Survey of Policies and Programs that Promote Fuel-Efficient Transport in APEC Economies

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Executive Summary

This survey explores the range of policies and programs available to public sector decision makers to maximize the efficiency of the transportation sector in their jurisdictions. For purposes of this discussion, transportation energy efficiency encompasses approaches that either reduce the amount of fossil fuels used per vehicle-kilometer traveled (VKT) by road or rail, or which reduce the overall vehicle-kilometers traveled.¹ Since countless volumes have been written on these topics, it is the intent of this survey to distill the large amount of information into concise summaries that provide APEC policymakers and decision makers with an understanding of the range of proven options for improving transport efficiency. The authors summarize about 50 examples² of policies and programs undertaken by APEC economies to improve transportation energy efficiency.

Strategies for optimizing transport energy efficiency fall into two broad categories: those focused on vehicles, and those that address urban systems and transportation infrastructure. The latter include mass transit, toll pricing for road use and parking to discourage the use of single-occupancy vehicles in central business districts, and land use and zoning decisions that locate mixed uses at higher densities to help reduce the need to travel. A third category, taxes and pricing of gasoline and diesel fuel, can influence both the efficiency of vehicles (through buyer purchase decisions) and the use of vehicles.

Increasing Fuel Economy of New Vehicles

With regard to new vehicles, one of the most common policy instruments for improving fuel efficiency, and arguably the most effective option for central governments, is through fuel economy standards imposed on vehicle manufacture or sale. Apart from the European Union, all economies in the world with fuel economy standards are members of APEC: Australia, Canada, China, Japan, Korea, Chinese Taipei and the United States, while New Zealand is proposing a standard for new and used vehicles. With the exception of Australia, the standards are either already mandatory or— in the case of Canada and the EU—in the process of becoming mandatory.

Automobile manufacturers have a range of technological approaches—backed in several cases by government-sponsored research and development—for meeting increasingly rigorous standards, including hybrid-electric drive trains, stop-start technology that automatically shuts off the engine when the vehicle comes to a standstill, transmissions with more speeds and wider gear ratios, reduced weight through lighter materials, reduced drag through improved aerodynamic design of the body, low friction lubricating oil, and low rolling resistance tires. The improvements in efficiency due to hybridization vary greatly depending on the specific vehicle, but they are in the range of 25% to 50% over corresponding non-hybrid models.

In some cases, governments can also remove inefficient vehicles from the road through tailpipe emissions standards. This situation applies to two-stroke engines such as the three-wheelers used as taxis in many developing economies, and to motorcycles. Four-stroke engines are more fuelefficient and less polluting than two-stroke, and so threshold emission standards can be set that are not practically feasible for two-stroke engines powered by gasoline or diesel. Emissions standards for greenhouse gas emissions can also improve fuel economy while reducing pollution that causes climate change.

Encouraging Purchase of Fuel-Efficient Vehicles

In countries that manufacture large numbers of vehicles, a common way for policymakers to increase the purchase of efficient vehicles is through a system that rates and labels vehicles according to their fuel efficiency. Labels and ratings are excellent tools for helping consumers make more fuel-efficient choices, and they could usefully be applied in all economies regardless of whether most vehicles are manufactured domestically or imported. New Zealand—which imports 100% of its vehicles—recently developed a labeling and rating system that converts the different standards used by different economies into a single efficiency rating on a scale from one to six stars. The system is applied to used vehicles as well as new, and can provide a useful example for other APEC economies.

Another common approach is to use taxes to encourage the purchase of efficient vehicles and discourage the purchase of inefficient ones. Such ―green levies‖ or ―feebates‖ are used in several APEC economies. The ―feebate‖ approach provides buyers of efficient vehicles with a rebate, and imposes a surcharge or tax on the purchase of fuel inefficient vehicles, whereby the surcharge funds the rebate. Governments can also mandate requirements regarding the purchase, maintenance and operation of their own vehicle fleets, which is not only readily implemented since they have direct control over these fleet vehicles, but can help drive the market for efficient vehicles.

Awareness campaigns can help influence purchasing decisions by making vehicle buyers more conscious of the costs associated with operating a vehicle, and by calling attention to vehicle labels in economies where they exist. Campaigns also inform drivers about ways they can improve fuel economy through certain driving habits and vehicle maintenance.

Improving Operational Efficiency of Existing Vehicles

While fuel economy regulations combined with efficient technologies ensure that newly manufactured vehicles are more efficient, the efficiency of vehicles erodes over time if they are not properly maintained. At some point, the technology of older vehicles also becomes so dated that maintenance cannot cost-effectively keep them running cleanly and efficiently, and they should be removed from use altogether. This removal, called scrappage or accelerated retirement, may be voluntary or mandatory, and it may be triggered by failure to pass an emission inspection, or by the vehicle‘s age and level of use. Generally more efficient vehicles have lower emissions, but it is important that the new technologies optimize increases in fuel economy with decreases in emissions.

An accelerated retirement program cannot be effective in the absence of a properly enforced, mandatory vehicle inspection program that maintains efficiency and, in many cases, also controls emissions over the life of the vehicle. Quite a few APEC economies have a mandatory annual vehicle inspection program, but the main challenge is to design it in such a way that certifications cannot be obtained fraudulently. The Mexico City example described in Chapter 3 provides valuable lessons for other economies: prevent fraud by using regularly audited testing protocols and by keeping testing separate from repairs; measure emissions of nitrogen oxides (NOx) using dynamometer testing to prevent vehicles from falsely passing the test, and use equivalent protocols and equipment of comparable quality in testing centers in overlapping jurisdictions.

Reducing Congestion

Traffic congestion increases fuel consumption through delays that keep motor vehicles on the road longer per VKT, and through the fuel inefficiency of stop and go driving. Reducing congestion encompasses a wide range of approaches that reduce the volume of vehicles on those roads prone to congestion, and that improve the flow of traffic to reduce or eliminate stop and go traffic. Some measures to reduce congestion—especially adding road capacity or allowing single-occupancy hybrids in restricted lanes—may increase total vehicle use and VKT, so it is important that policymakers consider the possible impact of increased VKT when choosing among approaches to reduce congestion.

Strategies for reducing congestion often focus on encouraging workers to commute to work by means other than by solo driving, or at least to do less solo driving, and they can be divided into two broad categories. One targets the roads themselves with regulations or traffic management techniques such as high occupancy vehicle (HOV) lanes, tolls to discourage the use of roads during peak traffic times, and lane restrictions that optimize flow on surface roads in congested areas. The other category of intervention is to provide commuters with options that make it easier for them to reduce or eliminate their motor vehicle commuting, such as allowing employees to work from home full or part time (telework), providing employees with transit passes in lieu of a parking space, and car sharing programs that relieve urban dwellers from the need for vehicle ownership.

Boosting Efficiency and Use of Mass Transit

Motor vehicles are already overwhelming roads in urban areas in many APEC economies, and as these areas continue to grow throughout the 21st century they will be utterly incapable of handling the ever increasing travel demand. Mass transit is a critical component to any comprehensive approach to improving the fuel efficiency of surface transportation, and it often forms the backbone of that approach. Since fixed-rail mass transit lines often spur high density growth along them, mass transit is also a useful planning tool to direct economic growth and density to those areas where they make the most sense or where they are most needed.

Japan, for example, strategically built its Tsukuba Express Line from Tokyo through undeveloped areas with the vision of having the line form the backbone of future urban development in these areas. Bus systems are an effective and affordable option, especially bus rapid transit (BRT) systems that provide higher quality service than regular bus service. However, bus lines—because they do offer flexibility to accommodate changing needs—may not have the same effect on shaping urban development and densities. Many cities throughout the APEC region rely on a combination of buses and urban rail (light and/or heavy), and sometimes vans.

Urban Design and Planning to Reduce Vehicular Transport

Smart, transit-oriented development harmonizes transportation energy efficiency goals with the zoning, permitting and regulations issued to developers. For example, in areas well served with mass transit, carefully crafted zoning laws can create high-density, mixed-use zones that combine business and housing, making it easy for people to walk or bike to work and to commercial amenities such as shopping and restaurants. Pedestrian and bicycle paths can be strategically located to facilitate non-motorized transport between home, work, shopping and dining.

The powerful leverage available in parking can be exploited by restricting parking spaces in areas where the use of mass transit, biking and walking are practical options. Smart growth planning not only improves transportation energy efficiency and reduces pollution and greenhouse gas emissions; it can also spur economic development and improve the quality of urban life.

Efficient Freight

The freight sector is a significant consumer of energy, and one in which the potential energy efficiency gains remain mostly untapped in APEC economies, although there are some encouraging examples of improvements. Fuel use can be reduced by about 25% from long-haul trucking operations through improvements in aerodynamics, tires, auxiliary power units that minimize engine idling, engine and drive train technologies, weight reduction, driver training, modal shifts (for example from roads to rail and sea in Japan), and freight logistics (for example, reducing empty return-trips).

Government policies can help freight carriers take advantage of these opportunities through regulations, incentives or voluntary programs. Some firms are taking measures on their own due to rising fuel costs. For short distance city deliveries, for example, Coca-Cola in New York City found that hybrid-electric trucks are cost-effective in situations where the truck‘s internal combustion engine is rarely needed at the low speeds characterizing deliveries in urban areas.

Conclusions

A message delivered by many of the APEC examples described here is the need for a comprehensive approach that considers the interaction among policy measures. For example, a scrappage program to remove old, inefficient vehicles from the road cannot be effective without a well functioning emissions inspection program that is free of corruption. Smart growth design and planning is by definition comprehensive, starting with a vision for a better approach to urban living and then designing the transportation infrastructure to support that vision.

In all APEC economies, regardless of their level of economic development, transportation energy efficiency policies need to address the realities of those with low incomes and the trends toward increased driving as incomes rise. Policies that will have the best results are those that improve access to cleaner, more sustainable and fuel-efficient mobility options, and that influence travelers to choose the more energy-efficient option available to them. In all approaches to improve transportation efficiency, it is vital that the public be made aware of the rationale for the policies and programs, and their benefits.

The many examples highlighted in this study demonstrate that economies throughout the Asia- Pacific region are taking constructive measures to optimize the efficiency of transportation. Many of these measures, especially those targeting vehicle efficiency and mass transit, span economies in varying levels of economic development. Implementation of other measures, most notably employee incentives to reduce single occupancy vehicles, congestion pricing, car-sharing programs, smart growth, and efficient freight systems, has so far only been documented in the most developed economies, but these measures are also within reach of less developed economies.

Congestion pricing generates revenues that can be used to improve transportation systems and provide assistance to the poor. Smart growth planning and efficient freight necessarily involve the private sector and their resources, and car sharing programs are being run profitably around the world by the private sector. It is the authors‘ objective that the information provided by this Survey of Policies and Programs in APEC Economies will provide the knowledge of practical strategies being implemented by others in the region to inspire all APEC economies to adopt proven strategies for promoting energy efficiency in surface transport.

End Notes

1. This APEC survey addresses only surface transportation, not transportation by air or water modes. In only a few cases, where data are available, the opportunity to shift among modes (for example from road to rail for freight) is discussed. This survey does not examine shifts in fuels used for transport, which is the subject of a separate APEC study by the APEC Biofuels Task Force.

2. The authors have endeavored to be as comprehensive as possible in showing the breadth and depth of proven policies and programs to improve energy efficiency in transportation in all APEC economies. It was not the authors' intention to attempt to catalog every example of each type of policy and program. Some relevant programs in APEC economies might not have been mentioned in order to avoid duplication or because information about such policies was not available to the authors. The authors welcome additional information from readers about examples of innovative programs that might not have made it into this survey.