IPCC Fourth Assessment Report: Climate Change 2007
Climate Change 2007: Working Group III: Mitigation of Climate Change Light-duty Vehicles

The following estimate of the overall GHG emissions reduction potential and costs for improving the efficiency of the world’s light-duty vehicle fleet (thus reducing carbon emissions), is based on the IEA Reference Case, as documented in a spreadsheet model developed by the IEA for the Mobility 2030 project (WBSCD, 2004b). The cost estimates for total mitigation potential are provided in terms of ‘societal’ costs of reductions in GHG emissions, measured in US$/tonne of carbon (tC) or carbon dioxide (CO2); the costs are the net of higher vehicle costs minus discounted lifetime fuel savings. Fuel savings benefits are measured in terms of the untaxed cost of the fuels at the retail level, and future savings are discounted at a low societal rate of 4% per year. These costs are not the same as those that would be faced by consumers, who would face the full taxed costs of fuel, would almost certainly use a higher discount rate, and might value only a few years of fuel savings. Also, they do not include the consumer costs of forgoing further increases in vehicle performance and weight. Over the past few decades, increasing acceleration performance and vehicle weight have stifled increases in fuel economy for light-duty vehicles and these trends must be stopped if substantial progress is to be made in fleet efficiency. Because consumers value factors such as vehicle performance, stopping these trends will have a perceived cost – but there is little information about its magnitude.

The potential improvements in light-duty fuel economy assumed in the analysis, and the costs of these improvements, are based on the scenarios in the MIT study summarised in Box 5.5. The efficiency improvements as mentioned in this study are discounted somewhat to take into account the period in which the full benefits can be achieved. Further, fleet penetration of the technology advances are assumed to be delayed by 5 years in developing nations; however, because developing nation fleets are growing rapidly, higher efficiency vehicles, once introduced, may become a large fraction of the total fleet in these nations within a relatively short time. The technology assumptions for two ‘efficiency scenarios’ are as follows (Table 5.9a).

Box 5.5 Fuel economy benefits of multiple efficiency technologies

Several studies have examined the fuel economy benefits of simultaneously applying multiple efficiency technologies to light-duty vehicles. However, most of these are difficult to compare because they examine various types of vehicles, on different driving cycles, using different technology assumptions, for different time frames. The Massachusetts Institute of Technology has developed such an assessment for 2020 (MIT, 2000) with documentation of basic assumptions though with few details about the specific technologies that achieve these values, for a medium size passenger car driving over the official US Environmental Protection Agency driving cycle (Heywood et al., 2003). There are two levels of technology improvement – ‘baseline’ and ‘advanced,’ with the latter level of improvement further subdivided into conventional and hybrid drive trains.

Some of the key features of the 2020 vehicles are:

  • Vehicle mass is reduced by 15% (baseline) and 22% (advanced) by a combination of greater use of high strength steel, aluminium and plastics coupled with advanced design;
  • Tyre rolling resistance coefficient is reduced from the current .009 to .008 (baseline) and .006 (advanced);
  • Drag coefficient is reduced to 0.27 (baseline) and 0.22 (advanced). The baseline level is at the level of the best current vehicles, while the advanced level should be readily obtainable for the best vehicles in 2020, but seems quite ambitious for a fleet average;
  • Indicated engine efficiency increases to 41% in both baseline and advanced versions. This level of efficiency would likely require direct injection, full valve control (and possibly camless valves) and advanced engine combustion strategies.

The combined effects of applying this full range of technologies are quite dramatic (Table 5.9). From current test values of 30.6 mpg (7.69 litres/100 km) as a 2001 reference, baseline 2020 gasoline vehicles obtain 43.2 mpg (5.44 L/100 km), advanced gasoline vehicles 49.2 mpg (4.78 L/100 km) and gasoline hybrids 70.7 mpg (3.33 L/100 km); advanced diesels obtain 58.1 mpg (4.05 L/100 km) and diesel hybrids 82.5 mpg (2.85 L/100 km) (note that on-road values will be at least 15% lower). In comparison, Ricardo Consulting Engineers (Owen and Gordon, 2002) estimate the potential for achieving 92 g/km CO2 emissions, equivalent to 68.6 mpg (3.43 L/100 km), for an advanced diesel hybrid medium size car ‘without’ substantive non-drive train improvements. This is probably a bit more optimistic than the MIT analysis when accounting for the additional effects of reduced vehicle mass, tyre rolling resistance and aerodynamic drag coefficient.

These values should be placed in context. First, the advanced vehicles represent ‘leading edge’ vehicles which must then be introduced more widely into the new vehicle fleet over a number of years and may take several years (if ever) to represent an ‘average’ vehicle. Second, the estimated fuel economy values are attainable only if trends towards ever-increasing vehicle performance are stifled; this may be difficult to achieve.

Table 5.9a: Fuel economy and cost assumptions for cost and potentials analysis

Medium size car MPG (L/100 km) Incr from Ref (%) Cost (%) DCost (US$)a) 
2001 reference 30.6 (7.69) 100 
2030 baseline 43.2 (5.55) 41 105 1,000 
2030 advanced 49.2 (4.78) 61 113 2,600 
2030 hybrid 70.7 (3.33) 131 123 4,600 
2030 diesel 58.1 (4.05) 90 119 3,800 
2030 diesel hybrid 82.5 (2.85) 170 128 5,600 
a) Cost differential based on a reference 20,000 US$ vehicle. See Box 5.5 for the definitions of the vehicle types. Source: adapted from MIT (2000), as explained in the text. 

The high efficiency and medium efficiency scenarios achieve the following improvements in efficiency for the new light-duty vehicle fleet (Table 5.9b):

Table 5.9b: Efficiency improvements new light-duty vehicle fleet

Region % improvement from 2001 levels, high/medium 
2015 2020 2025 2030 
North America 30/15 45/25 70/32 80/40 
Europe 30/25 40/30 55/35 70/40 
Emerging Asia/Pacific 30/25 40/30 65/35 75/40 
Rest of world 0/12+ 30/20+ 45/25+ 60/30+ 

Table 5.10 shows the light-duty vehicle fuel consumption and (vehicle only) CO2 emissions for the Reference scenario and the High and medium efficiency scenarios. In the Reference case, LDV fuel consumption increases by nearly 60% by 2030; the High Efficiency Case cuts this increase to 26% and the Medium efficiency scenario cuts it to 42%. For the OECD nations, the Reference Case projects only a 22% increase by 2030, primarily because of moderate growth in travel demand, with the High efficiency scenario actually reducing fuel consumption in this group of nations by 9% and the Medium efficiency scenario reducing growth to only 6%. This regional decrease (or modest increase) in fuel use is overwhelmed by the rapid growth in the world’s total fleet size and overall travel demand and the slower uptake of efficiency technologies in the developing nations. Because no change in the use of biofuels was assumed in this analysis, the CO2 emissions in the scenarios essentially track the energy consumption paths discussed above. Figure 5.16 shows the GHG emissions path for the three scenarios, resulting in a mitigation potential of about 800 (High) and 400 (Medium) MtCO2 in 2030.

Table 5.10: Regional and worldwide Light-duty vehicle CO2 emissions (vehicle only) and fuel consumption, efficiency and reference cases

 CO2 emissions (Mt) Energy use (EJ) 
2000 2030 2000 2030 
Reference High Medium Reference High  Medium 
OECD North America 1226 1623 1178 1392 17.7 23.4 17.0 20.0 
OECD Europe 488 535 431 479 7.0 7.5 6.0 6.7 
OECD Pacific 220 219 176 197 3.2 3.2 2.6 2.9 
EECCA 84 229 188 209 1.2 3.3 2.7 3.0 
Eastern Europe 49 82 68 74 0.7 1.2 1.0 1.0 
China  46 303 267 287 0.7 4.4 3.8 4.1 
Other Asia 54 174 148 160 0.8 2.5 2.1 2.3 
India 22 103 87 95 0.3 1.5 1.2 1.4 
Middle East 27 67 57 62 0.4 1.0 0.8 0.9 
Latin America 110 294 251 273 1.6 4.2 3.6 3.9 
Africa 53 167 152 162 0.8 2.4 2.2 2.3 
Total 2379 3797 3004 3390 34.2 54.4 43.1 48.6 

Note: EECCA = countries of EasternEurope, the Caucasus and Central Asia.

Figure 5.16

Figure 5.16: Light-duty vehicle CO2 emissions for three scenarios

Table 5.11 shows the cost of the reductions in GHG emissions in US$/tCO2 for those reductions obtained by the 2030 new vehicle fleet over its lifetime, assuming oil prices of 30 US$, 40 US$, 50 US$ and 60 US$/bbl over the vehicles’ lifetime.[36] Note that the costs in Table 5.11 do not apply to the carbon reductions achieved in that year by the entire LDV fleet (from Table 5.10), because those reductions are associated with successive waves of high efficiency vehicles entering the fleet during the approximately 15 year period before (and including) 2030.

Table 5.11: Cost of CO2 reduction in new 2030 LDVs

 CO2 reduction cost (US$/tCO2
High efficiency case Medium efficiency case 
30 US$/bbl 0.39 US$/L 40 US$/bbl 0.45 US$/L 50 US$/bbl 0.51 US$/L 60 US$/bbl 0.60 US$/L 30 US$/bbl 0.39 US$/L 40 US$/bbl 0.45 US$/L 50 US$/bbl 0.51 US$/L 60 US$/bbl 0.60 US$/L 
OECD North America -16 -37 -68 -72 -93 -114 -146 
OECD Europe 131 110 89 58 14 -7 -28 -60 
OECD Pacific 231 210 189 157 -14 -36 -57 -88 
     39   ---76     
EECCA 81 60 39 -54 -76 -97 -128 
Eastern Europe 181 160 139 107 -18 -39 -60 -92 
China  23 -19 -51 -23 -44 -65 -97 
Other Asia 19 -2 -23 -55 -23 -44 -65 -96 
India 62 41 20 -12 -12 -33 -65 
Middle East -15 -36 -57 -89 -49 -70 -91 -122 
Latin America -6 -27 -48 -79 -42 -63 -84 -116 
Africa 10 -12 -33 -64 -33 -54 -75 -106 

Note: EECCA = countries of EasternEurope, the Caucasus and Central Asia.

The Table 5.11 results show that the ‘social cost of carbon reduction’ for light-duty vehicles varies dramatically across regions and with fuel prices (since the cost is the net of technology costs minus the value of fuel savings). The results are also quite different for the High and Medium efficiency scenarios, primarily because the estimated technology costs begin to rise more steeply at higher efficiency levels, raising the average cost/tonne of CO2 in the High efficiency scenario. For the High efficiency scenario, CO2 reduction costs are very high for the OECD countries aside from North America, even at 60 US$/bbl oil prices, reflecting the ambitious (and expensive) increases in that scenario, the relatively high efficiencies of those regions’ fleets in the Reference Case, and the relatively low km/vehicle/year driven outside North America; on the other hand, the costs of the moderate increases in the Medium efficiency scenario are low to negative for all regions, reflecting the availability of moderate cost technologies capable of raising average vehicle efficiencies up to 30–40% or so.

The values in Table 5.11 are sensitive to several important assumptions:

  • Technology costs: the costs assumed here appear to be considerably higher than those assumed in WEO 2006 (IEA, 2006a).
  • Discount rates: the analysis assumes a low social discount rate of 4% in keeping with the purpose of the analysis. As noted, vehicle purchasers would undoubtedly use higher rates and would value fuel savings at retail fuel prices rather than the untaxed values used here; they might also only value a few years of fuel savings rather than the lifetime savings assumed here. WEO 2006 on the other hand, used a zero discount rate, substantially reducing the net cost of carbon reduction.
  • Vehicle km travelled (vkt): this analysis used the IEA/WBCSD spreadsheet’s assumption of constant vkt over time and applied these values to new cars. Actual driving patterns will depend on the balance of increasing road infrastructure and rapidly increasing fleet size in developing nations. Unless infrastructure keeps pace with growing fleet size, which will be difficult, the assumption of constant vkt/vehicle may prove accurate or even optimistic.
  • Efficiency gains assumed in the Reference scenario: the Reference scenario assumed significant gains in most areas (aside from North America), which makes the Efficiency scenarios more expensive.

Table 5.12 shows the economic potential for reducing CO2 emissions in the 2030 fleet of new LDVs as a function of world oil price.[37] The values show that much of the economic potential is available at a net savings, ‘if consumer preference for power and other efficiency-robbing vehicle attributes is ignored’. Even at 30 US$/bbl oil prices, over half of the total (<100 US$/tCO2) potential is available at a net savings over the vehicle lifetime; at 40 US$/bbl, over 90% of the 718 Mt total potential is available at a net savings.

Table 5.12: Economic potential of LDV mitigation technologies as a function of world oil price, for new vehicles in 2030

World oil price (US$/bbl) Region Economic potential (MtCO2
Cost ranges (US$/tCO2
<100 <0 0-20 20-50 50-100 
30 OECD 523 253 270 
 EIT  49  28  0  0  21  
 Other  146  88  30  20  8  
 World 718 369 300 20 29 
40 OECD 523 523 
 EIT  49  28  0  0  21  
 Other  146  118  20  8  0  
 World 718 669 20 21 
50 OECD 571 523 48 
 EIT  49  28  0  21  0  
 Other  146  138  8  0  0  
 World 766 689 21 48 
60 OECD 571 523 48 
 EIT  49  28  21  0  0  
 Other  146  146  0  0  0  
 World 766 697 21 48 

The regional detail, not shown in Table 5.12, is illuminating. In the High Efficiency scenario, of 793 Mt of total potential, 445 Mt are in OECD North America and are available at a net savings at 40 US$/bbl oil (and at less than 20 US$/tCO2 at 30 US$/bbl oil). The next highest regional potential is in OECD Europe at 104 Mt, but this potential is more expensive: at 30 US$/bbl oil. Only 56 Mt is available below 100 US$/tCO2, and becomes available at below 100 US$/tCO2 only at 60 US$/bbl oil. China has the next highest total emissions (2030 Reference case emissions of 303 Mt) but only a moderate potential of 36 Mt. This potential is fully available at a net savings only if oil is 50 US$/bbl or higher – perhaps not surprising because China has ambitious fuel economy standards embedded in the Reference Case and has relatively low driving rates, which make further improvements more difficult and expensive.

  1. ^  Note, however, that these results do not take into account changes in travel demand that would occur with changing fuel price and changes in Reference case vehicle efficiency levels. At higher oil prices, the Reference case would likely have less travel and higher vehicle efficiency; this would, in turn, reduce the oil savings and GHG reductions obtained by the Efficiency case and would likely raise the costs/tonne C from the values shown here.
  2. ^  These results do not take account of the effect higher oil prices would have on LDV efficiency in the Reference Scenario. This efficiency level would be expected to be a strong function of oil price, that is, it would be higher for higher prices. Consequently, the technology cost of improving vehicle efficiency further would also be higher – reducing the economic potential.