1 Bert Fabian, Programme Officer, Transport Unit UN Environment Programme Global Fuel Economy Initiative

Outline Background and introduction to fuel economy – Benefits and impacts Developing national fuel economy policies – Setting a baseline – Technical information and policy options GFEI Country Activities 2

GFEI and UNEP Global Fuel Economy Initiative (GFEI) Established in 2009 UNEP, FIA Foundation, International Energy Agency, International Transport Forum, University of California Davis, International Council for Clean Transportation Objective: At least double the efficiency of the global fleet from an average of 8L/100 km to 4L/100 km by 2050 UNEP’s role in the GFEI Co-founder of GFEI Leader in the UN on Climate Change and Transport Support to countries to develop fuel economy policies Focus on middle and low income countries Technical, policy, financial, networking support

The Contribution of Transport

Growth of light-duty vehicles between 2005 and 2050 Almost all growth is in developing countries Source: IEA Energy Technology Perspectives, : ~3 x 2005

Deep Transport CO 2 Reductions in ETP Degree Scenario (2DS) Fuel economy improvement plays largest role, particularly through 2030

Meeting GFEI targets can stabilize global light-vehicle CO 2 emissions, despite a near tripling of vehicle fleet

8 Types of Air Pollutants Air pollutants affecting human health NOx Non-methane hydrocarbons particulates carbon monoxide Toxic emissions (e.g. benzene) Heavy metals Air pollutants affecting the climate CO 2 Methane Black carbon N 2 0 Fuel quality / tailpipe controls Fuel economy improvement

9 What is fuel economy? Vehicles use energy, and fuel economy measures energy per unit of vehicle travel. It is the RATE of energy use. Litres per 100km (Europe) Km per litre (Japan) Miles per gallon (United States) Fuel economy, fuel efficiency, fuel intensity are all fairly interchangeable terms. But fuel economy always refers to fuel use relative to distance travelled.

10 What is fuel economy? (2) Fuel economy improvement can be achieved through Technical changes to vehicles Changing the types of vehicles bought Improving vehicle maintenance Changing the way vehicles are driven (ecodriving) Reducing traffic congestion Fuel economy improvement to vehicles should be part of a broader strategy: Traffic management City and regional planning Promotion of public transit Etc.

11 GFEI Targets

Why Countries need to improve fuel economy? Reduce pollutant emissions Reduce oil dependence Improve balance of payments Reduce transport cost consumers and companies Reduce cost public transport Reduce greenhouse gases Promote domestic economies/jobs

Global Progress on Fuel Economy Policies (2014)

14 Potential Fuel Economy Improvements to 2030 From the U.S. NRC 2013 report: Light-weighting of up to 25% in 2030, 50% in 2050 relative to 2010 High efficiency accessories (e.g. air conditioning, lighting, tires) High efficiency engines (including but not limited to hybridization) E.g. 25% improvement from turbocharged, downsized direct injection gasoline engines Overall Impacts: By 2030, potential for 50% reduction in fuel consumption/CO2 per km at $ per vehicle (through hybridization) 66% reduction by 2050 at somewhat higher cost

© OECD/IEA 2012 Fuel Economy Improvements are Cost- effective Fuel savings more than pays for fuel economy improvements in light-duty vehicles Source: IEA Fuel Economy Roadmap, July 2012

16 Improving efficiency can save $billions Countries could dramatically cut their fuel import bills in the future… Source: IEA World Energy Outlook 2012

17 Global Benefits to 2050 from Hitting GFEI Targets (Compared to a frozen baseline; based on IEA ETP 2014 Projections) In Cumulative Fuel savings (trillion Litres)1.433 CO 2 reduction (gigatonnes)3.885 Cost savings (USD trillions) $ 1.2 $ 27

18 Fuel economy improving, but not fast enough…

© OECD/IEA 2012 FE trends & market size Significant fuel economy improvement if policies are in place Size shift vs. technology evolution moderates Non-OECD improvement Growth of markets with worse fuel economy affects global trend

20 Passenger Car CO 2 Standards Globally

Progress towards 2030 GFEI target (We’re about half way there; next several years are critical)

Developing National Fuel Economy Policies

How GFEI Can Help Tools – Baseline setting – Overall GFEI toolkit – Policies impact tool – Fee bate tool Expert Network & Regional Partners Sharing Best Practices Publications – State of the World Fuel Economy Financial support – GEF, EU, GFEI Partners, ….

GFEI Toolkit

Examples of Auto Fuel Economy Policies Policy Briefs (fee bates, imports, labels) Technical Guides (fuels, vehicles, calculating emissions) GFEI Toolkit (2)

Setting a Baseline27

Developing a fuel economy baseline for the light-duty vehicle fleet

Baseline – Kenya example

Baseline – Country examples

Slide 31 Comparison of passenger vehicle GHG standards Kenya

32 Technical Information and Policy Options

33 Fuel economy policies – 4 keys Fuel economy labeling Based on tested fuel economy Need to make available to consumers before purchase (internet, car window stickers) Fuel pricing Taxation system should at least internalize externalities CO2 tax will help differentiate fuels as well as encourage fuel economy

34 Fuel economy policies – 4 keys Fuel Economy Standards Typically corporate average standards Typically either vehicle mass or size based Could be applied to 2 nd hand vehicles Vehicle purchase taxes Sales tax, registration tax, import duties Can be differentiated by fuel economy or CO2 emissions Germany also differentiates by pollutant emissions levels

Fuel Economy Policies lmpact Tool (FEPIt) simulation tool that assists users in setting auto fuel economy targets by estimating the impact of fuel economy policies Estimates what a set of fuel economy policies (and their level of ambition, low-high) can deliver in terms of average auto fuel economy in years Available with User Guide from: ating_policy_impacts.asp ating_policy_impacts.asp

FEPIt example: Georgia 1. Baseline auto import fuel economy data for 2008, 2010, Baseline FE policy situation as of 2012: Moderate fuel tax in place No fuel economy label No registration / ownership tax based on CO2 No restriction on used imports (age) No FE standard …. RESULTS:

Where is Georgia heading? Georgia BAU Source: adapted from ICCT Georgia w/FE policy

Using Economic Instruments39

Upcoming: Feebate Simulation Tool

Design of a feebate system $ g/km CO 2 0 FEE REBATE slope determines marginal costs and benefits pivot point can be designed to meet revenue goals FEE

Example : Mauritius Increasing fleet – almost doubled in 10 years; increasing need for petroleum imports; increasing air pollution Introduced cleaner fuels - unleaded and low sulfur fuels (50 ppm) Introduced a carbon tax: – FEE: 159 CO2 gr/km: Rs 2,000 per gm/km going to Rs 5,000 above 290 gm/km – REBATE: 158 gm/km: Rs 1000 going to Rs 3,000 below 90 gm/km – Now further tightened to 150 gm/km

GFEI Country Activities43

GFEI Country Engagement Pilot Countries Chile Ethiopia Indonesia Kenya Second Phase Countries Bahrain Côte d'Ivoire Egypt Georgia Jamaica Jordan Macedonia Mauritius Montenegro Morocco Peru Philippines Thailand Uruguay Vietnam Under Discussion Serbia Barbados Benin Russia St Lucia Countries Expressing Interest Armenia Azerbaijan Bangladesh Guatemala Mali Mozambique Nigeria Paraguay Sri Lanka Syria Togo Uganda Zambia Colombia Costa Rica Malaysia Nepal

Bert Fabian Transport Unit Division of Technology, Industry and Economics United Nations Environment Programme (UNEP)