 90Regulatory standards cannot be viewed inisolation. Car taxation is a powerful instrumentthrough which governments can influence thebehaviour of consumers. Graduated taxationthat rises with the level of CO 2emissions couldhelp to align energy policies in transport withclimate change mitigation goals. Annual vehicleexcise taxes and registration taxes on new vehicleswould be means to this end. Such measureswould support the efforts of car manufacturersto meet improved efficiency standards, alongwith the efforts of governments to achieve theirstated climate change goals.The role of alternative fuelsChanging the fuel mix within the transportsector can play an important role in aligningenergy policies with carbon budgets. The CO 2emissions profile of an average car journey canbe transformed by using less petroleum andmore ethanol produced from plants. Manygovernments now see biofuels as a technologythat kills two birds with one stone, helping tofight global warming while reducing dependenceon oil imports.Developing countries have demonstratedwhat can be achieved through a judicious mix ofincentives and regulation in the transport sector.One of the most impressive examples comesfrom Brazil. Over the past three decades, thecountry has used a mix of regulation and directgovernment investment to develop a highlyefficient industry. Subsidies for alcohol-basedfuel, regulatory standards requiring automobilemanufacturers to produce hybrid vehicles,preferential duties and government support fora biofuel delivery infrastructure have all played arole. Today, biofuels account for around one-thirdof Brazil’s total transport fuel, creating widerangingenvironmental benefits and reducingdependence on imported oil. 91Several countries have successfullychanged the national transport sector fuel-mixby using a mixture of regulation and marketincentives to promote compressed naturalgas (CNG). Prompted partly by concernsover air quality in major urban centres, andpartly by a concern to reduce dependence onimported oil, both India and Pakistan haveseen a major expansion of CNG use. In India,several cities have used regulatory mechanismsto prohibit a range of vehicles from usingnon-CNG fuel. For example, Delhi requiresall public transport vehicles to use CNG. InPakistan, price incentives have supplementedregulatory measures. Prices for CNG havebeen held at around 50–60 percent of the priceof petroleum, with Government supportingthe development of an infrastructure for140 HUMAN DEVELOPMENT REPORT 2007/2008