Energy Policies in the Transportation Sector

Transcription

1 Energy Polces n the Transportaton Sector by Paulo Henrque de Mello Santana, Energy, ABC Federal Unversty, Brazl, (11) , paulo.santana@ufabc.edu.br Conrado Augustus de Melo, Energy, ABC Federal Unversty, Brazl, (11) , conrado.melo@ufabc.edu.br Luza Passaro Bertazzol, Energy, ABC Federal Unversty, Brazl, (11) , luzapbertazzol@hotmal.com Abstract Transport s the sector wth the hghest fnal energy consumpton and, wthout any sgnfcant polcy changes, s forecast to reman so (IEA, 2010). Energy use could ncrease as much as 70% by 2050 f no further polces are adopted n support of effcency, alternatve vehcles/fuels and modal shftng. (IEA, 2012). The objectve of ths paper s to revew and classfy energy effcency polces mechansms n selected countres for the transportaton sector. It also suggests a new approach for these polces. Energy effcency nntatves s expected to mprove from 5% to 34% worldwde. Those polces are normally solated and non-coordnated actons. Energy polces for the transportaton sector should be part of a broader agenda, whch ncludes polces envsagng basc R&D and commercal mplementaton of transportaton technologes and mode change. Transportaton companes, polcymakers and academa should make an effort work closely together to buld a future agenda to acheve better results n the low carbon economy. Keywords: energy polcy, transportaton, energy effcency Introducton Although some authors queston the veracty of anthropogenc nfluences on clmate change, the frst part of the Intergovernmental Panel on Clmate Change (IPCC's) ffth assessment report says scentsts are 95% certan that humans have been the "domnant cause" of global warmng snce the 1950s. Transport s the sector wth the hghest fnal energy consumpton and, wthout any sgnfcant polcy changes, s forecast to reman so (IEA, 2010). Energy use could ncrease as much as 70% by 2050 f no further polces are adopted n support of effcency, alternatve vehcles/fuels and modal shftng. (IEA, 2012). Dfferent polcy mechansms were used by polcymakers to promote energy technologes

2 worldwde n recent years, consderng both technology-neutral and technology-specfc approaches. In the technology-neutral approach, polcymakers set up the goal of a polcy wthout pckng a specfc technology to promote. Although plenty of transportaton energy polces were launched n the two last decade around the world, a more coordnated acton s needed to mprove energy effcency n the transportaton sector. The sector comprses both passenger and freght modes. The passenger modes nclude lght-duty cars and trucks, buses, 2- and 3-wheel vehcles, arplanes, and passenger trans. The freght modes, whch are used n the movement of raw, ntermedate, and fnshed goods to consumers, nclude trucks (heavy-, medum-, and lght-duty), marne vessels (nternatonal and domestc), ral, and ppelnes (EIA, 2017). The subject of ths paper addresses the begnnng of a three year project. The general objectve of ths project s to develop a macroeconomc model, based on econometrc relatons and hghlghtng the energy sector, to smulate the mpacts n the state of Brazlan economc actvty, employment, energy supply and consumpton and CO 2 emssons of current and possble future publc polces. The project ntends to evaluate the mportance, effectveness, and effcency of energy polces n the transportaton sector n Brazl. The objectves of ths paper are to revew and classfy energy effcency polces mechansms n selected countres for the transportaton sector. It also suggests a new approach for these polces. Methodology Energy polcy for transportaton n selected countres are classfed nto dfferent polcy mechansms. The four known crtera of technology-push, demand-pull, market ncentves and command-and-control were aggregated nto four quadrants (de Mello Santana, 2017). Ths classfcaton was made to clarfy these polcy mechansms to help polcymakers better desgn and deploy energy polcy mechansms. The frst category s called technology-control, where polces are technology-push and command-andcontrol type because they have the potental to reduce prvate costs and are mandatory. The second s called market-control polcy, where polces are demand-pull and command-and-control type because they have the potental to ncrease prvate profts and are mandatory. The thrd s called open market polces, where polces are demand-pull and market-ncentve type because they have the potental to ncrease prvate profts and are not mandatory. The last category s called techno-economc, and they are technology-push and market-ncentve because they have the potental to reduce prvate costs and are not mandatory.

3 Energy polcy mechansms: a new approach for polcymakers Dfferent polcy mechansms were used by polcymakers to promote energy technologes worldwde n recent years, consderng both technology-neutral and technology-specfc approaches. In the technology-neutral approach, polcymakers set up the goal of a polcy wthout pckng a specfc technology to promote. Cap-and-trade polcy s a good example, where governments set up emsson lmts rather than dctate technologes. Technology-specfc approaches pck one or more technologes to promote though specfc polcy mechansms. The Wnd Producton Tax Credt (PTC), a part of the Energy Polcy Act of 1992 n the U.S., s an example of a technology specfc approach. A technology-push perspectve ndcates the key role that scence and technology play n developng technologcal nnovatons and adaptng to the changng characterstcs of the ndustry structure. A demand-pull approach dentfes a broader set of market features, ncludng characterstcs of the end market (partcularly, the users) and the economy as a whole, that affects the performance of nnovaton (Stefanoa, Gambardellab, & Veronab, 2012). The lterature also classfes energy polcy mechansms n terms of command-and-control or market ncentve polces. Command-and-control s drect regulaton n whch governments set a mandatory regulaton that the market must follow. Although those polces typcally have a hgh mpact effect, they are usually costly because of regulatory enforcement and market opposton. Market ncentves are polces desgned to ncentvze the market to develop or provde a good or servce. Changes are not mandatory, whch makes these polces more easly accepted by the market, but these polces are normally less effectve than a command-and-control polcy portfolo. Demand-pull polces target ncreases n prvate profts, whle technology-push polces reduce prvate costs (Nemet G. F., 2009). Command-and-control polces contan mandates, whle market ncentves are voluntary. Unfortunately, the lterature doesn t combne these mechansms. Based on these polcy mechansms classfcatons, de Mello Santana (2017) classfed the mechansms nto four categores, usng the four crtera of technology-push, demand-pull, market ncentves and command-and-control. The frst category s called technology-control, where polces are technologypush and command-and-control type because they have the potental to reduce prvate costs and are mandatory. The second s called market-control polcy, where polces are demand-pull and commandand-control type because they have the potental to ncrease prvate profts and are mandatory. The thrd s called open market polces, where polces are demand-pull and market-ncentve type because they have the potental to ncrease prvate profts and are not mandatory. The last category s called techno-economc, and they are technology-push and market-ncentve because they have the potental

4 to reduce prvate costs and are not mandatory. Fgure 1 llustrate ths classfcaton of energy polcy mechansms. Command-and-control Technology-push Technology-control polcy Market-control polcy Demand-pull Techno-economc polcy Open market polcy Market ncentve Fgure 1: Classfcaton of energy polcy mechansms Energy Polces n the Transportanton Sector To tackle the emssons problem and to address other ssues as ol securty and technology nnovatons, many countres have ntroduced mandatory or voluntary measures to reduce vehcle s fuel consumpton and ts related CO 2 emssons. Mandatory standards can be effectve mechansms for lmtng or promotng specfed energy technologes (Sh, 2014; Gabe, 2016). However, a hgher level of regulatory enforcement s requred to montor drect government nvestments and mandatory standards when these polcy mechansms are set up. In the other hand, voluntary standards are used to ncentvze the market to adopt best energy technologes and practces. Whle voluntary measures have a non-bndng nature, wherewth automakers can choose whether they wll or wll not to commt wth fuel economy measures, n mandatory measures the automakers are to requred partcpate n fuel economy programs and comply wth a set of regulatons to reach fuel economy targets. Examples of measures are (mandatory or) voluntary fuel economy standards, (mandatory or) voluntary emssons standards, and (mandatory or) voluntary labelng. Generally, these

5 measures are mplemented n assocaton wth other mechansm such as vehcle taxaton and charges connected to emssons performance, fscal ncentves to automakers, ncentves for fuel effcent and low emssons vehcles such as hybrd electrc vehcles (HEVs). These measures also can nclude rewards and/or penaltes f the agreements are not fulflled (IEA, 2008; Onoda, 2008; Wagner and Wang, 2009; IEA; 2011; Cheah and Heywood, 2011; Ataban et al., 2011; IEA, 2012). Voluntary measures are easer to mplement and therefore have been adopted n most countres. However, voluntary agreements between governments and automakers have shown less effectve results consderng fuel economy targets (Feng An and Sauer, 2004; Onoda, 2008; Olver, 2009; ICCT, 2015; GFEI, 2016). In fact, the European Unon and countres as Japan, Chna, South Korea, Canada, USA and Mexco swtched to mandatory systems, whch have already produced larger results n terms of controllng fuel demand and reducton of carbon emssons (Wadud, 2014; ICCT, 2015; GFEI, 2016), even though the success of these mechansms seems to be dependent on how the polces are desgned (IEA, 2008; Ataban et al., 2011). Nne world regons have adopted polces requrng vehcle manufacturers to mprove the energy effcency of new lght-duty vehcles (LDV); n 2013, over 80% of global new passenger car sales were subject to such regulatons (ICCT, 2014). Four regons Japan, US, Canada, and Chna have adopted GHG or effcency standards for heavy-duty vehcles (HDVs), (ICCT, 2014). The Internatonal Martme Organzaton (IMO) has adopted effcency standards for new nternatonal marne vessels, moreover the Internatonal Cvl Avaton Organzaton (ICAO) has not yet adopted energy effcency standards for arcraft (ICCT, 2014). Classfcaton and Prospects of Energy Polces n the Transportaton Sector Tha man energy polces mplemented n the world for lght-duty, heavy-duty vehcles, marne, ral and avaton found n lterature are: fuel effcency standards, fuel effcency tres, low carbon fuels, low sulfur fuels, technology transfer, drect nvestments n mode change, credt ncentves, tax credt, fuel consumpton labels, nformaton campagn, eco-drvng and fuel effcency standards for LDV and HDV. Fgure 2 shows the man energy polces mplemented n the transportaton sector around the world, classfed accordng de Mello Santana (2017) crtera. Technology tranfer s classfed as technologycontrol polcy. Drect nvestments, credt ncentves and tax credt are techno-economc polcy. Fueleffcent tres, low carbon/sulfur fuels are market-control polcy. Furthermore, fuel consumpton labels, nformaton campagn and eco-drvng are usualy open-market polcy. Fuel effcency standards for HDV and HDV s usually voluntary at the begnnng (open-market polcy approach), but n some cases t evolves nto a mandatory polcy (market-control polcy).

6 Technology-control polcy Command-and-control Market-control polcy Auctons Fuel effcency standards for LDV and HDV Fuel-effcent tres Technologypush Technology transfer Drect nvestmens: mode change Low carbon/sulfur fuels Fuel consumpton labels Demand-pull Credt ncentves Informaton Voluntary standards campagn Tax credt Eco-drvng Techno-economc polcy Market ncentve Fuel effcency standards for LDV and HDV Open market polcy Fgure 2: Classfcaton of energy polces mplemented n the transportaton sector around the world Table 1 shows some of these polcy mechansms, the countres and the estmated energy savngs accordng to lterature revew. These energy polces should be desgned and mplemented together to acheve better results. However, they are normally solated and non-coordnated actons. Those polces should be part of a broader agenda, whch ncludes polces envsagng basc R&D and commercal mplementaton of transportaton technologes and mode change. Transportaton companes, polcymakers and academa should make an effort work closely together to n most cases to buld a future agenda to acheve better results n the low carbon economy.

7 Table 1: Energy polces n several countres and the estmated energy savngs expected Source: adapted from ICCT (2014), IEA, 2008; Onoda, 2008; Wagner and Wang, 2009; IEA; 2011; Cheah and Heywood, 2011; Ataban et al., 2011; IEA, Polces Fuel-effcent tyres Countres European Unon, Canada, Unted States and Japan Estmated energy savngs 5% Fuel effcency standards for LDV Canada, European Unon, South Korea, Chna, Brazl, Unted States, Inda, Russa, Japan, Mexco and Saud Araba 12-34% Fuel effcency standards for HDV Low carbon/sulfur fuels Japan, Chna, Unted Stated, Canada, South Korea, Russa, European Unon Unted States, Brazl, Chna 11-14% 10% carbon and ppm lmt sulfur content Tax credt Brazl 12-19% Drect nvestments Chna and Japan 2-14% Concernng the fuel-effcent tyres, the mportance of ths polcy lays on the sgnfcant quantty of motor vehcle s fuel consumpton used to overcome rollng resstance of the tyres, about 20% (IEA, 2005). Addtonal fuel s requred when tyres are undernflated. In most real-world drvng condtons, tyres are undernflated compared to ther optmum performance level. It s generally understood that t corresponds to an ncrease n energy consumpton and CO 2 emssons of approxmately 1% to 2.5% for passenger cars, and 1% for trucks (IEA, 2010). Tyre pressure montorng systems are a valuable tool for both car safety and fuel economy purposes. The fttng of the best replacement tyres and the more effectve mantenance of tyre pressures could save about 3% of the fuel used n LDVs (equvalent to around 70 Mtoe and 190 Mt CO 2 n the medum term worldwde). Accordnd to de Mello Santana (2017), fuel-effcent tyres mechansm s classfed as a market-control polcy, snce t s mandatory by government and t ncreases prvate profts. In the absence of polcy nterventon, there would be very weak ncentves for both manufacturers and consumers, because tyre nflaton pressure n the real world and rollng resstance of replacement tyres are not subjected to current fuel economy standards. As a result, effcent measures for tyres are mportant complementary measures to fuel economy standards. Unted States, Europena Unon, Canada and Japan have been successful n mplementng fuel effcent tyres measures such as tyre pressure montoryng systems

8 (TPMS), low rollng resstance tyres and tyre labellng, reachng a estmated energy savng of 5% (IEA, 2010). To date, there are no fscal ncentves to complement the labellng schemes and ncentvse the purchase of fuel-effcent tyres, whch would mprove market uptake. Fuel economy of lght-duty vehcles polcy embraces mechansms and programs to mprove and accelerate the deployment of more fuel effcent vehcle technologes. The scope of polces s vast, gong from voluntary programmes to strct mandatory regulatons. It s dffcult to compare the fuel economy standards between regons due to the dfference n test measurement cycles, whch means that each standard s based on dfferent parameters such as vehcle speed, acceleraton, load, etc (IEA, 2010). However, t s nterestng to see the recent developments n most countres, whch have tghtened fuel economy and CO 2 emssons standards for passenger cars. Therefore, although dfferent regons have dfferent startng ponts n terms of current fleet average fuel economy, all regons are tghtenng standards by relatvely smlar amounts. Natonal effcency standards for HDVs have a much brefer regulatory hstory than LDV standards. Compared to passenger vehcle regulatons, heavy-duty vehcle fuel economy standards are at a much earler stage of development, snce settng HDV effcency standards s sgnfcantly more challengng than for LDVs. Frstly, t s dffcult and costly to measure heavy-duty vehcle emssons due to the sze of the test equpment requred and the number of model varatons avalable on the market for each vehcle type; and secondly, heavy-duty vehcles were untl recently consdered to be part of commercal operatons where the technology had already been optmsed for fuel effcency to reduce operatng costs. Both of these ssues are now beng addressed. Only four governments the US, Canada, Chna, and Japan have adopted HDV fuel economy standards, and those markets account for only about one-quarter of world truck sales (ICCT, 2015). Accordng to 2008 IEA study, voluntary fuel economy measures have not beng successful n achevng ther targets, encourangng coutres such as Korea, Japan, EU and Canada to move from voluntary to mandatory LDV standards programmes n recent tmes. Followng de Melo Santana (2007) approach, fuel effcency standards for lgh and duty vehcles can be ether a market control-polcy or an openmarket polcy, snce t has the potental to ncreases prvate profts and can be mandatory or voluntary, respectvely. Although market ncentve polces are more easly accepted by the market, those polces are normally less effectve than a command-and-control polcy portfolo because they are not mandatory. However, because bndng polces are usually costly due regulatory enforcement and market opposton, they are harder to mplement and therefore have been less adopted by countres. Internatonally, most major economes regulate ther vehcle markets wth some type of vehcle talppe emssons and fuel economy standards. There have been a number of sgnfcant low-carbon fuel polcy

9 developments n recent years. Unted States, Brazl and Chna are example of countres that have establshed polces to stmulate ncrease and mprovement of low-carbon fuels. As a result of the relatvely early nature of global low-carbon polces, the estmated energy savngs are based on lmted scenaros for the potental GHG reductons that could result from such polces. The techncal potental scenaro consders a 10% reducton n the lfecycle GHG ntensty of on-road fuels between (ICCT, 2014). Reducng the sulfur content of desel and gasolne s also a key to supportng the ntroducton of advanced vehcle emsson controls. Lmtng the sulfur content of on-road gasolne and desel to a maxmum of 10 to 15 ppm (ultralow-sulfur) s an essental component of best-practce vehcle emssons control programs n both fuel-mportng and fuel-producng countres (ICCT,2014). Such mprovements provde mmedate emsson benefts from the exstng vehcle fleet and enable the progresson of emsson standards. Another energy polcy type analysed n ths paper s tax credt. In lne wth de Melo Santana (2017), ths mechansm s classfed as a techno-conomc polcy, snce t s technology-push and market ncentve because t has the potental to reduce prvate costs and are not mandatory. By reducng prvate costs t stmulates technology nnovaton n energy sector. Brazl s an example of country that have mplemented a consoldated tax credt programme that has an estmated energy savng of 12% to 19%. In October 2012, the Brazlan government approved "Inovar-Auto," a progamme to encourage vehcle technology nnovaton. The program fosters ndustry compettveness by encouragng automakers to produce more effcent, safe, and technology-advanced vehcles whle nvestng n the natonal automotve ndustry. Inovar-Auto provdes ncentves n two ways. It frst ncreases a tax on ndustralzed products (IPI) by 30 percent for all lght-duty vehcles (LDVs) and lght commercal vehcles (LCVs). Second, t mposes a seres of requrements for automakers to qualfy for up to 30 percent dscount n the IPI (portuguese abbrevaton for Taxes on Industralzed Products). In other words, IPI taxes wll reman unchanged for those manufacturers that meet the requrements, thus ncentvzng nvestments n vehcle effcency, natonal producton, research and development (R&D), and automotve technology. The program s lmted to vehcles manufactured between 2013 and 2017, after whch IPI rates return to pre-2013 levels unless modfcatons to the decree are made (ICCT, 2013). Fnally, drect nvestment s one of the most used polcy mechansm to promote clean energy technologes. Ths mechansm s technology-push and market ncentve, because t reduces prvate costs and t s not mandatory, therefore t s classfed as techno-economc polcy by de Mello Santana (2017). Drect government nvestments provde grands to demonstrate or deploy clean energy

10 technologes. Full grants are usually provded to demonstraton plants, and cost sharng s used to promote commercal deployment facltes. In the commercal deployment case, the share amount s usually gven so the nvestment s feasble to nvestors, accordng to wth to de Mello Santada (2017). Chna and Japan are exemple of countres that have successfully adopted drect government nvestments n the energy sector, expectng a estmated energy savng between 2 and 14%.The effectveness of ths polcy mechansm s usually hgh because t can make a technology economcally feasble, dependng only on the amount of nvestment provded. Energy demand forecastng model for the transportaton sector Modellng energy consumpton for the transportaton sector n the long term wll consder ruptures that s lkely to happen n the upcomng decades due to effcency mprovements, mode and fuel changes. Econometrc relatons n the project wll provde a baselne scenaro for the transportaton sector to smulate these ruptures. Value added, passenger.km, mode of transportaton, unt fuel/electrcty consumpton are commonly used as ndependent varables for passenger transportaton. Gross domestc product, tones.km, mode of transportaton, unt fuel/electrcty consumpton are normally used n freght transportaton. Sectoral dsaggregaton wll be used to smulate dfferent scenaros n mode, fuel and effcency changes. Equatons 1 and 2 show the sectoral dsaggregaton models that wll be used n both passenger and freght transportaton, respectvely. CE j, PKM CE CE j, VA VA PKM CE CE j, TKM CE CE j, VA VA TKM CE equaton 1 equaton 2 Where, j: fuel type/electrcty : transportaton category CE: energy consumpton VA: value added PKM: passengers. km TKM: tones. km

11 Conclusons The man energy polces mplemented n the transportaton sector around the world were classfed accordng to de Mello Santana (2017) and detaled n Table 1. Those polces are desgned to mprove the effcency of the transportaton sector. However, they are normally solated and actons that are not coordnated. Those polces should be part of a broader agenda, whch ncludes polces envsagng basc R&D and commercal mplementaton of transportaton technologes and mode change. Transportaton companes, polcymakers and academa should make an effort work closely together to buld a future agenda to acheve better results n the low carbon economy. References Ataban A., Badruddn I., Mekhlef S., Sltonga A. A revew on global fuel economy standards, labels and technologes n the transportaton sector. Renewable and Sustanable Energy Revews 2011 vol: 15 (9) pp: Cheah L., Heywood J. Meetng U.S. passenger vehcle fuel economy standards n 2016 and beyond Energy Polcy, 39 (2011), pp DE MELLO SANTANA, PAULO HENRIQUE. Energy for Regonal Development. Advances n Spatal Scence. 1ed.: Sprnger Internatonal Publshng, 2017, v., p Feng An; Sauer A Comparson of Passenger Vehcle Fuel Economy and GHG Emsson Standards Around the World, Pew Center on Glbal Clmate Change, Gabe, J An emprcal comparson of voluntary and mandatory buldng energy performance dsclosure outcomes. Energy Polcy V. 96, p GFEI, Fuel Economy State of the World Tme for global acton. Avalable at: ICCT, Brazl, lght-duty vehcles: fscal ncentve. Avaable at: ICCT, The state of clean transport polcy: a 2014 synthess of vehcle and fuel polcy development. Internatonal Councl on Clean Transportaton. Avaable at:

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