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A new report by the ICCT analyses energy, transport and climate policies from around the World to determine which work, which don't and why. Published by the Climate Works Foundation, the report offers guidance including 'five steps to successful vehicle and fuel policies'.
The report says that well-designed vehicle performance standards and fuel fees could reduce the combined annual CO2 emissions from the U.S., China, and the E.U. by more than 1 Gt in 2030. Their cumulative reductions from 2010 through 2030 would total almost 10 Gt—and at a cumulative net saving of $800 billion to $1.5 trillion over the same time period.
The report provides an analytical framework to help government leaders evaluate proposed policies in terms of their economic impacts and effectiveness in reducing greenhouse gas emissions. It focuses on the sectors responsible for the vast majority of the world’s energy use and greenhouse gas emissions, including vehicles and fuels, appliances, power,industry, and buildings.
The 'five steps to successful vehicle and fuel policies include:
1. Set goals and let the market work out the best solutions: Establish performance standards and levies to reduce emissions but don't mandate a particular technology solution, such as electric cars or biofuels; instead, set overarching policy goals and let the market find the most cost effective solutions.
2. Require consistent, predictable performance improvements: Continuously tighten vehicle performance standards and raise fuel levies. Standards should be made more stringent on a constant, steady basis over several product development cycles — by 3 to 6 percent annually — to encourage ongoing innovation.
3. Go upstream in the manufacturing process and capture 100 percent of the market: Cover all vehicles and fuels. Emissions performance standards should apply to all vehicles, including medium- and heavy-duty, agricultural and construction, and two- and three-wheel vehicles. To prevent manufacturers and consumers from circumventing the standards or fees, no model or fuel should be exempt.
4. Facilitate private sector investment and innovation: Send long-term signals. Manufacturers need stable market signals to invest in new technology. Vehicle standards and fuel and vehicle fee rates should be predictable and well publicized to provide a meaningful signal to car makers and consumers. Combine fees with rebates. When appropriate, such as for vehicle fees, create “feebates” that offset charges with rebates, so that the pricing structure does not just penalize high emissions vehicles but also rewards low-emissions models. Adjust fees to meet revenue goals. Increased fuel and vehicle levies need not translate into higher overall tax rates. The pivot point (the point at which rebates become fees) can be adjusted to meet the revenue target of fiscal policies.
5. Reward performance, not investment, and beware ofunintended consequences: Avoid weight-based vehicle performance standards. Such standards typically shift fleets toward bigger or heavier models. Increase standards and fees on a continual, rather than a stepwise, basis across vehicle classes. Requirements that become more stringent a step at a time, from one vehicle class or size range to the next, encourage manufacturers to meet only the minimum for each class. Standards and levies that use a continuous curve across classes push automakers to develop more-efficient products and maximize emissions reductions and save consumers money. Improve testing techniques and rules.Procedures to test vehicle emissions and efficiency should closely approximate real-world conditions.
For more information, view the full report here.