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The drive for less fuel : will the motor industry be able to honour its committment to the European Union? Kågeson, Per

By: Publication details: Stockholm Nature Associates, 2000Description: 40 sSubject(s): Online resources: Abstract: The automotive industry will not meet its commitments to the European Union to produce cars in 2008-09 that on average emit no more than 140 g carbon dioxide (CO2) per km without large changes in its production and marketing strategies. o A shift to more efficient powertrains . such as common rail diesel engines, direct injection petrol engines, electric hybrids and fuel cells . will at best account for half of the reduction needed. o Improved fuel efficiency of conventional petrol engines and reduced mass, air resistance, friction and rolling resistance of all cars (regardless of powertrain) could make up the difference provided that the current trend towards heavier and more powerful cars, including .Sport Utility Vehicles. (SUVs) and vans, is discontinued. o The experience gained in Sweden and the UK suggests that mandatory use of CO2 labels on cars displayed for sale and information on fuel consumption in marketing could not be expected to make much difference. o The motor industry is not likely to be able to achieve the necessary trend towards smaller and less powerful cars on its own as manufacturers, wholesalers and dealers all earn more from concentrating on large, luxury and powerful cars. o The conclusion is that without additional financial incentives/disincentives manufacturers will only make use of a minor part of the available potential for general fuel-efficiency improvement. o A system of tradable emission credits or a sales tax that is differentiated for specific CO2 emissions appears to be most useful policy instruments. The latter should be designed as a fee and rebate system to avoid making the average new car more expensive. In order to prevent a continuing shift to vans and SUVs, the sales tax needs to be highly differentiated. o Diesel fuel is less taxed than petrol in most Member States. A further shift to diesel engines will thus affect real consumption less than would have been the case under equal taxation. When petrol engines become more efficient, the extra annual mileage stimulated by the lower tax on diesel will approximately counter-balance the remaining difference in specific CO2 emissions (per km). The conclusion is that fossil road fuels should be taxed according to their content of carbon. This means taxing diesel fuel 13 per cent above petrol as it contains more carbon per litre of fuel. o When cars become more fuel-efficient, the lower running costs will encourage owners to drive further. To counter-balance this .reboundeffect. the tax on diesel and petrol needs to be raised annually by 20-30 per cent of the rate of fuel efficiency improvement. o The joint monitoring of the CO2 agreement should cover both individual manufacturers and the progress made on national markets. o A swift introduction of low-sulphur diesel and petrol fuels is needed to provide for a shift to direct injection diesel and petrol engines. Thus it is essential that Member States be allowed to introduce tax-breaks for ultra-low sulphur fuels. o Speed and driving behaviour are other important elements in a comprehensive CO2 abatement strategy. Speed limits and speed control could depress fuel consumption by around 5 per cent. o A specific CO2 emission of 140 g/km (or even 120 g) could be achieved without a marginal loss of welfare. The abatement cost is low and in the case of engine and car downsizing even negative. When the positive side-effects on traffic safety are considered, it becomes obvious that society could achieve a net gain in welfare from reducing the specific fuel consumption of new cars. If the European Union fails to make use of this opportunity, CO2 will have to be further reduced in other sectors of society at a considerable additional cost.
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The automotive industry will not meet its commitments to the European Union to produce cars in 2008-09 that on average emit no more than 140 g carbon dioxide (CO2) per km without large changes in its production and marketing strategies. o A shift to more efficient powertrains . such as common rail diesel engines, direct injection petrol engines, electric hybrids and fuel cells . will at best account for half of the reduction needed. o Improved fuel efficiency of conventional petrol engines and reduced mass, air resistance, friction and rolling resistance of all cars (regardless of powertrain) could make up the difference provided that the current trend towards heavier and more powerful cars, including .Sport Utility Vehicles. (SUVs) and vans, is discontinued. o The experience gained in Sweden and the UK suggests that mandatory use of CO2 labels on cars displayed for sale and information on fuel consumption in marketing could not be expected to make much difference. o The motor industry is not likely to be able to achieve the necessary trend towards smaller and less powerful cars on its own as manufacturers, wholesalers and dealers all earn more from concentrating on large, luxury and powerful cars. o The conclusion is that without additional financial incentives/disincentives manufacturers will only make use of a minor part of the available potential for general fuel-efficiency improvement. o A system of tradable emission credits or a sales tax that is differentiated for specific CO2 emissions appears to be most useful policy instruments. The latter should be designed as a fee and rebate system to avoid making the average new car more expensive. In order to prevent a continuing shift to vans and SUVs, the sales tax needs to be highly differentiated. o Diesel fuel is less taxed than petrol in most Member States. A further shift to diesel engines will thus affect real consumption less than would have been the case under equal taxation. When petrol engines become more efficient, the extra annual mileage stimulated by the lower tax on diesel will approximately counter-balance the remaining difference in specific CO2 emissions (per km). The conclusion is that fossil road fuels should be taxed according to their content of carbon. This means taxing diesel fuel 13 per cent above petrol as it contains more carbon per litre of fuel. o When cars become more fuel-efficient, the lower running costs will encourage owners to drive further. To counter-balance this .reboundeffect. the tax on diesel and petrol needs to be raised annually by 20-30 per cent of the rate of fuel efficiency improvement. o The joint monitoring of the CO2 agreement should cover both individual manufacturers and the progress made on national markets. o A swift introduction of low-sulphur diesel and petrol fuels is needed to provide for a shift to direct injection diesel and petrol engines. Thus it is essential that Member States be allowed to introduce tax-breaks for ultra-low sulphur fuels. o Speed and driving behaviour are other important elements in a comprehensive CO2 abatement strategy. Speed limits and speed control could depress fuel consumption by around 5 per cent. o A specific CO2 emission of 140 g/km (or even 120 g) could be achieved without a marginal loss of welfare. The abatement cost is low and in the case of engine and car downsizing even negative. When the positive side-effects on traffic safety are considered, it becomes obvious that society could achieve a net gain in welfare from reducing the specific fuel consumption of new cars. If the European Union fails to make use of this opportunity, CO2 will have to be further reduced in other sectors of society at a considerable additional cost.