Global Air Pollution, Climate Change and Urbanization Trends

Prepared by

©2017 Fuels Institute Disclaimer: The opinions and views expressed herein do not necessarily state or reflect those of the individuals on the Fuels Institute Board of Directors and the Fuels Institute Board of Advisors, or any contributing organization to the Fuels Institute. The Fuels Institute makes no warranty, express or implied, nor does it assume any legal liability or responsibility for the use of the report or any product, or process described in these materials. Global Initiatives: Assessing Current & Future Global Initiatives on Fuels & Vehicles 1 2 fuelsinstitute.org Executive Summary

Twenty years ago, countries were just beginning to consider the impact of transport, in particular fuels and vehicles, on their respective environments, especially air pollution and congestion mitigation. The U.S., Canada, EU and Japan introduced many fuel quality improvements, including the reduction of sulfur in gasoline and diesel, and had introduced more stringent emission standards for light-duty vehicles (LDVs) (which has continued). Very few countries had in place fuel economy standards, and there was no greenhouse gas (GHG) element of those standards. In fact, there were no climate-change related transport policies per se. Moreover, there were few countries that had set heavy- duty vehicle (HDV) emission standards and none that had set them for HDV fuel economy. Japan was the first country to set HDV fuel economy standards in 2005 (Transport Policy 2017). Many other countries were just beginning to phase out leaded gasoline, and that was the extent of their involvement in transport-related environment policymaking. Electric vehi- my standards, some countries are promoting EVs with fiscal cles (EVs) were a pipe dream. There was some ethanol blend- incentives and/or with actual mandates, similar to Califor- ing in the U.S. and especially Brazil, while biodiesel was be- nia’s Zero Emission Vehicle (ZEV) program. Ethanol blend- ginning to be blended on a larger scale in the EU. There was ing, while still dominant in the U.S. and Brazil, has spread very little biofuels blending elsewhere in the world and there to other countries while biodiesel blending has grown in the were no advanced biofuels. Car bans and restrictions on a EU, U.S. and parts of Asia. A number of countries have set city and even nationwide basis would have been unthinkable. renewable transport obligations without specifying a partic- All of that today has changed with many more countries ular biofuels type or mandate. There are advanced biofuel setting both LDV and HDV emission and fuel economy/GHG targets in the U.S., and there will be one implemented in standards and improving fuel quality, primarily by reducing the next few years in the EU. California has a Low Carbon sulfur in diesel. Concurrent with setting tougher fuel econo- Fuels Standard (LCFS), and Canada is currently developing

Global Initiatives: Assessing Current & Future Global Initiatives on Fuels & Vehicles 3 its own such policy. Finally, for the first time, cities and even All of these factors have motivated policymakers at the countries are calling for a ban or limitation on the internal city, provincial/state and national levels to do something, combustion engine vehicle (ICEV) in favor of the EV, public which has resulted in the policies that are the subject of this transport and ride sharing. report. These policies include: Something else occurred in the intervening years: a • Biofuels mandates and renewable transport obligations number of global non-governmental organizations (NGOs) • Fuel economy regulations for the LDV and HDV fleets also emerged during this time with a focus on providing • ZEV policies analysis, advocacy and capacity building to countries looking • ICEV bans and limitations to set effective transport policies, including for motor fuels • Fuel quality improvement and emission standards and vehicles. These organizations include (but by no means are limited to) the International Council on Clean Transpor- In summary: tation (ICCT), Global Fuel Economy Initiative (GFEI) and • 33 countries have set specific biofuel mandates with Partnership for Cleaner Fuels and Vehicles (PCFV). The Part- city or provincial requirements in two additional nership on Sustainable, Low Carbon Transport (SLoCaT) countries; is a multi-stakeholder partnership of over 90 organizations • 41 countries have set renewable transport require- seeking to promote the integration of sustainable transport ments, dominated by the 28 EU member states; in global policies on sustainable development and climate • 37 countries have set fuel economy standards for their change. The International Energy Agency (IEA), Internation- LDV fleets, 35 have set them for light-commercial al Renewable Energy Agency (IRENA) and REN21 provide vehicles (LCVs) and 4 have set them for HDVs; analysis and support, the latter two on renewable energy • 13 countries have set ZEV support policies, which issues, including for transport. primarily is focused on fiscal incentives for now; As will be explained in the next section, the common link • 22 cities and countries globally have set a ban or other between these initiatives is the need to reduce air pollution, limitation on the ICEV, most of which has occurred transport-related climate change from motor vehicles, the only in the last year or so; LDV and HDV fleets, and traffic congestion which is grow- • 7 countries have an ultra-low sulfur diesel (ULSD) ing in the world’s cities. Many of the countries featured in standard of below 50 ppm; and this report have set and are implementing many policies to • 39 countries have set stringent emission standards for control air pollutants and reduce GHGs from motor vehicles LDVs, while 33 have set them for HDVs. and yet, emissions continue to climb. More information is available in the public domain about both climate change and air pollution, in particular the health impacts of the latter, which has citizens around the world concerned. In a number of cities mentioned in this report, all of these factors have become a quality of life issue. The global Dieselgate scandal has only served to fuel concerns about the impact of ICEVs on human health, especially in Europe. The Paris Agreement is another factor that has galvanized cities and countries to take action against ICEVs.

4 fuelsinstitute.org Introduction: The Primary & Interlinked Drivers of Air Pollution Reduction, Climate Change Mitigation & Urbanization

Transport-related GHG emissions and air pollution are in- Figure 1 Global Passenger Light-Duty Fleet creasing. After all the oil and car industries have done globally Vehicle Stock Projection to 2050 to clean up fuels and vehicles over the last 20+ years, air pollution is actually worse than ever in many parts of the world 2500 as more and more people with growing incomes buy cars. Efforts to mitigate climate change from transport have taken 2000 on new importance following the ratification of the Paris Agreement in 2016. Growing urbanization is another con- 1500 cern, with a projected 70% of the global population expected to reside in cities by 2050, according to the United Nations. 1000 By 2040, world population is expected to reach 9.1 billion, up from 7.3 billion today (ExxonMobil 2017). Over that 500 Passenger vehicle stock (m ) same period, global GDP will effectively double, with non- 0 OECD countries seeing particularly high levels of economic 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 growth. Key countries will be located in Asia and Africa. This OECD Non OECD means rising living standards in essentially every corner of the world, and billions of people joining the global middle (Source: IEA 2015) class. This economic expansion, coupled with growing numbers of people, will help drive up global energy demand by ments around the world. The global car fleet is expected to about 25% by the year 2040, similar to adding another North double in the next 20-25 years, as shown in Figure 1. And America and Latin America to the world’s current energy with oil prices so low, people in some countries, including the demand (ExxonMobil 2017). As millions (even billions) join U.S., are buying larger cars and driving more. the middle class, they will want to leave public transport Mitigating air pollution and GHG emissions, as well as behind for personal mobility and buy a car. implementing Paris Agreement targets and reducing conges- With ever growing numbers of cars in cities, air pollution, tion in cities and making them more livable is what is driving greenhouse gas (GHG) emission reduction and traffic man- a number of the initiatives discussed in this report: stringent agement and congestion mitigation are becoming more and fuel economy standards, zero emission vehicles targets, bio- more a priority for city, provincial/state and federal govern- fuels blending mandates, car bans (or car limitation strate-

Global Initiatives: Assessing Current & Future Global Initiatives on Fuels & Vehicles 5 gies), tougher emissions standards and improved fuel quality. Where these initiatives are happening globally is shown in Figure 2.

Figure 2 Global Renewable Transport, Fuel Efficiency & Zero Emission Vehicle Initiatives (Current or Planned), 2016

(Sources Compiled by Future Fuel Strategies citing data from REN21, “Renewables 2016 Global Status Report,” Intended Nationally- Determined Contributions (INDCs) Offer Opportunities for Ambitious Action on Transport and Climate Change,” Partnership for Low Carbon Transport, Global Renewable Fuels Alliance)

These initiatives are discussed in more detail in the sec- tions that follow, but it is important to first understand a little about the three issues underpinning them. Following is a short discussion about global air pollution, climate change and urbanization trends.

6 fuelsinstitute.org Global Air Pollution

After all the oil and car industries have done to clean up Moreover, most of the world’s population lives in areas fuels and vehicles over the last 20+ years, air pollution is ac- where air quality is unhealthy, even in the West. An estimated tually worse than ever in some parts of the world as more and 92% of people live in areas where PM concentrations exceed more people with growing incomes buy cars and take to the the World Health Organization’s Air Quality Guideline of 10 roads. Air pollution mitigation has arguably been overshad- µg/m3 shown in Figure 3 (WHO 2005). Global population- owed by climate change though the consequences are just as, weighted PM2.5 concentrations increased by 11.2% from if not more, alarming. More than 4 million people die every 1990 (39.7 µg/m3) to 2015 (44.2 µg/m3) (HEI, IHME 2017). year because of outdoor air pollution, and transport is a signif- Since 2010, the increase was somewhat more rapid. The high- icant source of that, especially particulate matter (PM). est concentrations of population-weighted average PM2.5 in Air pollution has now been linked to a range of health ef- 2015 were in North Africa and the Middle East, due mainly fects such as premature death, respiratory conditions, impacts to high levels of windblown mineral dust (HEI, IHME 2017). to children that follow them through adulthood, Alzheimer’s Similarly, the World Bank noted last year that air pollu- and dementia, cancer and heart disease, to name but a few tion has emerged as the deadliest form of pollution and the conditions. According to the Institute for Health Metrics and fourth leading risk factor for premature deaths worldwide Evaluation (IHME) and the Health Effects Institute (HEI), (World Bank 2016). Those deaths cost the global economy particulate matter (PM) is ranked number five out of a list of about US$225 billion in lost labor income in 2013, and costs global risk factors for total deaths from all causes (HEI, IHME the global economy more than $5 trillion annually in welfare 2017). costs. And, the OECD highlighted in a 2016 study that partic-

Figure 3 Average Annual Population-Weighted PM2.5 Concentrations in 2015

. g 0 to <15 15 to <30 30 to <45 45 to <75 75 to <107 No data

W Africa E Med

Caribbean Balkan Peninsula (Source: HEI, IHME 2017)

Global Initiatives: Assessing Current & Future Global Initiatives on Fuels & Vehicles 7 ulate matter, both PM10 and PM2.5, are expected to increase Notably, many of these same countries have implemented substantially in the coming years concurrent with increased many policies to fight air pollution aggressively over the last economic activity and energy demand (OECD 2016). 20-30 years. From the transport perspective, the countries OECD attempted2500 to quantify the potential economic shown in Figure 4 have implemented cleaner conventional impacts of spiraling air pollution through 2060, finding a 1% fuels, tougher emissions and fuel economy standards, inspec- loss of GDP 2000or $2.6 trillion annually in losses. The impacts are tion and maintenance programs, promoted cleaner public attributed in part to premature mortality, illness and medical transport, among other initiatives. Nevertheless, transport-re- expenses, lost1500 productivity and lower crop yields. As shown in lated air pollution still persists. This provides insight into why Figure 4, the GDP losses are even more staggering in China focus is shifting in many of these countries to ZEVs, car bans 1000 and Russia. The number of premature deaths from outdoor or limitations and improved public transport. pollution could climb from 3 million in 2010 to 6-9 million 500 annually by 2060, most likely happening in the world’s megacities and among aging populations (particularly in China and

Passenger vehicle stock (m ) 0 Eastern Europe)2005 (OECD2010 2016).2015 2020 2025 2030 2035 2040 2045 2050

OECD Non OECD Figure 4 Projected GDP Losses and Lives Cut Short by Air Pollution in 2050

of loss in uer of ets er erillions of eole

South Africa Canada USA

Korea

Japan

India

China

Russia

-3.0%-2.0% -1.0%0.0%05001000150020002500

(Source: OECD 2016)

8 fuelsinstitute.org Climate Change Mitigation in Transport

Transport currently contributes 23% of energy-related also believe the only way to effectively decarbonize is to stop GHG emissions and 20% of energy use and is expected to driving altogether or at least curtail personal driving and to double by 2030, according to IEA (IEA 2015). Passenger more proactively adopt ride sharing, public transport, cycling transport accounts for nearly 60% of total transport energy and walking. demand, and 60% of this is in OECD member countries. De- The Paris Agreement itself has served as a major driver carbonizing transport is a major challenge, not only for the and catalyst for many countries to take aggressive actions light-duty fleet, but for the heavy-duty fleet, aviation and ship- to decarbonize transport. The agreement entered into force ping. For the latter three sectors, there are not cost-efficient November 4, 2016, 30 days after the date on which 55 par- options for decarbonization currently. ties accounting for 55% of total GHGs deposited their instru- There has been much more recognition in the last few ments of ratification, acceptance, approval or accession with years of the need to decarbonize transport and that, without the agreement. To date, 159 of 197 countries have ratified the a serious, concerted global effort to do so, GHG emissions agreement, shown in Figure 5 (UNFCC 2017). Last year was will continue to spiral, taking into account the foregoing about ratification, which came quickly. discussion about GDP growth, energy demand and car fleet The Agreement sets an overall emissions reduction target growth in emerging economies. For the passenger car fleet, of holding the increase in the global average temperature ZEVs are viewed as the best option to decarbonize and still to well below 2°C above pre-industrial levels and pursuing allow for personal mobility. There are other advocates that efforts to limit the temperature increase to 1.5 °C above

Figure 5 Countries that Have Ratified the Paris Agreement as of August 2017

(Source: UNFCC 2017)

Global Initiatives: Assessing Current & Future Global Initiatives on Fuels & Vehicles 9 2500

2000

1500

1000

500

Passenger vehicle stock (m ) 0 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050

OECD Non OECD

of loss in uer of ets er erillions of eole

South Africa Canada USA

Korea

Japan

India

China

Russia

-3.0%-2.0% -1.0%0.0%05001000150020002500 Figure 6 Energy Sector CO2 Emissions, 1990-2100 (Gigatons)

Gt 40

Central scenario

30 2 oC scenario ➢ Early peak in emissions 20 ➢ Net-zero by the end of the century

1990 2000 2010 2020 2030 2040 2050 2060 2070 2080 2090 2100

(Source: International Energy Agency, World Energy Outlook, November 2016) pre-industrial levels. The contributions that each individual of this century. The stocktake will not be of contributions/ country should make in order to achieve the worldwide goal achievements of individual countries but a collective analysis are determined by all countries individually and called nation- of what has been achieved and what more needs to be done. ally determined contributions (NDCs). The implementation of the agreement by all member coun- The 2°C and 1.5°C targets are very challenging and it is tries together will be evaluated every 5 years, with the first unclear whether they can be met. To illustrate the challenge, evaluation in 2023. Figure 6 shows energy sector CO2 emissions as modeled by This year, the focus will turn to the beginnings of imple- IEA (IEA 2016). The Central Scenario shows IEA’s estimates mentation, and some countries have begun to submit their of CO2 emissions if every country implements their NDC NDCs already. Many of these countries have indicated the measures they have committed to under the Paris Agreement measures discussed in this report to mitigate climate change, (blue line). According to IEA, this would mean that by 2040: especially biofuels programs/mandates and fuel economy (a) 37% of power generation would come from renewables; standards. That includes the U.S., which has ratified the (b) 150 million electric vehicles would be on the road; and agreement. (c) there would be a 50% growth in natural gas use over coal, In the last months of the Obama Administration, the U.S. among other measures taken. Compare this to the green submitted its plan to implement the agreement with a heavy line, which is what meeting 2°C targets would look like. CO2 focus on electrification. However, in June 2017 President emissions would need to peak early, around 2020 and then Trump announced the U.S. would cease any participation in precipitously decline. Meeting these targets, according to IEA, the Paris Agreement with the intention to withdraw. Under means that the energy sector must reach carbon neutrality Article 28 of the agreement, the earliest the U.S. can with- by 2100. The gap between the Central Scenario and the 2°C draw is 2020, four years after the agreement became effective Scenario is substantial. for the country (and, notably, one day after the 2020 presiden- The Paris Agreement also provides for a global “stock- tial election). The U.S. is expected to abide by the four-year take” that will kick off with a “facilitative dialogue” in 2018 exit process, and until the withdrawal takes effect, it may be where countries will evaluate how their NDCs stack up to the obligated to maintain its commitments under the agreement, nearer-term goal of peaking global emissions and the long- such as the requirement to continue reporting its emissions term goal of achieving net zero emissions by the second half to the United Nations.

10 fuelsinstitute.org Increasing Urbanization

Increasing urbanization in the world’s cities is an under- thority to city authority, especially when it comes to air pollu- lying force propelling transport policies such as improved/ex- tion and climate change mitigation. This means that we could panded public transport, ZEVs and car bans (or limitations). see cities increasingly take regulatory actions that impact the Cities are beginning to take the lead more and more on these use of fuels and vehicles. And that makes sense: with 70% of kinds of policies, and that trend is expected to continue. Their us living in urban areas by the year 2030 (shown in Figure 7), responses could really impact fuel and vehicle demand in the cities are going to have to figure out how to make that work future and is something the fuels and associated industries sustainably for their citizens based on their unique circum- need to be paying attention to and figuring out how best to stances. Taking a greater stand on congestion, air pollution respond and engage. and climate change flows out of that. And, it may be cities that There is a larger theme at play here underlying urbaniza- end up carrying much of the water to actually implement the tion. There does seem to be a movement or shift occurring (or Paris Agreement. trying to occur) from federal/national and state/provincial au-

Figure 7 Urbanization Rate, 2014-2030

it oultion 500–750 thousand rot te 750–1000 thousand <1% 1–5 million 1–3% 5–10 million 3–5% 10 million or more 5% +

Note: Designations employed and the presentation of material on this map do not imply the expression of any opinion whatsoever on the part of the Secretariat of the United Nations concerning the legal status of any country, territory or area, or of its authorities, or concerning the delimitation of its frontiers or boundaries. (Source: UN DESA 2015a)

Global Initiatives: Assessing Current & Future Global Initiatives on Fuels & Vehicles 11 Figure 8 shows the progression from 1970 to what is projected for 2030 for urban populations (UN DESA 2015). In short, the number of cities with populations above 300,000 have grown markedly over time. While in 1970 there were just three megacities, in 2014 there were 28 and in 2030 there will be 41. Large cities of 5 to 10 million inhabitants have grown from 15 in 1970 to 63 in 2030 (UN DESA 2015).

Figure 8 Distribution of the World’s Urban Population by Size Class of Urban Settlement and Number of Cities, 1970, 1990, 2014 and 2030

100 3 cities 10 cities 28 cities 15 cities 41 cities 90 21 cities Megacities of 10 million 43 cities or more 63 cities 80 126 cities 239 cities Large cities of 5 to 10 million 70 417 cities 186 cities 558 cities Medium-sized cities of 1 to 5 million 60 294 cities 227 cities 412 cities 525 cities Cities of 500,000 to 1 million 50 731 cities 679 cities Cities of 300,000 to erentge 40 832 cities 500,000 Urban areas with fewer 30 than 300,000

0 1970 1990 2014 2030

(Source: UN DESA, 2015)

12 fuelsinstitute.org

2005 Biofuels

Despite ongoing debates over biofuel production and use in some countries that generally center around sustainability and “food versus fuels” concerns, biofuel support policies continued to be adopted during 2016. Biofuels programs are the number one strategy countries are planning to comply with transport-related Paris Agreement commitments. Blend mandates and fiscal incentives for biofuel blending programs continued to be the most common forms of support for renewable energy in the transport sector (REN21 2017). Table 1 summarizes global biofuel blend mandates.

Global Initiatives: Assessing Current & Future Global Initiatives on Fuels & Vehicles 13 Table 1 National and State/Provincial Biofuel Blend Mandates, 2016 (REN21 2017)

ountr nte State/Province

ngol E10 rgentin [E5] and B10 ustrli [no national mandate] New South Wales E6 and B2 Queensland E by July 2017; E by July 201 and B0.5 elgiu E4 and B4 ril E27 and n E5 and B2 Alberta E5 and B2 British Columbia E5 and B Manitoba E.5 and B2 Ontario E5, B2 and B by 2016; B by 2017 Saskatchewan E7.5 and B2 in E10 in nine provinces, B1 in Taipei oloi E8 and B10 ost i E7 and B20 uor B5 and E10, E5 in 2016 tioi E10 utel E5 ni . n [E10] nonesi E3, B20 [B5] tl 0 .6% advanced biofuels blend by 2018; 1% by 2022 i E10 li E10 lsi n eio . n outsie onterre ulr n eio it oiue E15 in 2016-20; E20 from 2021 or B3 .5 n [E7] rgu E25 and B1 eru E7 .8 and B2 iliines E10 and B2 out fri E2 and B5 (targets came into force in 2015) out ore B2.5; B3 by 2018 un E5 iln E5 and B7 ure E2

1 Chinese provincial mandates include Anhui, Heilongjian, Henan, Jilin and Liaoning.

14 fuelsinstitute.org ountr nte State/Province

nite ttes Renewable Fuel Standard (RFS) 2016 standards: 68 .6 billion liters total renewable fuels, including 871 million liters cellulosic biofuel, 7 .2 billion liters biodiesel, 13 .7 billion liters advanced biofuel; stnrs illion liters renele fuels inluing . illion liters ellulosi iofuel . illion liters iossse iesel . illion liters ne iofuel . illion liters iossse iesel fuel in oter stnrs roose ut not et finlie2 Hawaii E10 Louisiana E2 and B2 Massachusetts B5 Minnesota E20 and B10 Missouri E10 Montana E10 New Mexico B5 Oregon E10 and B5 Pennsylvania B2 one year after 200 million gallons, and B20 one year after 1.5 billion liters (00 million gallons)2 Washington E2 and B2, increasing to B5 10 days after in-state feedstock, and oil-seed crushing capacity can meet reuirement

rugu E5 and B5 ietn ie [E5]

2 Original target(s) set in gallons and converted to liters for consistency and comparison with other global mandates. OTHER NOTES: Text in ol indicates new/revised in 2016 or 2017, brackets '[ ]' indicate previous mandates where new mandates were enacted, and text in italics indicates mandates adopted at the state/provincial level. The Dominican Republic has targets of B2 and E15 for 2015 but has no current blending mandate. Fiji approved voluntary B5 and E10 blending in 2011 with a mandate expected. The Kenyan city of Kisumu has an E10 mandate. This table lists onl biofuel blend mandates.

Global Initiatives: Assessing Current & Future Global Initiatives on Fuels & Vehicles 15 A number of countries/regions, especially in the EU, do A summary of biofuel blend mandates, renewable trans- not have specific biofuel mandates but require a percentage port targets and those countries that intend to develop biofuels of their transportation energy to come from renewable sourc- programs as part of their Paris Agreement commitments (and es, which can (and to a large extent does) come from biofuels. so noted in their Intended NDCs or what countries were initially In other words, renewable electricity in EVs would count thinking as they came to the table to negotiate the agreement) toward these kinds of targets. These targets are summarized is shown in Figure 9. Nearly 60 countries have developed or in Table 2. will be developing such programs.

Table 2 Transportation Energy from Renewable Sources, Targets and 2015 Shares (REN21 2017)

ountr re (in %) rget (in %)

– 10% of EU-wide transport final energy demand by 2020 lni 0 0 ustri 11 11.4 elgiu 3.8 10 Wallonia – 10.14 ulgri 6.5 11 roti 3.5 10 rus 2.5 4.9 e euli 6.5 10.8 enr 6.7 10 stoni 0.4 10 inln iofuel lening n renele trnsort fuel use [20% by 2020] rne 8.5 15 ern 6.8 20 reee 1.4 10.1 ungr 1.4 10 reln 6.5 10 tl 6.4 10.1 ti 3.9 10 ueourg 6.5 10 lt 4.7 10.7 eterlns 5.3 10 oln 6.4 20 ortugl 7.4 10 oni 5.5 10 lo euli 8.5 10 loeni 2.2 10.5 in 1.7 11 .3% from biodiesel by 2020; 2,313 ktoe ethanol/bio-ETBE by 2020; 4 .7 GWh per year electricity in transport by 2020 (501 ktoe from renewable sources by 2020) een 24 Vehicle fleet independent from fossil fuels by 2030 nite ingo 4.4 10.3

16 fuelsinstitute.org ter ountries re (in %) rget (in %)

eln 5.7 10% by 2020 ieri – 5% palm oil blends in transport fuel by 2030 eoni – 2% by 2020 olo – 20% by 2020 ontenegro – 10.2% by 2020 or . [10% by 2020] tr – 10% by 2020 eri – 10% by 2020 ri n – 20% from biofuels by 2020 iln – 9 million liters per day ethanol consumption by 2022; 6 million liters per day biodiesel consumption by 2022; 25 million liters per day advanced biofuels production by 2022 gn – 2,200 million liters per year biofuels consumption by 2017 rine – 10% by 2020 ietn – 5% of transport petroleum energy demand by 2025

NOTE: Targets refer to share of renewable transport in total energy supply unless otherwise noted. Only ole targets are new/revised in 2016. A number of nations have already exceeded their renewable energy targets. In many of these cases, targets serve as a floor setting the minimum share of renewable energy for the country. Panama has an additional target for 30% of new vehicle purchases for public fleets to be flex-fuel (no date).

(Sources: Compiled by Future Fuel Strategies citing data from REN21, “Renewables 2016 Global Status Report,”; Intended Nationally-Determined Contributions (INDCs) Offer Opportunities for Ambitious Action on Transport and Climate Change,” Partnership for Low Carbon Transport; 2016. Belgium, the U.S. and Canada have state/provincial mandates as well.

Global Initiatives: Assessing Current & Future Global Initiatives on Fuels & Vehicles 17 Table 3 is a summary table of biofuels market and policy developments in the regions over the past year. Some countries increased mandates and tax credits, while others set mandates for the first time.

Table 3 Biofuels Market & Policy Developments, 2016-2017 (REN21 2017)

egion ur of iofuels eeloents

ort eri Production of both ethanol (at a similar pace as 2015) and biodiesel (reversing the decline witnessed in 2015) increased in 2016 in the .., while in n, ethanol production decreased, while biodiesel production increased. At the U.S. state level, ii introduced a tax credit for biofuel producers, and o extended biodiesel and ethanol tax credits through 2025. The biodiesel tax credit in the .. expired in December 2016.

tin eri Both ethanol and biodiesel production declined in ril in 2016, reversing the increase in 2015, and its tax exemption on ethanol was allowed to expire in December 2016. Biofuels production also decreased in oloi and eru. Production of both biofuels increased in rgentin, and it enacted a B10 and E10 mandate and announced plans for an E26 mandate to be enacted this year. It also extended tax exemptions for biodiesel production through 2017, and increased taxes on biodiesel exports. In eio, ethanol production increased from near zero in previous years to 20 million liters. It mandated the blending and sale of E5.8 outside of the three metropolitan areas of Guadalajara, Mexico City and Monterrey, where ethanol blending was initially piloted. ns ethanol mandate increased to E10.

uroe Policy and public support for first-generation biofuels continues to wane in the due in part to sustainability concerns, but also because of the increasing interest in electric mobility. Regional production of both ethanol and biodiesel was down, although increases occurred in some countries such as for ethanol production in ungr, oln, een and the nite ingo. een introduced tax cuts on both ethanol and biodiesel.

si ustrli Growth in ethanol production in Asia continued to slow. in, ni and iln led the region in production. Biodiesel production continued to rise, particularly in nonesi where the significant increase in 2016 countered the decline in 2015. It also increased its B5 mandate to B20. ni set goals of E22.5 and B15 through a new policy that promotes the use of non-conventional biofuel feedstocks (for example, biodiesel from bamboo, rice straw, wheat straw and cotton straw, and ethanol from molasses). lsi increased its B7 mandate to B10. iln provided subsidies to support a trial program for the use of B20 in trucks and B10 for military and government use. ietn established an E5 mandate. At the sub-national level, ueensln (ustrli) mandated that fuel retailers with 10 or more locations in the province sell specified shares of renewable blended fuel.

fri Production of fuel ethanol increased 11% (from comparatively low levels) in 2016, albeit well below the 30% growth in 2015. ie returned its blend mandate to E15 after a temporary reduction to E5 due to a lack of supply.

Notably, many of the countries setting biofuel mandates Moreover, biofuels (primarily ethanol and biodiesel) are emerging economies. This is important, because while represent the vast majority of the renewable share of global developed countries/regions such as the U.S. and Europe energy demand for transport, providing 4% of world’s road grapple with whether biofuels should even have a future in transport fuel (REN21 2017). In 2016, global ethanol produc- their fuel pools, emerging economies have much less concern. tion remained stable relative to 2015, with decreases across They by and large see biofuels as a viable strategy that pro- Europe and in Brazil offset by increases in the United States, vides them a number of benefits from reducing air pollution China and India. Global biodiesel production increased by and GHG emissions to providing economic and rural devel- around 9% compared with 2015, with substantial increases opment. in the United States and Indonesia. The U.S. and Brazil

18 fuelsinstitute.org remained the largest biofuels producers by far, accounting for 70% of all biofuels between them, followed by Germany, Argentina, China and Indonesia. An estimated 72% of biofuel production (in energy terms) was fuel ethanol, 23% was biodiesel, and 4% was hydrotreated vegetable oil (HVO). Both ethanol and biodiesel production are expected to grow through 2026 (OECD, FAO 2017). Global ethanol production is expected to expand about 14% from 120 billion liters (31.7 billion gallons) in 2016 to 137 billion liters (36.2 billion gallons) by 2026 driven by demand in Brazil, China, India and Thailand. Biodiesel production is expected to increase about 10% from 37 billion liters (9.8 billion gallons) in 2016 to 40.5 billion liters (10.7 billion gallons) by 2026.

Advanced Biofuels

Note that most of the foregoing biofuel-specific mandates Mandates such as the Renewable Fuel Standard in the U.S. concern first-generation (1G) biofuels. These biofuels are and the Low Carbon Fuel Standard in California have not commonly understood to be ethanol from feedstocks such been enough alone to really spur the large scale development as corn and sugarcane using a fermentation process and of the advanced biofuels industry. What the industry needs is biodiesel using a transesterification process from feedstocks a price on carbon (preferably global), long-term R&D invest- such as soybean oil, palm oil and waste oils and greases. The ment and regulatory certainty with long-term policies that sup- EU is contemplating a revised biofuels policy that would cap port the development of the industry. Higher oil prices helped the amount of traditional food-based 1G biofuels in the fuel justify the development of the industry and spur investments, pool to 3.8% by 2030 (from 7% currently) and require an in- but those have waned with falling and volatile pricing (IRENA creasing volume advanced biofuels (3.6% by 2030) (European 2016). This trend is shown in Figure 10. Commission 2016). Different regulations, including the one being considered in the EU, define advanced biofuels in different ways. But generally, these fuels can reduce GHG emissions by 50% or more, can involve production processes such as those shown in Figure 12 and may use non-food feedstocks such as woody biomass, grasses and algae.

Global Initiatives: Assessing Current & Future Global Initiatives on Fuels & Vehicles 19 Figure 10 Global Investment in Advanced and Conventional Biofuels

Note: IRENA analysis based on Bloomberg New Energy Finance (2015), Global Trends in Clean Energy Investment. Investments are given in USD billion per year.

(Source: IRENA, October 2016)

Figure 11 compares gasoline/diesel demand scenarios steadily in 2015-2045 according to most scenarios (including to biofuels demand from different organizations the last five the OECD-FAO scenario described in the last section) but years (IRENA 2016). The fuel scenarios all point to increased these differ very broadly. In 2030, the estimates range from fuel demand over the next 30 years with the bulk of the 257 billion liters (67.9 billion gallons) to 500 billion liters growth coming from Asia (led by India and China). (132 billion gallons) per year. The projected demand depends Global biofuel demand is expected to at least increase on assumptions about policies and biofuel availability and cost.

Figure 11 Scenarios for Global Liquid Fuel Demand (Circles) and Biofuels Demand (Triangles)

(Source: IRENA, October 2016)

20 fuelsinstitute.org The idea is that if the challenges attendant to commercial- izing advanced biofuels can be overcome, there is potential to capture a larger share of that fuel demand. However, from a technological standpoint, only bioethanol (via fermented feedstock) and biomethanol (via gasification) are both ready for commercialization. Other production pathways are at early stages of development, as Figure 12 shows.

Figure 12 Commercialization Status of Various Advanced Biofuels Conversion Technologies

1–3 45 67 89 TRL

Research Prototype Demonstration Ready for Commercialization Lignocellulosic butanol

Aerobic fermentation Lignocellulosic ethanol

Aqueous phase reforming

Pyrolysis oil + upgrading

Hydrothermal upgrading Syngas fermentation Sugars to Gasi cation + hydrocarbons Fischer-Tropsch Gasi cation + mixed alcohols

Alcohol to hydrocarbons Gasi cation + methanol

TRL = Technology Readiness Level

Note: Colors represent the principal conversion process, hydrolysis (green), pyrolysis (blue), hydrothermal upgrading (purple) and gasification (red). (Source: IRENA, October 2016)

Demonstration and commercial plants at present add one billion liters per year of advanced biofuels production capacity, which would meet just 0.04% of the current liquid transport fuel demand, according to IRENA. Plants planned or under construction would add another 2 billion liters per year of capacity. These include plants producing ethanol, methanol, mixed alcohols, diesel and jet fuel. Most are in Europe and North America.

Global Initiatives: Assessing Current & Future Global Initiatives on Fuels & Vehicles 21 Fuel Economy

Ten years ago, only four governments had introduced emission standards for LDVs (ICCT 2017). All are among the mandatory GHG emission/fuel economy standards: China, top 15 vehicle markets worldwide: nearly 80% of new LDVs Japan, South Korea, and the United States, while the Euro- sold globally are currently subject to some kind of GHG emis- pean Union and Canada had announced their intention to sion or fuel economy standards. Other large markets, such introduce such standards though neither had a legislative as Australia, Thailand, and Vietnam, are in the process of framework in place. Ten governments today—Brazil, Canada, developing standards as well. An overview of the regulations China, the EU, India, Japan, Mexico, Saudi Arabia, South for both passenger and LCVs follow in Tables 4 and 5. Korea, and the U.S.—have established fuel economy or GHG

Table 4 Overview of Regulation Specifications for Passenger Cars (ICCT 2017)

ountr or rget egulte nuste leet or of est egion er etri rgetesure trget ure le ril 2017 Energy consumption 1.82 MJ/km Weight-based U.S. combined corporate average

n 2016 GHG 217 gCO2 /mi1 Footprint-based U.S. combined 2025 N/A2 corporate average

in 2015 Fuel consumption 6.9 L/100km 5 L/100km Weight-class based NEDC 2020 corporate average

2015 CO2 130 gCO2 /km Weight-based NEDC4 2021 95 gCO2 /km corporate average

ni 2017 CO2 130 g/km Weight-based NEDC for low- 2022 113 g/km corporate average powered vehicle

n 2015 Fuel economy 16.8 km/L Weight-class based JC084 2020 20.3 km/L corporate average

eio 2016 Fuel economy/ GHG 39.3 mpg or 140 g/km Footprint-based U.S. combined corporate average

ui ri 2020 Fuel economy 17 km/L Footprint-based U.S. combined corporate average

out ore 2015 Fuel economy/ GHG 17 km/L or 140 gCO2 /km Weight-based U.S. combined 2020 24 km/L or 97 gCO2 /km corporate average

.. 2016 Fuel economy/ GHG 36.2 mpg3 and 225 gCO2 /mi Footprint-based U.S. combined 3 22 2025 55.2 mpg and 147 gCO2 /mi corporate average fuelsinstitute.org

1 In April 2010, Canada announced a target for its LDV fleet of 246 g/mi for model year 2016. The separated targets for car and light truck fleet are estimated by ICCT based on the overall target. 2 Canada follows the U.S. standards in the proposal, but the final target value would be based on the projected fleet footprints. 3 Assumes manufacturers fully use low-Global Warming Power (GWP) A/C refrigerants credits. 4 EU and Japan plan to switch to WLTP by 2018. ountr or rget egulte nuste leet or of est egion er etri rgetesure trget ure le ril 2017 Energy consumption 1.82 MJ/km Weight-based U.S. combined corporate average

n 2016 GHG 217 gCO2 /mi1 Footprint-based U.S. combined 2025 N/A2 corporate average

in 2015 Fuel consumption 6.9 L/100km 5 L/100km Weight-class based NEDC 2020 corporate average

2015 CO2 130 gCO2 /km Weight-based NEDC4 2021 95 gCO2 /km corporate average

ni 2017 CO2 130 g/km Weight-based NEDC for low- 2022 113 g/km corporate average powered vehicle

n 2015 Fuel economy 16.8 km/L Weight-class based JC084 2020 20.3 km/L corporate average

eio 2016 Fuel economy/ GHG 39.3 mpg or 140 g/km Footprint-based U.S. combined corporate average

uiountr ri or 202rget0 Fuel economyegulte 17 km/Lnuste leet Footprint-basedor of U.S. combinedest egion er etri rgetesure corporatetrget average ure le outril ore 20152017 FEnergyuel economy/ consumption GHG 171.82 km/L MJ/km or 140 gCO2 /km Weight-based U.S. combined 2020 24 km/L or 97 gCO2 /km corporate average

..n 2016 FGHGuel economy/ GHG 36.2217 gCO2 mpg3 /miand1 225 gCO2 /mi Footprint-based U.S. combined 2025 55.2N/A 2mpg3 and 147 gCO2 /mi corporate average

1 Inin April 2010, Canada2015 announcedFuel a target consumption for its LDV fleet of 6.9246 L/100km g/mi for model5 L/100km year 2016. The separatedWeight-class targets based for car andNEDC light truck fleet are estimated by202 ICCT0 based on the overall target. corporate average 2 Canada follows the U.S.2015 standardsCO2 in the proposal, but the final130 target gCO2 value /km would be based on theWeight-based projected fleet footprintsNEDC. 4 3 Assumes manufacturers2021 fully use low-Global Warming Power95 (GWP) gCO2 A/C /km refrigerants credits. corporate average 4 EU and Japan plan to switch to WLTP by 2018. ni 2017 CO2 130 g/km Weight-based NEDC for low- 2022 113 g/km corporate average powered vehicle

n 2015 Fuel economy 16.8 km/L Weight-class based JC084 Table 5 Overview 2020 of Regulation Specifications20.3 km/L for Light-Commercialcorporate Vehicles average (ICCT 2017)

eio 2016 Fuel economy/ GHG 39.3 mpg or 140 g/km Footprint-based U.S. combined ountr or rget tnr nuste leet corporatetrutur averageeest egion er e rgetesure le ui ri 2020 Fuel economy 17 km/L Footprint-based U.S. combined 1 n 2016 GHG 293 gCO2/mi corporateFootprint-based average U.S. combined 2025 N/A2 corporate average out ore 2015 Fuel economy/ GHG 17 km/L or 140 gCO2 /km Weight-based U.S. combined in 20220200 Fuel consumption 246.9 km/L L/100km or 97 gCO2 /km corporateWeight-class average based NEDC

4 .. 20162017 FCO2uel economy/ GHG 36.2175 gCO2/km mpg3 and 225 gCO2 /mi FoWeight-basedotprint-based U.S.NEDC combined 20220250 55.2147 gCO2/kmmpg3 and 147 gCO2 /mi corporatecorporate averageaverage n 2015 Fuel economy 15.2 km/L Transmission, JC084 1 In April 2010, Canada announced a target for its LDV fleet of 246 g/mi for model year 2016. The separated targets for car and light truck 2022 17.9 km/L vehicle structure, fleet are estimated by ICCT based on the overall target. weight-class based 2 Canada follows the U.S. standards in the proposal, but the final target value would be based on thecorporate projected average fleet footprints. 3 Assumes manufacturers fully use low-Global Warming Power (GWP) A/C refrigerants credits. eio 2016 Fuel economy/ GHG 29.7 mpg or 185 g/km Footprint-based U.S. combined 4 EU and Japan plan to switch to WLTP by 2018. corporate average

ui ri 2020 Fuel economy 13.2 km/L Footprint-based U.S. combined corporate average

out ore 2020 Fuel economy/ GHG 15.6 km/L or 166 gCO2/km Weight-based U.S. combined corporate average

.. 2016 Fuel economy/ GHG 28.8 mpg3 and 298 gCO2/mi Footprint-based U.S. combined 2025 24 km/L or 97 gCO2 /km corporate average

1 In April 2010, Canada announced a target for its LDV fleet of 246 g/mi for model year 2016. The separated targets for car and light truck fleet are estimated by ICCT based on the overall target. 2 Canada follows the U.S. standards in the proposal, but the final target value would be based on the projected fleet footprints. 3 Assumes manufacturers fully use low-GWP A/C refrigerants credits. 4 EU and Japan plan to switch to WLTP by 2018.

Global Initiatives: Assessing Current & Future Global Initiatives on Fuels & Vehicles 23 ICCT has also summarized the fleet specifications for the passenger car and LCV fleets in Tables 6 and 7.

Table 6 Passenger Car Fleet Vehicles Fleet Specifications (ICCT 2017)

ui out ssenger r ril in ni n eio ri ore .. fleet (2013) (2014) (2015) (2015) (2011) (2014) (2012) (2014*) (2015)

les illion 3.0 20.7 13.7 2.8 3.5 0.7 0.4 1.4 7.5

ngine 1.4 1.7 1.6 1.3 1.4 1.8 2.3 2.0 2.4 isleent

ngine oer 76 98 93 59 78 95 120 120 149

ur eigt 1.1 1.4 1.4 1.1 1.2 1.2 1.4 1.5 1.6 etri tons

ootrint 3.7 4.1 4.0 3.5 3.7 3.8 4.2 4.2 4.3

uel onsution 6.8 7.3 5.1 5.3 5.8 6.3 6.8 6.4 6.8 l

eission 154 171 120 123 136 147 158 148 158 g

etrol 6% 98% 44% 47% 86% 99% – 51% 94%

iesel 0% 2% 52% 50% 0% 1% – 39% 1%

rieletri 0% 0% 2% 0% 13% 0% – 0% 5%

ters 94% 0% 2% 3% 1% 0% – 10% 0%

nul 83% 49% 75% 92% 1% 56% – 2% 6% trnsission

utoti 17% 51% 25% 8% 99% 44% – 98% 95% trnsission

* South Korea footprint reflects 2011 fleet, engine power reflects 2013 fleet. Data sources: (Marklines, 2016; Mock, 2016), additional ICCT internal databases.

24 fuelsinstitute.org Table 7 Light-Commercial Vehicles Fleet Specifications (ICCT 2017)

ui out igt oeril in ni n eio ri ore .. eile fleet (2012) (2015) (2014) (2013) (2014) (2012) (2014) (2015)

les illion 2.6 1.7 0.3 0.8 0.2 0.4 0.2 10.3

ngine 1.7 1.9 1.6 1.0 2.7 3.7 2.3 3.8 isleent

ngine oer 46 86 33 – 135 173 – 211

ur eigt 1.4 1.8 1.3 1.1 1.7 2.0 1.9 2.2 etri tons

ootrint 3.5 5.2 3.6 – 4.6 4.6 – 5.2

uel onsution 8.7 7.2 6.8 6.5 9.6 10.7 8.9 9.7 l

eission 202 168 158 151 224 251 209 226 g

etrol 48% 3% 0% 94% 95% – 0% 98%

iesel 51% 97% 89% 6% 5% – 96% 2%

rieletri 0% 0% 0% 0% 0% – 0% 1%

ters 1% 1% 11% 0% 0% – 4% 0%

nul 100% 96% 100% – 65% – 28% 1% trnsission

utoti 0% 4% 0% – 35% – 72% 99% trnsission

* China sales reflects 2014 fleet, footprint reflects 2010 fleet. Data sources: (CATARC, 2013; Mock, 2016), additional ICCT internal databases.

Globally there is greater harmonization of regulations Fuel economy regulations in most regions give manufac- with regard to how the standards are structured, types of turers substantial flexibility in meeting their targets. Exam- vehicles covered, index parameters, and test procedures ples include setting corporate average fuel economy targets; (ICCT 2017). And, not only have standards become more indexing targets to vehicle attributes; providing off-cycle ambitious over time, but also the timeframe of regulation in credits; establishing super credits for electric vehicles; and some regions has been extended by 10 years, from 2015 to allowing credit banking and trading across years, fleets, or 2025. Countries that were laggards with respect to targets, manufacturers. Such features of fuel economy regulation such as China, South Korea, and the U.S., are catching up as can reduce manufacturers’ compliance costs while spurring they renew their standards. technology innovation.

Global Initiatives: Assessing Current & Future Global Initiatives on Fuels & Vehicles 25 Global Trends in Global Fuel Economy

Working together, ICCT, Global Fuel Economy Initiative implement fuel economy standards in the coming years, shown (GFEI) and IEA have made important contributions to fuel in Figure 13. And, some of these countries are implementing economy improvement, from tracking and analyzing trends, these standards as part of their commitments under the Paris to setting bold goals for improvement, to providing technical Agreement. In terms of transport strategies to mitigate GHGs, assistance and support to countries in analyzing their fleets in fuel economy standards are second behind biofuels and more preparation for fuel economy policy development and prom- countries in the next five years are expected to implement ulgation. standards for the first time. Target regions will be the Middle A number of countries are planning to put into place fuel East, Asia, Latin America and Africa. economy standards (or strengthen standards they have in place). More than 40 countries have implemented or plan to

Figure 13 Countries That Either Have or Plan to Put into Place Fuel Economy Targets, Including Those Countries That Set Fiscal Policies to Encourage Fuel Economy

(Sources: PPMC; SLoCaT 2015; ICCT 2017; GFEI 2016; GFEI, IES 2017)

26 fuelsinstitute.org A number of regions are adopting complementary policies to improve vehicle fleet fuel economy. These policies are summarized in Table 8.

Table 8 Fiscal Policies on Fuel Economy/CO2 Emissions in Major Markets (ICCT 2017)

letri eile ountr iret t niret t uel t inentie ustrli Yes (L) Displacement, weight +

ril Displacement +

n Partly +

in Displacement + Subsidy and tax reduction

rne Yes Engine power ++ Subsidy and tax reduction

ern Yes Displacement ++ Tax reduction

ni Displacement, engine + (G) Subsidy power (L) – (D)

nonesi Displacement + (G) – (D)

tl Engine power ++ Subsidy and tax reduction

n Displacement, weight ++ Tax reduction

ussi Engine power +

out fri Yes +

out ore Displacement ++ (G) Subsidy and tax reduction + (D)

ure Displacement ++

Yes ++ Subsidy

.. Partly Weight (some states) + Subsidy

* + fuel taxation, ++ high fuel taxation, – fuel subsidies, (G) gasoline, (D) diesel, (L) local policy

Along with the U.S., which is preparing to set standards for but clear differences exist between countries and regions 2022 and beyond, the EU is currently discussing regulations (GFEI, IEA 2017). The country that made the greatest progress that would cover the 2025-2030 timeframe, and China has (measured as percentage improvement over 2005 values) was conducted a technology roadmap study of feasible passenger Turkey, followed by the United Kingdom and Japan. However, vehicle fuel consumption targets for 2025-2030. Policy pro- annual improvement rates are slowing in OECD countries and posals are being developed in Algeria, Ethiopia, Ivory Coast, accelerating in non-OECD countries (GFEI, IEA 2017). Both Kenya, Mauritius, Indonesia, Thailand, Vietnam, United Arab rates are below those needed to achieve a 2030 target GFEI Emirates, Chile and Peru (GFEI 2016). has set to halve fuel consumption to 4.4 kilometers per liter With respect to other fuel economy trends, average LDV of gasoline-equivalent per 100 kilometers (Lge/100 km) from fuel economy improved in all regions between 2005 and 2015, 8.8 Lge/100 km in 2005. (Note that the data presented here

Global Initiatives: Assessing Current & Future Global Initiatives on Fuels & Vehicles 27 will be in Lge/100 km to allow for comparison among coun- from fuel economy improvements) that occurred in Japan tries.) The annual improvement in average fuel economy at between 2014 and 2015, as well as a gradual increase in the the global level slowed during the course of the past decade, overall share of sales in OECD economies that have higher from 1.8% in 2005-08 to 1.2% in 2012-15 and 1.1% in 2014-15 fuel consumption averages compared with the regional av- (GFEI, IEA 2017). erage, including (and perhaps especially, the U.S.) (GFEI, Since 2014, non-OECD countries have achieved faster IEA 2017). LDV sales between 2005-2015 with average new fuel economy improvements than OECD economies. The LDV fuel economy in the same time period are compared in slowdown in improvement of average fuel economy in OECD Figure 14. economies is primarily attributable to a trend reversal (away

Figure 14 LDV Sales by Market Combined with Average New LDV Fuel Economy, 2005-2015

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Notes: Other OECD = Australia, Canada, Chile, Korea, Mexico and Turkey; Other non-OECD = Argentina, Egypt, India, Indonesia, Malaysia, Peru, South Africa, Thailand and Ukraine. LDV Sales by market=bars; average new LDV fuel economy=lines. Lge/100 km is liters of gasoline-equivalent per 100 kilometers, a harmonized unit to allow for comparison among these countries. (Source: IEA elaboration and enhancement for broader coverage of IHS Markit database.)

28 fuelsinstitute.org Heavy-Duty Vehicle Fuel Economy

The global demand for freight transport continues to grow half of global diesel demand today and, if left unchecked, will as economies grow and this will especially be the case in continue to grow significantly. emerging economies in Asia and Africa. Thus, improving the Road freight in heavy-duty trucking today accounts for fuel efficiency of HDVs is an increasingly important objective more than 35% of transport-related CO2 emissions, and for policymakers and transport advocates around the world. around 7% of total energy-related CO2 emissions (IEA 2017b). Oil demand growth from road freight transport has outpaced Tailpipe CO2 emissions by region from 2000-2015 are shown that of all other sectors from 2000 onward (IEA 2017b). While in Figure 15. Notice that emissions increased by nearly 50% in oil use of passenger cars has begun to plateau and decline this time period, most notably in China, India, Latin America, in many industrialized countries, oil use from road freight Africa and the Middle East. This trend is expected to continue vehicles continues to rise. Road freight transport relies pri- as these regions continue to grow economically which will fur- marily on diesel, which accounts for more than 80% of its oil ther push freight travel and fuel consumption. use; road freight alone accounted for about 80% of the global net increase in diesel demand since 2000. It makes up about

Figure 15 Tailpipe CO2 Emissions from Road Freight Transport by Region, 2000-2015

Note: EU28 = European Union. Developed Pacific Economies = Australia, Japan, Korea and New Zealand. (Source: IEA (2017a), Mobility Model, June 2017 version, database and simulation model, www.iea.org/etp/etpmodel/transport/.)

Global Initiatives: Assessing Current & Future Global Initiatives on Fuels & Vehicles 29 According to IEA, without further policy efforts, oil demand over the projection period, equivalent to around demand from road freight vehicles is set to rise by 5 mb/d to 30% of total oil demand growth from all sectors. 2050. In its Reference Scenario, global road freight activity is To date, only a handful of countries have set HDV fuel expected to increase by a factor of 2.4, driven by robust GDP economy/GHG standards: Canada, China, Japan and the U.S. growth, bringing up oil demand (IEA 2017b). Emerging and and each of these countries is in the process of setting tough- developing countries in Asia, in particular China and India, er standards that will take effect around the 2020 timeframe account for about 90% of the net increase in road freight oil (IEA 2017b). These are summarized in Table 9.

Table 9 Heavy-Duty Fuel Economy/GHG Standards (IEA 2017b)

oline erio ountr tnr te ru tes ru sie erge trgete Phase trget etri regulte tegories effiien iroeent n Established in 2005; Tractors, trucks, 2 weight bins for 9.7% over model year (MY) 2002 Phase I came into effect from transit buses and tractors > 3.5 tons (t), baseline for tractors by 2015 2015 coaches 11 bins for non-tractor 12.2% over MY 2002 baseline by 2015 Fuel consumption trucks > 3.5 t for all vehicle classes other than (km/liter) tractors

n 2014–17 Tractors, pickups, 2 weight bins for 6-23% over MY 2010 baseline, set for Phase I GHG vans, and all other tractors > 3.856 MY 2014-16 and updated for MY 2017, (g CO2 /tkm, medium and tons (t), 2 bins for depending on truck type and size g CO2/bhp-hr) heavy-duty vocational heavy-duty pickup vehicles trucks and vans, 7 bins for vocational vehicles

nite ttes 2014–17 Tractors, pickups, 3 bins for combination 7-20% over MY 2010 baseline for Phase I Joint: GHG and fuel vans, and all other tractors, 2 bins combination tractors (no trailers) consumption medium and (gasoline and diesel) from MY 2014 to MY 2017 (g CO2/ton-mile, heavy-duty vocational for heavy-duty pick-up 10-15% for heavy-duty pickup trucks g CO2/bhp-hr, vehicles trucks and vans, 3 bins and vans by MY 2018 gal/1,000 ton-mile) for vocational vehicles 10% for vocational vehicles from MY 2014 – MY 2017

The standards for combination tractors and vocational vehicles are also supported by engine standards for MY 2014 and MY 2017

nite ttes 2021–27 (trucks, Tractors, semi-trucks, 3/4 bins for combina- Additional efficiency requirements Phase II large pickups, vans large pickups, vans, tion tractors, for models beyond MY 2018 and buses) buses and work 4 bins for trailers, Reductions of 16% for pickups and 2018-27 (trailers) trucks 2 bins for heavy-duty vans, 24% for vocational vehicles, Joint: GHG & Fuel Includes trailers pick-up trucks 25% for tractors and 9% for trailers in consumption and vans, MY 2027 compared to MY 2017, with (g CO2/ton-mile, 3 bins for vocational interim standards for MY 2021 and g CO2/bhp-hr, vehicles MY 2024 gal/1,000 ton-mile) Updated modeling capacity (GEM v2); focus on promotion of advanced technologies Estimated annual fuel savings of 10.5-11.7 billion liters of gasoline equivalent, or from 4.6-5.2% of total fuel used by HDVs, by 2025

in 2012–15 Tractors, trucks (excl. 8 bin for tractors > 3.5 t, First standard to benchmark energy Phase I Fuel consumption dump trucks,) buses 11 bins for non-tractor consumption of trucks. Consumption (liters/100 km) and coaches trucks > 3.5 t limits based on weight between 38 – 30 56 l/100 km for tractors,fuelsinstitute.org 15.5 – 50 l/100 km for non-tractor trucks and 14 – 33 l/100 km for busses/coaches

in 2014–20 Tractors, heavy-duty 8 bins for tractors > 10.5% for coach buses, 11.5% for Phase II Fuel consumption vocational vehicles, 3.5 t, 11 bins for trucks trucks and 14% for tractors, compared (liters/100 km) buses and coaches (excluding dump to MY 2012 Phase I fuel consumption trucks) > 3.5 t, 11 bins limits from July 2014 (type approvals)/ for dump trucks July 2015 (all sales), depending on truck type and size

in From 2019 Tractors, dump 8 bins for tractors > 15.9% (for buses), 21.7% (for coach Phase III Fuel consumption trucks, trucks (excl. 3.5 t, 11 bins non-trac- buses), 23.7% (for trucks [excl. dump (liters/100 km) dump trucks), buses tor/non-dump trucks > trucks]), 14.1% (for dump trucks) and and coaches 3.5 t, 11 bins of dump 27.2% (for tractors) compared to MY trucks 2012 Phase I fuel consumption limits from July 2019 (type approvals) / July 2021 (all sales), depending on truck type & size oline erio ountr tnr te ru tes ru sie erge trgete Phase trget etri regulte tegories effiien iroeent n Established in 2005; Tractors, trucks, 2 weight bins for 9.7% over model year (MY) 2002 Phase I came into effect from transit buses and tractors > 3.5 tons (t), baseline for tractors by 2015 2015 coaches 11 bins for non-tractor 12.2% over MY 2002 baseline by 2015 Fuel consumption trucks > 3.5 t for all vehicle classes other than (km/liter) tractors

The standards for combination tractors and vocational vehicles are also supported by engine standards for MY 2014 and MY 2017

nite ttes 2021–27 (trucks, Tractors, semi-trucks, 3/4 bins for combina- Additional efficiency requirements Phase II large pickups, vans large pickups, vans, tion tractors, for models beyond MY 2018 and buses) buses and work 4 bins for trailers, Reductions of 16% for pickups and 2018-27 (trailers) trucks 2 bins for heavy-duty vans, 24% for vocational vehicles, Joint: GHG & Fuel Includes trailers pick-up trucks 25% for tractors and 9% for trailers in consumption and vans, MY 2027 compared to MY 2017, with (g CO2/ton-mile, 3 bins for vocational interim standards for MY 2021 and g CO2/bhp-hr, vehicles MY 2024 gal/1,000 ton-mile) Updated modeling capacity (GEM v2); focus on promotion of advanced technologies Estimated annual fuel savings of oline erio 10.5-11.7 billion liters of gasoline ountr tnr te ru tes ru sie equivalent, orerge from trgete4.6-5.2% of total Phase trget etri regulte tegories fuel usedeffiien by HDV iroeents, by 2025

nin 2012–15Established in 2005; Tractors, trucks,trucks (excl. 82 weightbin for tractorsbins for > 3.5 t, First9.7% standard over model to benchmarkyear (MY) 2002 energy Phase I Fucameel consumption into effect from transitdump trucks,)buses and buses 11tractors bins for > 3.5non-tractor tons (t), consumptionbaseline for tractors of trucks. by 2015Consumption (liters/1002015 km) coachesand coaches trucks11 bins > for 3.5 non-tractor t limits12.2% basedover MY on 2002weight baseline between by 38 2015 – Fuel consumption trucks > 3.5 t 56for l/100all vehicle km for classes tractors, other 15.5 than – 50 (km/liter) l/100tractors km for non-tractor trucks and 14 – 33 l/100 km for busses/coaches n 2014–17 Tractors, pickups, 2 weight bins for 6-23% over MY 2010 baseline, set for inPhase I 2014–20GHG vans,Tractors, and heavy-duty all other 8tractors bins for > tractors3.856 > 10.5%MY 2014-16 for coach and buses,updated 11.5% for MY for 2017, Phase II Fu(g elCO2 consumption /tkm, mediumvocational and vehicles, 3.5tons t, (t),11 bins 2 bins for fortrucks trucksdepending and 14%on truck for tractors, type and compared size heavy-duty vocational heavy-duty pickup (liters/100g CO2/bhp-hr) km) buses and coaches (excluding dump to MY 2012 Phase I fuel consumption vehicles trucks)trucks and > 3.5 vans, t, 11 7bins bins limits from July 2014 (type approvals)/ for dumpvocational trucks vehicles July 2015 (all sales), depending on truck type and size nite ttes 2014–17 Tractors, pickups, 3 bins for combination 7-20% over MY 2010 baseline for inPhase I FrJoint:om GHG2019 and fuel vans,Tractors, and dump all other 8tractors, bins for 2 tractors bins > 15.9%combination (for buses), tractors 21.7% (no (fortrailers) coach medium and (gasoline and diesel) from MY 2014 to MY 2017 Phase III Fuconsumptionel consumption trucks, trucks (excl. 3.5 t, 11 bins non-trac- buses), 23.7% (for trucks [excl. dump heavy-duty vocational for heavy-duty pick-up 10-15% for heavy-duty pickup trucks (liters/100(g CO2/ton-mile, km) dump trucks), buses tor/non-dump trucks > trucks]), 14.1% (for dump trucks) and g CO2/bhp-hr, vehiclesand coaches 3.5trucks t, 11 and bins vans, of dump 3 bins 27.2%and vans (for by tractors) MY 2018 compared to MY gal/1,000 ton-mile) trucksfor vocational vehicles 201210% forPhase vocational I fuel consumption vehicles from limits MY from2014 –July MY 2019 2017 (type approvals) / July

2021The standards (all sales), for depending combination on truck typetractors & size and vocational vehicles are also supported by engine standards for MY 2014 and MY 2017 The EU, Mexico, India and Korea are looking to intro- standards in 2005 and 2015. While over 80% of the LDV nite ttes 2021–27 (trucks, Tractors, semi-trucks, 3/4 bins for combina- Additional efficiency requirements ducePhase them II in the nextlarge year pickups, or two. vans The figurelarge below pickups, compares vans, markettion tractors, is regulated by fuelfor modelseconomy beyond standards, MY 2018 just under the share of LDV versusand buses) HDV sales subjectbuses to fuel and economy work 60%4 bins of for the trailers, HDV market is,Reductions according of to16% IEA. for pickups and 2018-27 (trailers) trucks 2 bins for heavy-duty vans, 24% for vocational vehicles, Figure 16 Share Joint: ofGHG Light- & Fuel and Heavy-DutyIncludes trailers Vehicle pick-upSales trucks Subject to Fuel25% Economy for tractors and Regulations 9% for trailers in consumption and vans, MY 2027 compared to MY 2017, with (g CO2/ton-mile, 3 bins for vocational interim standards for MY 2021 and g CO2/bhp-hr, vehicles MY 2024 gal/1,000 ton-mile) Updated modeling capacity (GEM v2); focus on promotion of advanced technologies Estimated annual fuel savings of 10.5-11.7 billion liters of gasoline equivalent, or from 4.6-5.2% of total fuel used by HDVs, by 2025

in 2012–15 Tractors, trucks (excl. 8 bin for tractors > 3.5 t, First standard to benchmark energy Phase I Fuel consumption dump trucks,) buses 11 bins for non-tractor consumption of trucks. Consumption (liters/100 km) and coaches trucks > 3.5 t limits based on weight between 38 – 56 l/100 km for tractors, 15.5 – 50 l/100 km for non-tractor trucks and 14 – 33 l/100 km for busses/coaches

in 2014–20 Tractors, heavy-duty 8 bins for tractors > 10.5% for coach buses, 11.5% for Phase II Fuel consumption vocational vehicles, 3.5 t, 11 bins for trucks trucks and 14% for tractors, compared Note: The HDV sales(liters/100 shares km)shown in the figurebuses andinclude coaches buses. The(excluding share of dump all HDV sales coveredto MY 2012 by fuelPhase economy I fuel consumption standards (including trucks and buses was 51%. trucks) > 3.5 t, 11 bins limits from July 2014 (type approvals)/ for dump trucks July 2015 (all sales), depending on (Sources: ICCT and DieselNet (2016), IEA (2017a), Mobility Model, June 2017 version, database andtruck simulation type and size model, www.iea.org/etp/etpmodel/transport/.) in From 2019 Tractors, dump 8 bins for tractors > 15.9% (for buses), 21.7% (for coach Phase III Fuel consumption trucks, trucks (excl. 3.5 t, 11 bins non-trac- buses), 23.7% (for trucks [excl. dump (liters/100 km) dump trucks), buses tor/non-dump trucks > trucks]), 14.1% (for dump trucks) and and coaches 3.5 t, 11 bins of dump 27.2% (for tractors) compared to MY trucks 2012 Phase I fuel consumption limits Global Initiatives: Assessing Current & Future Global Initiatives on Fuels & Vehicles from July 2019 (type approvals) / July 31 2021 (all sales), depending on truck type & size Zero Emission Vehicle Policies

While a small percentage of overall global car sales, the road as quickly as possible and end the era of the ICEV. Some growth in electric vehicle sales in the last six years has been governments are beginning to set policies that encourage and astounding, and some proponents are intent on this trend even require zero emission vehicles (ZEVs), and in particular, continuing. From NGOs such as the Zero Emission Vehicle EVs. As Figure 17 shows, this is expected to continue as coun- Alliance to governments such as the California Air Resourc- tries implement GHG-mitigating measures under the Paris es Board (CARB): the goal is clear: get as many EVs on the Agreement.

Figure 17 Countries that Have Set ZEV Targets or Support Policies

(Sources: PPMC, SLoCaT 2015; IEA 2017b)

32 fuelsinstitute.org Most of these countries already have a policy(ies) in place aging early EV uptake. Fleet operators, both public and to support the development of the EV market, and these private, can contribute significantly to the deployment are summarized in Table 10. Financial incentives are most of EVs, first from demand signals that they send to the common, but notably, so are fuel economy standards. Setting market, and second thanks to their broader role as very stringent fuel economy standards for vehicles is a path- amplifiers in promoting and facilitating the uptake of EVs way toward facilitating EV uptake because it makes the tech- by their staff and customers.” nology costs to comply with ICEVs expensive and thus brings • Measures to support infrastructure deployment them more into parity with EVs. Monitoring ZEV mandates • Access restrictions: Waivers on regulations that limit the and fiscal policies is, of course, important, but monitoring availability of license plates for ICE vehicles, exemptions fuel economy developments is even more so because of this from access restrictions to urban areas (this is directly issue. In addition to these policies, there are others being used related to diesel car bans), exemptions from usage fees for to support EV market uptake including: specific portions of the road network, dedicated parking • Research, development and demonstration (RD&D) of and access to publicly available charging infrastructure, innovative technologies allowances to access bus lanes and high-occupancy vehi- • Financial incentives: Direct rebates, tax breaks/credits or cle (HOV) lanes. exemptions • Public procurement: IEA notes that “the analysis shows that fleet procurement is an important means of encour-

Table 10 Policies in Place Globally to Support the ZEV Market (IEA 2017b)

uel ono innil ess estrition leet ountr tnrs nte nenties nenties roureent

n Yes Under development (Provincial - British Yes Columbia, Ontario, Quebec)

in Yes Under development Yes Yes

enr Yes Yes

rne Yes Yes Yes

ern Yes Yes Yes

ni Yes Under development Some states

n Yes Yes

eterlns Yes Yes

or Yes Yes

out ore Yes Target Yes

een Yes Yes

nite Yes Yes Yes ingo

nite ttes Yes California (with nine Some states Some cities states following)

Global Initiatives: Assessing Current & Future Global Initiatives on Fuels & Vehicles 33 In addition to these policies, the state of California has The number of EVs on the roads around the world rose implemented a ZEV requirement that nine other U.S. states to 2 million in 2016, following a year of strong growth in are following: Connecticut, Maine, Maryland, Massachusetts, 2015 (IEA 2017b). New registrations of electric cars hit a new New Jersey, New York, Oregon, Rhode Island, and Vermont. record in 2016, with over 750,000 sales worldwide. However, The California program requires 1.5 million ZEVs in Califor- EVs only made up 0.2% of total passenger light-duty vehicles nia by 2025 and establishes several milestones on the pathway in circulation in 2016, and “have a long way to go before toward this target. Several U.S. states offer fiscal incentives: reaching numbers capable of making a significant contribu- Washington, Hawaii, Oregon, Vermont, Colorado, Maryland, tion to greenhouse gas emission reduction targets. In order Connecticut, New York and Massachusetts (ZEV Alliance to limit temperature increases to below 2°C by the end of the 2016). century, the number of electric cars will need to reach 600 The province of Quebec, Canada and China intend to million by 2040” (IEA 2017b). However, battery costs are implement ZEV mandates similar to California’s over the declining rapidly and energy density is increasing. next few years (Quebec 2016, Future Fuel Strategies 2016a). The evolution of the EV car stock from 2010-2016 is India has announced a goal to replace the entire ICEV fleet shown in Figure 18 (IEA 2017b). So far, battery electric vehi- in the country with EVs by 2030 (Sputnik News 2017). Ger- cle (BEV) uptake has been consistently ahead of the uptake of many has called for EV quotas, similar to China (Transport plug-in hybrid electric vehicles (PHEVs). The U.S. and China & Environment 2017). As will be discussed in more detail have the most EVs on the roads. However, with more than below, France and the United Kingdom will end the sale of 200 million electric two-wheelers and more than 300,000 conventional ICEVs by 2040, which will serve to incentivize electric buses, China is by far the global leader in the electri- the ZEV market; Norway plans a similar goal by 2025. The fication of transport. Netherlands is considering a ban on ICEVs that would take effect by 2025.

Figure 18 Evolution of the Global Electric Car Stock, 2010-2016

Notes: The electric car stock shown here is primarily estimated on the basis of cumulative sales since 2005. When available, stock numbers from official national statistics have been used, provided good consistency with sales evolutions. (Sources: IEA analysis based on EVI country submissions, complemented by EAFO(2017a), IHS Polk (2016), MarkLines (2017), ACEA (2017a, 2017b) and EEA (2017).)

34 fuelsinstitute.org China, the U.S. and Europe made up the three main markets, totaling over 90% of all EVs sold around the world (IEA 2017b). China accounted for more than 40% of the electric cars sold in the world and more than double the amount sold in the U.S. Moreover, with a 29% market share, Norway has achieved the most successful deployment of electric cars in terms of market share, globally. It is followed by the Nether- lands, with a 6.4% EV market share, and Sweden with 3.4%. China, France and the United Kingdom all have electric car market shares close to 1.5%. Nevertheless, despite a continuous and impressive increase in the electric car stock, electric vehicle supply equipment (EVSE) deployment and electric car sales in the past five years, annual growth rates have been declining (IEA 2017b). In 2016, the EV stock growth was 60%, down from 77% in 2015 and 85% in 2014. The year 2016 was also the first time year-on-year electric car sales growth had fallen below 50% since 2010. IEA says that declining year-on-year increments are consistent with a growing EV market and stock size, but the scale achieved so far is still small: the global EV stock currently corresponds to just 0.2% of the total number of passenger light-duty vehicles (PLDVs) in circulation.

Global Initiatives: Assessing Current & Future Global Initiatives on Fuels & Vehicles 35 Heavy-Duty Electrification

The need to reduce air pollution and mitigate climate cates as a possible decarbonization strategy. The barriers are change are becoming more and more critical for countries similar to the LDV market: cost of the technology and infra- around the world. Stringent emission standards are expected structure development, though battery costs are decreasing to reduce air pollution, but decarbonizing the HDV fleet is a for HDVs and infrastructure may not be as big an issue for difficult proposition, much more so than the LDV fleet. The non long-haul HDVs. International Transport Forum (ITF) and the Organization Currently HDV electrification is in the pilot to early for Economic Cooperation and Development (OECD) have deployment stage (and for the latter, this generally applies estimated that if no additional measures are taken, CO2 to medium-duty trucks). There are no heavy-duty ZEV man- emissions from global freight alone could increase by 160%, dates at this time. California has taken the lead in setting as international freight volumes grow threefold (OECD, ITF policies to facilitate these technologies and incentivize HDVs 2017). This is largely due to increased use of road transport, through various pilot and demonstration projects and its especially for short distances and in regions that lack rail Hybrid and Zero Emission Truck and Bus Voucher Incentive links, such as Southeast Asia. CO2 emissions by freight mode Project (HVIP), which provides monetary incentives for truck in 2015, 2030 and 2050 are shown in Figure 19. manufacturers to develop zero-emissions and hybrid trucks. Along with biofuels and natural gas, electrification of The EU’s Green Freight Programme facilitates demonstration heavy-duty trucks is viewed by some policymakers and advo- programs around Europe.

Figure 19 CO2 Emissions from International Freight by Mode Million Tons, 2015-2050

(Source: OECD, ITF 2017)

36 fuelsinstitute.org ICEV Bans & Other Policy Initiatives that Serve to Limit Them

Some cities and several countries have announced initiatives to diesel vehicles. Air pollution and congestion mitigation are to ban, phase out or otherwise limit diesel ICEVs or the ICEV thus primary drivers, but so is the need to reduce GHGs and, in general. Most of these cities/countries are in Europe where as an additional dimension in Europe, the Dieselgate scandal. many cities are experiencing worsening air pollution, partic- Table 11 summarizes current car ban/limitation/phase out ularly PM2.5 and nitrogen dioxide, that is largely attributed initiatives globally (Future Fuel Strategies 2017).

Table 11 Cities/Countries that Have Taken Recent Action to Ban or Limit ICEVs (Future Fuel Strategies 2017)

it ountr ur

tens reee Diesel cars and vans banned by 2025 nglore ni Investing heavily in public transport and converted its 6,000 buses to CNG while discouraging car use relon in All cars older than 20 years old banned from 2019; exploring the "superblock" concept (more green spaces and less street) to clean up its air and to reclaim space from road transportation oengen enr The city has prioritized bikes over cars and has closed to vehicles for decades, long before the car ban issues came to the fore. Copenhagen prioritizes bikes over cars and now has more cycles than people. uriti ril Has invested heavily in public transport; currently nearly 70% of the city goes to work by public transport rne Ending the sale of ICEVs by 2040 ern Legislation banning permits for new ICEVs as of 2030 is currently under consideration. noi ietn Plans to ban motorbikes by 2030 elsini inln The Finnish capital plans to drastically reduce the number of cars on its streets by investing heavily in better public transport, imposing higher parking fees, encouraging bikes and walking and converting inner city ring roads into residential and walking areas. ni Plans to replace all ICEVs with EVs by 2030 onon nite Has instituted policies to require cleaner buses, incentives to encourage taxi drivers to choose cleaner ingo vehicles (i.e. ZEVs), added bike lanes and has started the ultra low emission zone (ULEZ) a year early, in 2018. Under the ULEZ program, all cars, motorcycles, vans, minibuses, buses, coaches and heavy goods vehicles (HGVs) will need to meet exhaust emission standards (ULEZ standards), or pay a daily charge, when travelling in central London. Considering restricting parking spaces in the city, pay-per-mile road pricing for some vehicles, car-free days and zones. ri in Diesel cars and vans banned by 2025 eio it Diesel cars and vans banned by 2025; new regulations to eliminate parking requirements in buildings Global Initiatives: Assessing Currentsigned & inFuture June Global2017 Initiatives on Fuels & Vehicles 37 uni ern Considering legislation to ban all diesel ICEVs from the city center e eli ni Has banned all new large diesel cars and SUVs with engines of more than 2,000cc and is phasing out thousands of diesel taxis; vehicle registrations for diesel ICEVs made at least 10 years ago will be canceled or won't be renewed or Has set a goal (not a ban) that all new cars sold by 2025 should be zero (electric or hydrogen) or low (plug-in hybrids) emission vehicles. This is a very ambitious but feasible goal with the right policy measures. e eterlns Policymakers have discussed the banning of gasoline ICEVs by 2025 and only ZEVs will be allowed for sale slo or Initially created car-free zones, but citizen backlash caused city managers to rethink this policy and now the city is eliminating parking spaces. ris rne Diesel cars and vans banned by 2025; has already banned all diesel cars manufactured before 2000; bans cars in many historic central districts on weekends; imposes odd-even bans on vehicles; makes public transport free during major pollution events and encourages car and bike-sharing; a long section of the Right Bank of the river Seine is now car-free and a monthly ban on cars has come into force along the Champs-Elysées. tuttgrt ern Plans in 2018 to ban diesel cars that do not emissions standards from entering the city on days when pollution is heavy nite ingo Ending the sale of conventional ICEVs by 2040 (i.e., presumably hybrid vehicles will still be allowed) uri iterln Has capped the number of parking spaces in the city, only allows a certain number of cars into the city at any one time, and is building more car-free areas, plazas, tram lines and pedestrianized streets. it ountr ur

tensri reeein Diesel cars and vans banned by 2025 ngloreeio it ni InvestingDiesel cars heavily and vans in public banned transport by 2025; and new converted regulations its 6,000to eliminate buses parkingto CNG requirementswhile discouraging in buildings car use signed in June 2017 relon in All cars older than 20 years old banned from 2019; exploring the "superblock" concept (more green spaces uni ern andConsidering less street) legislation to clean to up ban its allair dieseland to ICE reclaimVs from space the fromcity center road transportation eoengen eli ni enr TheHas citybanned has prioritizedall new large bikes diesel over cars cars and and SUV hass closedwith engines to vehicles of more for decades,than 2,000cc long andbefore is phasing the car banout issuesthousands came of to diesel the fore. taxis; Co vehiclepenhagen registrations prioritizes for bikes diesel over ICE carsVs made and now at least has 10more years cycles ago thanwill be people. canceled or won't be renewed uriti ril Has invested heavily in public transport; currently nearly 70% of the city goes to work by public transport or Has set a goal (not a ban) that all new cars sold by 2025 should be zero (electric or hydrogen) or low rne Ending(plug-in the hybrids) sale of emission ICEVs by vehicles. 2040 This is a very ambitious but feasible goal with the right policy measures. eern eterlns LegislationBy 2030, all banning new cars permits in the Netherlands for new ICEV musts as ofbe 2030 zero isemission currently. under consideration. slonoi or ietn PlansInitially to created ban motorbikes car-free zones, by 2030 but citizen backlash caused city managers to rethink this policy and now the elsini inln Thecity isFinnish eliminating capital parking plans to spaces. drastically reduce the number of cars on its streets by investing heavily in better ris rne publicDiesel transport,cars and vans imposing banned higher by 2025; parking has alreadyfees, encouraging banned all bikesdiesel and cars walking manufactured and converting before 2000; inner banscity ringcars roadsin many into historic residential central and districts walking on areas. weekends; imposes odd-even bans on vehicles; makes public ni Planstransport to replace free during all ICEV majors with pollution EVs by events2030 and encourages car and bike-sharing; a long section of the Right Bank of the river Seine is now car-free and a monthly ban on cars has come into force along the onon nite HasChamps-Elysées. instituted policies to require cleaner buses, incentives to encourage taxi drivers to choose cleaner ingo vehicles (i.e. ZEVs), added bike lanes and has started the ultra low emission zone (ULEZ) a year early, in tuttgrt ern 2018.Plans Underin 2018 the to banULEZ diesel program, cars that all cars, do not motorcycles, emissions vans,standards minibuses, from entering buses, coaches the city onand days heavy when goods vehiclespollution (HGV is heavys) will need to meet exhaust emission standards (ULEZ standards), or pay a daily charge, nite ingo whenEnding travelling the sale inof centralconventional London. ICE CoVsnsidering by 2040 (i.e.,restricting presumably parking hybrid spaces vehicles in the citywill, stillpay-per-mile be allowed road) pricing for some vehicles, car-free days and zones. uri iterln Has capped the number of parking spaces in the city, only allows a certain number of cars into the city at ri in Dieselany one cars time, and and vans is buildingbanned bymore 202 car-free5 areas, plazas, tram lines and pedestrianized streets. eio it Diesel cars and vans banned by 2025; new regulations to eliminate parking requirements in buildings signed in June 2017 uni ern Considering legislation to ban all diesel ICEVs from the city center In addition to these efforts, London Mayor Sadiq Khan ande Paris eli Mayor ni Anne HidalgoHas havebanned teamed all new forlarge a dieselnew initiacars and- SUVs with engines of more than 2,000cc and is phasing out thousands of diesel taxis; vehicle registrations for diesel ICEVs made at least 10 years ago will be canceled or tive, the Clean Vehicle Checkerwon't programbe renewed (C40 2017). Avail- ableor this fall, consumers willHas be setable a goal to type(not ain ban) the that model all new of cars sold by 2025 should be zero (electric or hydrogen) or low the new car or van they are (plug-inconsidering hybrids) buying emission and vehicles. find out This is a very ambitious but feasible goal with the right policy measures. moree about eterlns its actual “on thePolicymakers road” emissions. have discussed Other cities the banning are of gasoline ICEVs by 2025 and only ZEVs will be allowed for sale likelyslo to orfollow their lead, includingInitially created Seoul, car-free Madrid, zones, Mexico but citizen backlash caused city managers to rethink this policy and now the City, Milan, Moscow, Oslo andcity isTokyo. eliminating Each parking have committed spaces. to workris rwithne the group to Dieseldevelop cars a andglobal vans scoringbanned bysystem 2025; has already banned all diesel cars manufactured before 2000; bans cars in many historic central districts on weekends; imposes odd-even bans on vehicles; makes public relevant and accessible to alltransport citizens. free during major pollution events and encourages car and bike-sharing; a long section of the Right Bank of the river Seine is now car-free and a monthly ban on cars has come into force along the Champs-Elysées. tuttgrt ern Plans in 2018 to ban diesel cars that do not emissions standards from entering the city on days when pollution is heavy nite ingo Ending the sale of conventional ICEVs by 2040 (i.e., presumably hybrid vehicles will still be allowed) uri iterln Has capped the number of parking spaces in the city, only allows a certain number of cars into the city at any one time, and is building more car-free areas, plazas, tram lines and pedestrianized streets.

38 fuelsinstitute.org A number of other cities and countries have long instituted car-free zones, pedestrian zones or car-free days long before the Dieselgate scandal to reduce air pollution and mitigate traffic congestion. But bans are a new phenomena. Figure 20 shows the countries with cities that have enacted such policies, which include major cities noted above and others such as Vienna, Brussels, Dubrovnik, Budapest, Venice, Rome, Rotterdam, Moscow, Montreal, Toronto, Havana, Buenos Aires, Santiago and Bogota. In the U.S., these kinds of restrictions affect large cities such as Minneapolis, New York, Portland, Atlanta and New Orleans, but also smaller communities as well, especially coastal communities.

Figure 20 Countries with Cities that Have Car-Free & Pedestrian Zones or Car-Free Days

(Source: Future Fuel Strategies 2017)

Global Initiatives: Assessing Current & Future Global Initiatives on Fuels & Vehicles 39 Overall Fuel Quality Improvement & Vehicle Emission Standards

Fuel quality improvement over the last 15 years has focused largely on removing lead in gasoline, which has now been ac- complished for 99% of the global gasoline pool, and reducing sulfur in road transport fuels (PCFV 2017). Some countries have gone further and improved gasoline fuel quality by reducing benzene, a known human carcinogen, and improved other parameters. Given the air quality issues and the growing health impacts associated with PM, countries and NGOs have increasingly focused on reducing sulfur in diesel. Diesel sulfur levels range as low as 10 ppm in the U.S. and Europe to highs of 10,000 ppm in countries such as Egypt. As vehicles are major sources of PM2.5, the need to reduce these pollutant emissions are becoming critical as more and more vehicles take to the roads globally, especially in emerging economies. Ultra-low sulfur fuels, especially diesel, with no more than 50 ppm (and ideally 10 ppm) sulfur are necessary to introduce more advanced and cleaner emission control technologies into countries. A leading organization working in this Similarly, the Climate and Clean Air Coalition has a global area is the Partnership for Cleaner Fuels and Vehicles (PCFV), strategy to introduce cleaner diesel fuels and vehicles. Figure a public-private partnership with its secretariat in the United 21 shows the status of diesel desulfurization (PCFV 2016). Nations Environment Program (UNEP). PCFV is actively working to support and encourage countries to reduce sulfur in fuels and introduce more stringent emission standards.

40 fuelsinstitute.org Figure 21 Status of Diesel Desulfurization

* Information in parts per million (ppm) For additional details and comments per country, visit www.unep.org/transport/pcfv/ (Source: Partnership for Cleaner Fuels and Vehicles, March 2017)

As the figure shows, only a few countries such as the U.S., In addition to diesel desulfurization, PCFV has focused on Canada, EU, Japan, Australia, New Zealand and Russia have supporting and encouraging countries to set vehicle emission set ULSD standards. Several others such as China, Colombia, standards (PCFV 2016b). Many countries around the world Paraguay, Uruguay and Thailand have set ULSD standards follow EU emission standards and thus the key classifies below 50 ppm. Many other countries are at or below 500 countries in terms of Euro emission standards. For a basis of ppm and include Mexico, Brazil, South Africa, India and In- comparison, Euro III would be very roughly in line with U.S. donesia. A number of countries in Latin America, Africa, the Tier 1 emission standards set in the early 1990s, though the Middle East and Asia are over 500 ppm, and in some cases, Tier 1 nitrogen oxide (NOx) emission standards were more above 5,000 ppm. Notably, for some countries with higher stringent than Euro III’s. sulfur standards, there may be lower-sulfur grades for more advanced vehicles and there may also be government regulations or legislation that requires cleaner city or regional fuels with lower sulfur for both diesel and gasoline.

Global Initiatives: Assessing Current & Future Global Initiatives on Fuels & Vehicles 41 Figure 22 Status of Light-Duty Vehicle Emission Standards

NOTE: “Above Euro 3” means that the regulations are stricter than Euro 3 and the country has in place either Euro 4, 5 or 6 or equivalent standards. For additional detail, visit www.unep.org/transport/pcfv/ (Source: Partnership for Cleaner Fuels and Vehicles, March 2017)

Aside from the EU, U.S. and Japan, which were leaders in A number of countries have also put into place emission setting stringent standards, other countries have followed, in- standards for HDVs. These are summarized in Figure 23. cluding Argentina, Australia, Canada, Chile, China, Mexico, Most of these countries tend to follow EU regulations respect- Brazil, Russia and South Korea. Many countries, especially in ing emissions standards, except for the U.S. and Canada. The Africa, the Middle East and Asia, still have not set emission designations in the figure refer to those EU standards with an standards. Still others in Latin America, Africa, the Middle equivalency shown for the U.S. and Canada to provide a com- East and Asia will need to improve their standards over time parison. In short, the U.S., Canada, EU, Turkey, South Korea to reduce vehicle-related air pollution. and Japan have put into place the most stringent standards for HDVs. Mexico, Brazil and Beijing will join them by 2020.

42 fuelsinstitute.org Figure 23 Countries that Have Put into Place Heavy-Duty Emission Standards

NOTE: This map displays national-level regulations only; a number of countries, including China, have implemented more stringent standards at the sub-national level. (Source: Compiled by Future Fuel Strategies citing data TransportPolicy.net as of June 2016.)

Global Initiatives: Assessing Current & Future Global Initiatives on Fuels & Vehicles 43 Conclusion

In response to growing concerns about reducing air pollution For the first time, cities and even countries are calling for from motor vehicles, mitigating transport-related climate a ban or limitation on the ICEV in favor of the EV, public change and improving traffic congestion countries have and transport and ride sharing. That trend is likely to continue, will continue setting policies such as biofuels mandates and not just in Europe, but in other large world cities. Finally, renewable transport requirements; fuel economy standards, countries will continue to improve fuel quality and set or ZEV support policies and emission standards and improved tighten emissions standards and will most likely focus on re- fuel quality for gasoline and diesel. A trend to watch respect- ducing sulfur in diesel and gasoline. This is a key focus area ing biofuels is whether the EU follows through on its plan to for many African countries which have very poor fuel quality cap first-generation biofuels and require a specific amount of with diesel sulfur levels above 5,000 ppm and where air pollu- advanced biofuels in the pool. Another trend to watch are tion, notably PM, is a serious issue. whether countries begin to increase blend levels, similar to what is being discussed in the U.S. with mid-level blends of E15 or higher. With respect to fuel economy, expect those LDV and HDV standards already set in countries continue to tighten (e.g. U.S., EU) while other countries (especially in Africa and Asia) begin to set them for the first time. As it pertains to ZEV policies, it is important to watch the evolution of fiscal policies in the countries that have set them and to see how they facilitate the ZEV market, particularly for EVs. It is expected that more countries will institute ZEV mandates similar to California, and the tightening of fuel economy standards, coupled with a ZEV mandate and fiscal policies may actually help to drive down the cost of ZEVs and into parity with the ICEV much quicker than might be expected.

44 fuelsinstitute.org Bibliography

Global Initiatives: Assessing Current & Future Global Initiatives on Fuels & Vehicles 45 46 fuelsinstitute.org About the Author

Tammy Klein is the Principal Consultant for Future Fuel and NGOs on transportation fuels issues. She has advised Strategies, which provides market and policy intelligence the Organization of Petroleum Exporting Countries (OPEC), with unique insight and analysis for the global fuels industry. International Petroleum Industry Environmental Conserva- Tammy provides consulting service to clients in the auto, oil tion Association (IPIECA), Energy Management Authority and associated industries, as well as governments and NGOs (EMA) of Singapore and Natural Resources Defense Council and helps them understand current and future fuels trends (NRDC) and the International Energy Agency (IEA), among and issues; or in the case of government and NGOs, the best many others. Prior to her time at Hart Energy, she was an policies to develop and implement. Tammy also provides a associate at Venable LLP specializing in environmental and membership-based service, the Future Fuels Outlook, with administrative law matters. She holds a juris doctor from the subscribers from the auto, oil and biofuels industries. She Georgetown University Law Center and a bachelor of science is an expert on conventional, biofuels and alternative fuels in journalism from the University of Florida. market and policy issues. Tammy is formerly Senior Vice President for Stratas Ad- visors/Hart Energy and in that capacity was responsible for overseeing all aspects of its fuels and transport-related research, products, services, staff and consultancy. She continues to serve as an advisor to many companies, governments

Global Initiatives: Assessing Current & Future Global Initiatives on Fuels & Vehicles 47 About the Fuels Institute

The Fuels Institute, founded by NACS in 2013, is a 501(c)(4) ests of the affected stakeholders. Such publications will help non-profit research-oriented think tank dedicated to evaluat- to inform both business owners considering long-term investing the market issues related to vehicles and the fuels that ment decisions and policymakers considering legislation and power them. By bringing together diverse stakeholders of the regulations affecting the market. Our research is independent transportation and fuels markets, the Institute helps to identi- and unbiased, designed to answer questions, not advocate a fy opportunities and challenges associated with new technolo- specific outcome. Participants in the Fuels Institute are dedi- gies and to facilitate industry coordination to help ensure that cated to promoting facts and providing decision makers with consumers derive the greatest benefit. the most credible information possible, so that the market can The Fuels Institute commissions and publishes compre- deliver the best in vehicle and fueling options to the consumer. hensive, fact-based research projects that address the inter- For more about the Fuels Institute, visit www.fuelsinstitute.org.

Board of Advisors (*Denotes individual who also serves on Board of Directors)

Jay Ricker (Chairman)* Deborah Grimes Mike Lorenz Danny Seals Ricker’s Casey’s General Stores Sheetz, Inc. Gilbarco Veeder-Root Robert Wimmer Doug Haugh* Brian Mandell* Matt Spackman (Treasurer)* Parkland USA at Parkland Phillips 66 Company Kum&Go Toyota Motor Fuel Corporation Rebecca Monroe Norman Turiano* North America, Inc. Joel Hirschboeck General Motors Turiano Strategic Jeremy Bezdek Kwik Trip, Inc. Jeff Morris* Consulting Flint Hills Resources JeSean Hopkins Michael Whatley* Derek Regal Wendy Chronister Nissan North America Andeavor Consumer Energy Alliance Chronister Oil Company Heather Killough Dave Whikehart Rob Sabia* Mark DeVries* Argus Media Gulf Oil Marathon Petroleum POET Ethanol Products Tom Kloza Corporation Jon Scharingson Karl Fails Craig Willis OPIS Renewable Energy Group Sunoco Steve Loehr* Archer Daniels Midland Alison Schmidt Matthew Forman* Company Kwik Trip, Inc. U.S. Oil FCA

48 fuelsinstitute.org CORPORATE Jessica Bennett Joe Gagliano Rick Long PARTNERS National Corn Growers CA Fuel Cell Partnership Petroleum Equipment John DiMartini Association Ezra Finkin Institute The Andersons, Inc. Scott Negley Diesel Technology Forum Rob Underwood Douglas Dorfman Wayne Fueling Systems Robin Vercruse Petroleum Marketers CHS, Inc. (CENEX) Tom Tietjen Fuel Freedom Foundation Association of America Jeff Murphy Xerxes Corporation Chris Bliley Dawn Carlson Copec Growth Energy PMCI/RINAlliance, Inc. Jeff Cole ASSOCIATION Gregory Dolan Robert White Costco Wholesale PARTNERS Methanol Institute Renewable Fuels Association Peter Davis Valerie Ughetta Paige Anderson Ryan McNutt Green Print, LLC Alliance of Automobile NACS SIGMA Stuart Bartley Manufacturers David Fialkov Wayne Geyer The Lubrizol Corporation Ron Lamberty NATSO STI/SPFA Kevin McWilliams American Coalition for Scott Fenwick Scott Fisher Lucas Oil Products, Inc. Ethanol (ACE) National Biodiesel Board Jen Stewart Texas Food & Fuel Sean Maclaurin Jeff Clarke Association Metroplex Energy Canadian Independent NGV America Petroleum Marketers Ronald E. Oligney Association Kris Kiser Midwest Methanol, LLC Outdoor Power Equipment Institute

Founder Level Kwik Trip ICM, Inc. Fuel Freedom Foundation NACS Marathon Petroleum The Lubrizol Corporation Growth Energy Corporation Platinum Contributor Lucas Oil Products Methanol Institute Nissan North America SIGMA Metroplex Energy, Inc. National Biodiesel Board OPIS Midwest Methanol, LLC National Corn Growers Gold Contributors Phillips 66 Company U.S. Oil Association Andeavor POET Ethanol Products Wayne Fueling Systems NATSO Archer Daniels Midland Renewable Energy Group Outdoor Power Equipment Company WEX, Inc. Sheetz, Inc. Institute Argus Media Xerxes Corporation Sunoco LP Petroleum Equipment Casey’s General Stores Institute Toyota Motor Association Partners Chronister Oil Company North America, Inc. Alliance of Automobile Petroleum Marketers Association of America Consumer Energy Alliance Manufacturers PMCI | RINAlliance, Inc. FCA Bronze Contributors American Coalition for The Andersons, Inc. Ethanol Renewable Fuels Flint Hills Resources CHS, Inc. (CENEX) CA Fuel Cell Partnership Association General Motors Copec Canadian Independent STI/SPFA Gilbarco Veeder-Root Costco Wholesale Petroleum Marketers Texas Food & Fuel Kum & Go Association Association GreenPrint, LLC Diesel Technology Forum

John Eichberger Amanda Appelbaum Donovan Woods Executive Director Director, Research Director, Operations [email protected] [email protected] [email protected]

Fuels Institute 1600 Duke Street (703) 518-7970 Suite 700 FuelsInstitute.org Alexandria, VA 22314 @FuelsInstitute