Global Rollout of the Global Fuel Economy Initiative (GFEI)

Project General Information



01387


9312

Climate change

Climate Change

VI





1) the global environmental problem

 

 

Figure 1: Predicted Global Growth in Light Duty Vehicles, ETP 2012 4DS scenario

 

The global vehicle fleet is set to double or even triple in the coming decades, going from about 850 million vehicles today to as much as 2.5 to 3 billion by 2050. More than ninety percent of this growth is set to take place in developing and transitional (non-Annex 1) countries. As the average vehicle fuel economy in these countries is stagnant, it is predicted that greenhouse gas emissions of the global fleet are set to triple.  And black carbon and pollutant emissions are also set to increase similarly with major health and short-term climate impacts.

 

The dramatic potential for emissions growth within UNFCCC non-Annex 1 nations is typically neglected in most global climate change mitigation scenarios. Recent research indicates that given the very rapid industrialization of many non-Annex 1 nations, the total emissions of Annex 1 countries will be eclipsed if the five billion people currently resident in non-Annex 1 nations remain or become locked into a fossil fuel economy (Anderson K and Bows A., Beyond ‘dangerous’ climate change: emission scenarios for a new world, Phil. Trans. R. Soc. A, 2011, 369, 20–44). This underscores the need of addressing climate change using a global approach that looks at both Annex 1 and non-Annex 1 nations.

 

To achieve a stabilization of GHG emissions from transport, behavioral and technological change enabled and supported by policy will be required. One of the most cost effective measures across all sectors is to improve the efficiency of light duty vehicles (cars, SUVs, minivans). According to the International Energy Agency (IEA), the transport sector has the highest growth of CO2 emission of any sector – its contribution to energy related CO2 emissions are estimated to go from one quarter today to one-third by 2050.

 

Substantially improving vehicle-fuel efficiency requires the introduction of comprehensive policies at a national level - to provide regulations and incentives for significantly more efficient vehicles. However, many relevant government agencies in developing and transitional countries lack understanding of fuel economy policies and their benefit. There is also lack of institutional coordination and cooperation between the Energy, Environment, Transport and Finance Ministries that can serve as a deterrent to develop comprehensive fuel economy policies. In addition, there are wide differences in the capacity of developed and developing countries for developing and implementing methods to test the efficiency of vehicles or ensure that manufacturers and importers comply with the policies.

 

This GEF6 project aims to support countries to develop these policies to improve the efficiency of their fleets.

 

2) the baseline

 

 

Figure 2: Auto Fuel Economy Policy Progress Worldwide as of June 2015

 

Many developed countries have introduced fuel economy policies that have seen an unprecedented improvement of the efficiency of their vehicles fleets. Including the United States, EU countries, China, and Japan (Figure 2). These countries are improving the efficiency of their fleets at 2.4% per year (figure 3). However, most developing and transitional countries have yet to introduce such policies (with some exceptions like China, Chile, Thailand, Viet Nam and Kenya). Non-OECD fleet see no improvements at all. Where policies and incentives have been introduced rapid improvements are made and fleets become more effcieint. Therefore 100+ developing and transitional countries need to develop and adopt fuel economy measures before the additional 2 billion vehicles are added in developing and transitional countries over the coming decades (figure 1). There is therefore only a small window of opportunity to get these policies in place to make sure that the expected vehicle growth will not result in increasing global emissions.

 

 

Figure 3- Improvement in average fuel economy in OECD and non-OECD countries in liters per 100 kms (IEA, 2015)

 

The Global Fuel Economy Initiative (GFEI) - comprising the International Energy Agency (IEA), the OECD based International Transport Forum (ITF), the FIA Foundation, the United Nations Environment Programme (UNEP), the International Council on Clean Transportation (ICCT) and the Institute of Transportation Studies at the University of California, Davis – was launched in 2009 with the primary aim of reducing emissions and at least double the efficiency of the global vehicle fleet from an average of 8l/100 km in 2005 to 4l/100 km by 2050. The GEF was one of the founding supporters of the GFEI.

 

As it takes about 20 years for the vehicle fleet to turn over, the GFEI aims to double new light duty vehicle fuel economy (in l/100km or gCO2/km) by 2030 – based on IPCC and G8 targets and recommendations. Even if vehicle kilometers driven will double by 2050, efficiency improvements on this scale would effectively cap emissions of CO2 from cars at current levels.

 

Right after its launch, the GFEI focused on developing methodologies and tools for countries and pilot these. GEF (GEF4), with others like the US and EC, were among the early supporters for this work. It included:

•           Creating an on-line toolkit (http://www.unep.org/transport/gfei/autotool/) providing details of adopted fuel economy policies around the world as examples for countries to develop a fuel economy policy;

•           Setting up the four initial pilot countries (Chile, Kenya, Indonesia and Ethiopia) which have developed national fuel economy policies and submitted them for approval from national legislative bodies. Chile and Kenya have already adopted some measures developed as part of this pilot project.

•           Establishing a Secretariat and partnership with public and private sector organizations. A website was created that is the preeminent hub of all matters fuel economy in developing and transitional countries

•           Developing methodologies and tools for country baseline data setting, providing a means to measure progress and policy impacts.

 

After this the GFEI parnters followed a two track approach: on one hand we promoted the issue of fuel economy, the opportunities to make massive GHG reductions through better fuel economy and the need to prioritize this at political level and at the same time we started a programme to support countries develop fuel economy policies. With support from the GEF (GEF5) and others, we:

•           Have been, or are currently supporting the development of national fuel economy policies in 27 countries. Of these 10 countries are supported with GEF4 and GEF5 resources (Chile, Kenya, Ethiopia, Indonesia, Côte d'Ivoire, Jamaica, Macedonia, Mauritius, Montenegro and Peru) while an additional 17 countries (Georgia, Philippines, Vietnam, Morocco, Bahrain, Egypt, Tunisia, Thailand, Uruguay, Nepal, Paraguay, Sri Lanka, Costa Rica, Benin, Algeria, Uganda, Russia) are supported to develop national policies through support from others, including EC, FIA Foundation and UNEP.

·                     GFEI partners have also started to replicate the experiences of these countries within their (sub)regions to ensure that results are disseminated to other countries within the region.

 

UNEP is taking the lead among the GFEI partners in the country support work and is in the process of signing donor agreements to work in an additional 14 countries (Malaysia, Kazakhstan Bangladesh, Mali, Nigeria, Togo, Tanzania, Rwanda, Bolivia, Argentina, Ecuador, Serbia, Ukraine and Jordan) to bring the total number of countries that GFEI is supporting to develop automotive fuel economy policies to 41. Additional discussions with major donors are ongoing to increase the total number of country projects we are working with to at least 60 by COP21 in December 2015.

 

The GFEI has grown significantly over the past years and is now the leading global initiative to improve the efficiency of the global fleet. We are heavily engaged in shaping a series of global processes on energy efficiency and fuel economy, including:

•           The GFEI has been highlighting the vital importance of fuel economy in the Sustainable Development Goals (SDGs) - the SDG target to double energy efficiency (7.3). A specific indicator has been included on the efficiency of the transport fleet to be able to achieve the 7.3 target. GFEI is therefore crucial to achieve the energy efficiency target of the SDGs.

•           GFEI is a separate Accelerator within the UN's Sustainable Energy for All (SE4ALL) programme, and as such is a key element in the UNFCCC/COP21 climate action process. GFEI will work towards developing a publishable goal on country engagement in fuel economy work for announcement at COP21 in Paris in December 2015.

•           In November 2014, world leaders at the 2014 G20 Summit, with GFEI providing expert input, agreed on an Action Plan for Energy Efficiency, and highlighted vehicle fuel efficiency as a key priority and the GFEI as the programme to support this globally.

 

The GFEI has developed a set of tools that countries use to develop national fuel economy policies. These tools provide technical guidance and share best practices and lessons learned. The GFEI has developed the following tools:

•           GFEI country project toolkit – this is an overall support tool for national fuel economy policy development. It follows a step by step approach supporting countries with developing fuel economy policies. It also includes information on best practices around the world.

•           GFEI feebate tool – an interactive tool to help governments develop a fee bate system[1].

•           GFEI FEPIT tool – a tool that allows countries to compare different policy interventions and predict their costs and benefits.

 

3) the proposed alternative scenario

 

This project will support 6 more country projects to develop fuel economy policies as well as enhance the capacity of 6 sub-regional inter-governmental organizations to support the development of fuel economy policies in other countries in the sub-regions (there are 93 member states in the targeted sub-regions). Further, GFEI will continue to contribute to global processes highlighting the role of fuel economy in achieving global climate change mitigation targets. This project will thus support the global rollout of the GFEI, which aims to have all countries in the world develop fuel economy policies resulting in reduced transport GHG emissions.

 

The activities to achieve the project objective and outcomes as included in the Project Framework are as follows:

 

i) Global:

•           Engage at high level fora and global policy processes such as the UNFCCC, G20 and Post 2015 framework to ensure fuel economy is placed as an integral part of energy efficiency targets and that fuel economy is fully integrated into global policies on sustainable development and climate change.

•           Continue to maintain the profile of the GFEI project as well as the issue of automotive fuel economy through ongoing awareness raising through production and dissemination of outreach materials (e.g. films, technical publications, newsletters, leaflets etc.) as well as talks at conferences, seminars and symposia.

•           Strengthen data analysis and monitoring of CO2 reductions and potential of adopted and proposed fuel economy policies and measures in the target countries

•           Develop an online global framework developed for tracking auto fuel economy policy impacts in terms of GHG emissions. This database will contain all baselines and national fuel economy averages updated for all GFEI country projects, with simulations of GHG automotive fuel economy policy impacts;

 

ii) Sub-Regional:

•           Technical training sessions (training of trainers) organized within six sub-regional governmental organizations secretariats - Southern African Development Community (SADC), Pacific Islands Forum, Arab League, Economic Community of West African States (ECOWAS), Caribbean Community (CARICOM) and Central Asia Regional Economic Cooperation (CAREC) Program - to build institutional capacity on fuel economy policy ranging from baseline setting, cost-benefit analyses, feebate design, policy harmonization, implementation support and  awareness raising

•           Support six sub-regional governmental organizations to develop and approve fuel economy action plans at the sub-regional level.

•           Promote replication and wider adoption of progressive fuel economy policies and measures within the six sub-regional inter-governmental organizations.

•           Sub-regional coordination and experience-sharing events to begin implementation of sub-regional roadmaps, share fuel economy policy setting successes, challenges, solutions and experiences as well as the results of capacity-building activities, followed by the dissemination to all countries within each sub-region.

 

iii) National: The six project countries have been selected on the basis of two criteria; Demand – several countries have expressed interest to the GFEI and are keen to improve the fuel economy of their fleet; and sub-regional significance – by ensuring that we support a country in each sub-region we can develop sub-regional programs and ultimately reach out to more countries in each sub-region.

 

The six project countries will be supported to develop national fuel economy policies. Depending on the local situation, a national project may involve the following steps

•           Develop an agreement with the country for a national programme ;

•           Set up a task force, organize a launching workshop. The task force will include representatives from government, private sector, civil society, learning institutions, and consumer organizations;

•           Develop a baseline and a monitoring programme to track progress in cooperation with local universities and institutions;

•           Develop a menu of fuel economy policy options and do a cost-benefit and impact analysis of different intervention options;

•           Design a draft national fuel economy policy; where feasible, the project should look into synergies with other energy fuel efficiency initiatives;

•           Submit for adoption (often to parliament).

 

4) incremental/additional cost reasoning;

 

The funds requested from GEF will allow the GFEI to support the development of fuel economy policies in six additional countries as well as build the capacities of six sub-regional governmental organizations to prioritize and support the development of fuel economy policies in the sub-regions using the six country projects as case studies.

 

The six sub-regional governmental organizations - Southern African Development Community (SADC), Pacific Islands Forum, Arab League, Economic Community of West African States (ECOWAS), Caribbean Community (CARICOM) and Central Asia Regional Economic Cooperation (CAREC) Program  - represent a total membership of 93 states, with a combined population of approximately 1.4 billion people as of 2015[2].

 

Currently the GFEI is targeting a move from about 41 country projects to add an additional 40 to 50 country projects. The target is to get 100 countries join the GFEI and work on fuel economy projects ideally by COP21, or at least within the next one year. This will be a tipping point, at which in all (sub)regions a majority of countries will now be developing fuel economy policies. It will result in a world-wide adoption of fuel economy policies.

 

UNEP has already secured more than USD 7.5 million in financial and in-kind contributions for the current set of GFEI activities as highlighted in this project. Major donors include the UN, European Union, and the FIA Foundation, in addition to significant in-kind contributions of all six GFEI partners.

 

International studies show that improving automotive fuel economy is one of the most cost effective ways to reduce carbon emissions (for example see the carbon cost abatement curve of McKinsey & Company, 2014). They also show that it will not be possible to achieve any 2C climate change scenario with a BAU baseline of a doubling of CO2 emissions of the global fleet. As such the GFEI is a key programme to ensure the implementation of any global climate agreement.

 

5) global environmental benefits

 

According to a report by McKinsey & Company, "Roads toward a low-carbon future: Reducing CO2 emissions from passenger vehicles in the global road transportation system", research indicates that increasing the fuel efficiency of new vehicles accounts for 72% of the emissions reductions potential of the transport sector by 2030. If the GFEI achieves its primary goal of doubling  the efficiency of the global vehicle fleet from an average of 8l/100 km in 2005 to 4l/100 km by 2050 along with the intermediate goal of halving the new light duty vehicle fuel economy (in l/100km or gCO2/km) by 2030 - based on IPCC and G8 targets and recommendations - it is estimated that CO2 savings would exceed 1Gt CO2 annually by 2025 going to 2Gt CO2 annually by 2050.

 

Road transport is responsible for an estimated 50-80% of local air pollution in urban areas. A recent WHO report estimates the health impacts of air pollution at 7 million premature deaths per year. About half of this is due to outdoor air pollution with small particulates the number one pollutant. Road transport emissions are the major cause of small PM pollution in urban areas.

 

More efficient vehicles are cleaner, smaller, use modern engine design and emission control technologies, and use cleaner fuels - all helping to reduce emissions of pollutants up to 90% - especially nitrogen oxides, hydrocarbons and particulate matter (PM), including black carbon (BC) - a major short lived climate pollutant. Road transport (specifically diesel engines) is a significant source of BC emissions globally (estimated at 18-24% of total BC emissions) which has negative impacts on human health and is an important contributor to climate change. IPCC now believes that BC is the second largest contributor to global warming. Cleaner, modern, more efficient vehicles with matching fuels will contribute to immediate and substantial reductions in BC emissions.

 

Improving fuel efficiency will also reduce the dependency of many countries on oil imports and decrease the burden on government budgets for these imports, which can result in significant savings in annual oil import bills. This is undoubtedly most significant in small island developing states (SIDS). With few exceptions, SIDS are highly dependent on imported fossil fuels for meeting energy needs, in particularly for electricity generation and for transport. Given their distance from global markets and their multi-island features, SIDS often face much larger transportation requirements as well as costs with transport being the fastest growing source of oil consumption globally. In some SIDS, oil imports can cost up to 20 percent of their GDP. Compounding this, their remote location adds to the transport costs. For example, the landed prices of oil products in Pacific SIDS are 200 to 300 percent higher than average international prices. This project will support the development of fuel economy policies via country projects in two SIDS; Samoa and Barbados as well as sub-regional support through the Pacific Islands Forum and the Caribbean Community (CARICOM) thus ensuring that SIDS start implementing automotive fuel efficiency policies.

 

The coming decade will see massive penetration of low and zero emissions vehicles, especially hybrid, plug-in-hybrid and electric vehicles. When countries develop policies to promote more efficient vehicles they often include a component for low and no emissions vehicles. As such GFEI country projects promote the introduction of no and low emissions vehicles, especially hybrid-electric and electric vehicles. The introduction of electric mobility is essential to go beyond leveling off of the CO2 emissions of the global fleet and develop a downward emissions trend.

 

6) innovation, sustainability and potential for scaling up.

 

The project will promote and support the greening of fiscal policies and regimes. Most country projects include a component to increase taxation on dirty vehicles and reduce taxation for cleaner vehicles. These are fiscal neutral interventions that are very effective and have multiple benefits to the countries. By their very nature these measures tend to rely on innovation. Indeed, taxation schemes, import restrictions, and standards often spur innovation, both from a technology and consumer behavior perspective, and improve fleet performance. In the case of feebates (a fiscal fuel economy policy that essentially sets a fee on inefficient technology and a rebate on efficient vehicles), innovative design and correct implementation can speed up the emergence of new, clean technologies and help to ensure economies of scale are reached, so that the next generation of vehicles are more affordable to the general public without government intervention in the market.

 

There is a wide interest among governments to introduce these measures, but a lack of awareness, knowledge and experience. This is what the GFEI can bring. In many cases countries adopt GFEI taxation interventions to wider efforts to green taxation, for example to improve energy efficiency ouytside of the transport sector.

 

The GFEI country projects start with setting a baseline that determines the current average efficiency of a fleet in a country. This will not only create the necessary awareness and a base for policy development, but will also allow countries to keep track of the impact of policies.  Repeating the baseline every few years will show if the fuel economy policies introduced are effective. And it allows for continuous strengthening of these policies, to maintain an incentive for consumers to move towards more efficient vehicles. An example is Mauritius, where we supported the development of a feebate system. Initially Mauritius set their feebate pivot point at 158 gCO2/km (the pivot point is the point at which a vehicle will start paying additional taxes - below it the vehicle will get a tax break). This resulted in a direct reduction of average fuel economy from 7 l/100 to 6.7 l/100km. Last year Mauritius decided to move the pivot point to 150 gCO2/km. And currently there is a proposal under consideration to further reduce this to 130 gCO2/km. As such the GFEI country project allows for continued improvement, consumer incentives, measuring and emissions reductions.

 

Given the role consumer choice plays in the kind of vehicles entering a given market, GFEI strongly believes that raising awareness about the issue of automotive fuel economy and its impact on lifecycle costs through innovative outreach initiatives makes a difference and create change – one consumer at a time. GFEI consumer awareness raising campaigns seek to successfully shift attitudes, affect adoption of new behaviors e.g. improved driver technique (eco-driving). Through alliances with relevant partner organizations and targeted outreach, GFEI propels the fuel economy agenda to the forefront of consumer awareness. Consumer education and public awareness methods include audience research, message testing and development, grassroots and community activation, media strategy and outreach, public service announcements and advertising, partnerships and strategic alliances as well as social media outreach. Awareness is often part of the set of policy interventions that countries use. For example, as part of its GFEI project, Chile introduced the first ever vehicle labeling in Latin America. While in most developed countries vehicle labeling shows the fuel efficiency of the car for sale, in most developing countries similar systems are not in place.

 

The GFEI is designed and predicated on the principle of scalability as all countries in the world have to develop and adopt fuel economy policies if the primary goal of doubling global fuel economy by 2050 (based on a 2005 baseline) is to be achieved. To date, scale-up has been encouraging: from 2010, GFEI has grown from four national country projects (with GEF-4 funding) to 27 ongoing national country projects in 2015 (with GEF-5 funding for 6 of these). This number is going to be 41 countries by the end of 2015 with the commencement of another project that is in the final stages of preparation, and which will add 14 countries to the number of ongoing GFEI projects. This proposed project is designed to scale up from the six national country projects to a potential of 80+ countries through outreach to six sub-regional inter-governmental organizations with total country membership of 93 member states.



[1] A fee bate is a change in taxation where less efficient and more polluting cars will be required to pay additional taxes (the fee) and tax breaks are given to more efficient and cleaner cars (a rebate). This is a very effective intervention that results in immediate fuel economy improvements of the fleet. The GFEI is supporting many countries adopt a feebate system.

[2]  Population data does not include Australia, New Zealand, Saudi Arabia, and China as these already have fuel economy policies.


Full Size Project(FSP)

Global


Global


Barbados, Uzbekistan, Egypt, Samoa, Gambia, Mozambique


GEF Trust Fund

Stage Grant to UNEP Grant to other IA Co-Financing UNEP Fee Other IA Fee
Project
$ 1,804,773.00 $ 0.00 $ 7,542,500.00 $ 180,477.00 $ 0.00


No





External



Executing Agency Category

Partner Category

Name Category Period
Geordie Colville
Principal

Low Risk

The overall project risk is low as all participating countries have prioritized improvement of the transport sector's fuel efficiency. Furthermore, because there is a national economic incentive to implement fuel economy policies, be it from a lower national energy bill due to reduced energy demand (from increased efficiency) or increased national revenue from fiscal fuel economy policies, development of fuel economy policies tends to be a 'win-win' proposition for countries. Identified risks and recommended mitigation measures are provided in the table below. Identified Risk: Slackened political interest in countries on the issue of fuel efficiency Likelihood /Severity: Low Likelihood Proposed risk management measures: GFEI works closely with country governments, providing assistance in research, analysis, data, policy dialogue, and capacity development. This not only strengthens institutions involved with the formulation of transport policy but also ensures a high profile for fuel economy on national agendas. Further, GFEI will continue to raise awareness of fuel economy as it has done for a number of years and from a number of key perspectives , including climate change, local air quality and national energy security; Identified Risk: Lack of implementation of global, regional and national commitments made by involved stakeholders Likelihood /Severity: Moderate Likelihood Proposed risk management measures: GFEI has been introduced at a number of regional and national conferences, and much interest has been generated, leading to requests by several countries for a GFEI national project Identified Risk: Introducing fuel economy strategies in some countries may generate out-of-use vehicles Likelihood /Severity: Low Likelihood Proposed risk management measures: Most developing and transition countries have rapidly growing vehicle fleets. Influencing the type of vehicles that are being added to markets is expected to have little influence on the amount of out-of-use vehicles. There may be a small increase, but that should not be significant. On contrary - often GFEI country projects result in countries doing an overall overview of their vehicles policies - and thus the GFEI country projects may actually trigger new policies on out-of-use vehicles. In any case, GFEI partners commit to address the out-of-use vehicles issues with the project countries they will be working in. Identified Risk: Resistance of public to switch to more fuel efficient vehicles. Likelihood /Severity: Low Likelihood Proposed risk management measures: The project will involve a wide public outreach campaign at the national levels aimed at changing behavioral patterns and informing people of the fuel cost savings available to them by evaluating fuel economy when purchasing vehicles, e.g. through vehicle fuel economy labeling. In addition, fiscal instruments for fuel economy such as taxes and rebates that have vehicle purchase cost implications due to fuel economy, greatly influence consumers purchasing patterns towards more fuel efficient vehicles. Some countries may decide to put in place policies that directly limit the average fleet fuel consumption and/or CO2 emissions. In this case, consumer behavior would not be a factor in the reduction of emissions.




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Fiscal Year Project activities and objectives met


$ 0.00


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