World Energy Outlook 2006

Fuel Economy
Governments intervene extensively in the transport sector, though frequently
for reasons not primarily focused on the reduction of energy consumption and
greenhouse gas (GHG) emissions, such as road safety or reduced impact on
the local environment. Some examples include traffic restrictions, education
programmes for travellers, and parking and congestion charges. The effects of
these policies on energy consumption and GHG reduction are more difficult
to quantify than those of policies such as direct taxation on the purchase of
vehicles and fuels, as well as stringent fuel economy standards for new
vehicles. There are relatively fewer policies currently under discussion relating
to the freight transport sector than to the passenger sector, which accounts for
65% of total road-fuel consumption. Although energy demand for freight
transport is expected to increase at a slightly faster rate than energy for
passenger transport, it accounts for no more than 40% of road transport
energy demand in 2030. Demand for freight transport is closely linked to
economic activity and, given that fuel expenditures constitute a major cost of
their business, freight operators have a strong financial incentive to be
efficient. The assumed improvements in the efficiency of freight transport
stem from operational improvements, logistical changes, shifts in modal
choices and improved loading techniques aimed at reducing wasted loading
space. Changes in vehicle technologies also reduce fuel consumption, but to
a lesser extent than for passenger transport, which is the focus of the
remainder of this subsection.
Several countries have passed legislation regulating passenger car fuel
efficiency, either with mandatory fuel-economy standards or through
voluntary agreements with manufacturers (Table 9.4). Some countries have
adopted or are considering the introduction of taxes on car ownership which
are differentiated according to the fuel economy of the car. The United States,
Japan and China regulate passenger car fuel efficiency through mandatory
standards. Japan also regulates heavy-duty vehicle fuel economy. The
European Union, Canada, Australia and Switzerland have agreed on voluntary
targets for car manufacturers and importers. Japan’s Top Runner programme
and the EU ACEA’s (European Automobile Manufacturers Association)
voluntary targets are the most ambitious ones. US CAFE (Corporate Average
Fuel Economy) standards are far less stringent, but new standards adopted by
California in 2006 are more stringent (see Box 7.1).
Car manufactures can use technological advances in vehicle design either to
increase the power and performance of the vehicle or to improve its fuel
efficiency. Often these aims conflict, with power improvements damaging fuel
efficiency. Market forces often favour increased power. Governments can play
an important role by introducing fuel efficiency regulations to force
automakers to devote new technology to improving fuel efficiency.
226 World Energy Outlook 2006 - THE ALTERNATIVE POLICY SCENARIO
© OECD/IEA, 2007