PASSENGER VEHICLE FUEL EFFICIENCY STANDARDS IN ASIA: THE RISKS OF REGULATING BY WEIGHT

Abstract:

Reflecting rising concern about the high price of petroleum and the impact of transport greenhouse gas (GHG) emissions on the global climate, many countries in Asia are in the process of adopting or strengthening GHG or fuel efficiency standards for light-duty passenger vehicles. Regulators face a number of design decisions beyond stringency when setting those standards, the most important of which is whether to require all manufacturers to meet a single common standard regardless of their sales mix (the historical approach of the US CAFE program), or whether to set efficiency targets based upon vehicle attributes such as vehicle weight or size. This presentation explores tradeoffs associated with different standard bases, in particular, how the unique characteristics of Asian fleets are likely to interact with different design options to impact fleet-wide GHG emissions, petroleum consumption, and local air pollution. I explain why weight-based standards pose a serious risk if adopted in Asian countries with historically light fleets: industry-wide reductions in GHG emissions and fuel consumption may not materialize due to vehicle upweighting; safety may be threatened by the move to a more heterogeneous fleet structure; and air quality goals may be compromised by the preferential treatment afforded light-duty diesels under weight-based standards. In closing, I discuss how the key advantages of weight-based standards, notably their putative ability to reduce impacts on automaker competitiveness, can also be provided by size-based efficiency targets that avoid several of these key disadvantages.