IDEAS home Printed from https://ideas.repec.org/a/eee/appene/v241y2019icp257-277.html
   My bibliography  Save this article

Technology pathways for complying with Corporate Average Fuel Consumption regulations up to 2030: A case study of China

Author

Listed:
  • Wang, Sinan
  • Chen, Kangda
  • Zhao, Fuquan
  • Hao, Han

Abstract

Under the annually strengthened fuel economy regulations for light-duty vehicles, a technology pathway provides automakers with forward-looking guidance to strategically manage their vehicle assortment and fuel-efficient technologies. Because the regulations worldwide are very different in terms of their various schemes and designs, it is difficult to calculate the optimal pathway or to evaluate a regulation’s impact on the vehicle fleet without an assessment model specifically designed to do so. To date, China has issued four Phases of Corporate Average Fuel Consumption regulations; however, a bottom-up optimized technology pathway for the regulation compliance of domestic automakers is still missing. In this paper, real-world data on each vehicle model’s market and technology parameters are used to describe China’s passenger vehicle fleet. Employing a combinational optimization assessment model for China’s regulation, this study calculates bottom-up fuel-efficient technology pathways for complying with the 2020 regulation and the potential 2025–2030 regulations. Under scenarios that do not consider the subsidy or super-credit preferential policies for New Energy Vehicles (Plug-in Hybrid Electric Vehicles and Battery Electric Vehicles in China), the average compliance costs for the three future phases of the regulations will be $687.5, $2344.4 and $3111.2. The average fuel consumption rate of passenger vehicle fleet will reach 5.28, 4.07 and 3.33 L/100 km, and the average vehicle curb weight will increase by 4.7%, 6.3% and 9.2%. These results mean that if current schemes are followed, the regulations will fail to achieve their fuel saving targets and to promote lightweighting vehicles. The technology pathway of powertrains and specific fuel-efficient technologies is analyzed in great detail. The results show that the market share of New Energy Vehicles will increase to 16.9% and 34.2% by 2025 and 2030, and that Plug-in Hybrid Electric Vehicle will be the most promising fuel saving technology due to the preferential test method in China. The sensitivity of the compliance cost and the market share of New Energy Vehicles to regulation stringency is further analyzed. For every change in regulation stringency of 0.05 L/100 km in the 2025 and 2030 regulations, the compliance cost will change by 3.03% and 2.31%, while the market share of New Energy Vehicle will change by 0.58% and 0.73%. These results indicate that if the various schemes for regulation compliance are not taken into account, only making adjustment to the regulations’ stringency may have little effect on reducing automakers’ compliance cost or promoting the market share of New Energy Vehicles.

Suggested Citation

  • Wang, Sinan & Chen, Kangda & Zhao, Fuquan & Hao, Han, 2019. "Technology pathways for complying with Corporate Average Fuel Consumption regulations up to 2030: A case study of China," Applied Energy, Elsevier, vol. 241(C), pages 257-277.
    • Handle: RePEc:eee:appene:v:241:y:2019:i:c:p:257-277
    DOI: 10.1016/j.apenergy.2019.03.092
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0306261919305021
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.apenergy.2019.03.092?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Lan, Song & Yang, Zhijia & Stobart, Richard & Chen, Rui, 2018. "Prediction of the fuel economy potential for a skutterudite thermoelectric generator in light-duty vehicle applications," Applied Energy, Elsevier, vol. 231(C), pages 68-79.
    2. Tsiakmakis, Stefanos & Fontaras, Georgios & Ciuffo, Biagio & Samaras, Zissis, 2017. "A simulation-based methodology for quantifying European passenger car fleet CO2 emissions," Applied Energy, Elsevier, vol. 199(C), pages 447-465.
    3. Soren T. Anderson & James M. Sallee, 2011. "Using Loopholes to Reveal the Marginal Cost of Regulation: The Case of Fuel-Economy Standards," American Economic Review, American Economic Association, vol. 101(4), pages 1375-1409, June.
    4. Massaguer, A. & Massaguer, E. & Comamala, M. & Pujol, T. & González, J.R. & Cardenas, M.D. & Carbonell, D. & Bueno, A.J., 2018. "A method to assess the fuel economy of automotive thermoelectric generators," Applied Energy, Elsevier, vol. 222(C), pages 42-58.
    5. Zirogiannis, Nikolaos & Duncan, Denvil & Carley, Sanya & Siddiki, Saba & Graham, John D., 2019. "The effect of CAFE standards on vehicle sales projections: A Total Cost of Ownership approach," Transport Policy, Elsevier, vol. 75(C), pages 70-87.
    6. Peng, Tianduo & Ou, Xunmin & Yuan, Zhiyi & Yan, Xiaoyu & Zhang, Xiliang, 2018. "Development and application of China provincial road transport energy demand and GHG emissions analysis model," Applied Energy, Elsevier, vol. 222(C), pages 313-328.
    7. Koichiro Ito & James M. Sallee, 2018. "The Economics of Attribute-Based Regulation: Theory and Evidence from Fuel Economy Standards," The Review of Economics and Statistics, MIT Press, vol. 100(2), pages 319-336, May.
    8. Wang, Ning & Tang, Linhao & Zhang, Wenjian & Guo, Jiahui, 2019. "How to face the challenges caused by the abolishment of subsidies for electric vehicles in China?," Energy, Elsevier, vol. 166(C), pages 359-372.
    9. Soren T. Anderson & Ian W. H. Parry & James M. Sallee & Carolyn Fischer, 2011. "Automobile Fuel Economy Standards: Impacts, Efficiency, and Alternatives," Review of Environmental Economics and Policy, Association of Environmental and Resource Economists, vol. 5(1), pages 89-108, Winter.
    10. Cheah, Lynette & Heywood, John, 2011. "Meeting U.S. passenger vehicle fuel economy standards in 2016 and beyond," Energy Policy, Elsevier, vol. 39(1), pages 454-466, January.
    11. Al-Alawi, Baha M. & Bradley, Thomas H., 2014. "Analysis of corporate average fuel economy regulation compliance scenarios inclusive of plug in hybrid vehicles," Applied Energy, Elsevier, vol. 113(C), pages 1323-1337.
    12. Andress, David & Das, Sujit & Joseck, Fred & Dean Nguyen, T., 2012. "Status of advanced light-duty transportation technologies in the US," Energy Policy, Elsevier, vol. 41(C), pages 348-364.
    13. Simmons, Richard A. & Shaver, Gregory M. & Tyner, Wallace E. & Garimella, Suresh V., 2015. "A benefit-cost assessment of new vehicle technologies and fuel economy in the U.S. market," Applied Energy, Elsevier, vol. 157(C), pages 940-952.
    14. Al-Alawi, Baha M. & Coker, Alexander D., 2018. "Multi-criteria decision support system with negotiation process for vehicle technology selection," Energy, Elsevier, vol. 157(C), pages 278-296.
    15. Changzheng Liu and David L. Greene, 2014. "Vehicle Manufacturer Technology Adoption and Pricing Strategies under Fuel Economy/Emissions Standards and Feebates," The Energy Journal, International Association for Energy Economics, vol. 0(Number 3).
    16. Shabbir, Wassif & Evangelou, Simos A., 2019. "Threshold-changing control strategy for series hybrid electric vehicles," Applied Energy, Elsevier, vol. 235(C), pages 761-775.
    17. Pan, Xunzhang & Wang, Hailin & Wang, Lining & Chen, Wenying, 2018. "Decarbonization of China's transportation sector: In light of national mitigation toward the Paris Agreement goals," Energy, Elsevier, vol. 155(C), pages 853-864.
    18. Hao, Han & Wang, Hewu & Yi, Ran, 2011. "Hybrid modeling of China’s vehicle ownership and projection through 2050," Energy, Elsevier, vol. 36(2), pages 1351-1361.
    19. Hao, Han & Wang, Sinan & Liu, Zongwei & Zhao, Fuquan, 2016. "The impact of stepped fuel economy targets on automaker's light-weighting strategy: The China case," Energy, Elsevier, vol. 94(C), pages 755-765.
    20. Hasuike, Takashi & Ishii, Hiroaki, 2009. "On flexible product-mix decision problems under randomness and fuzziness," Omega, Elsevier, vol. 37(4), pages 770-787, August.
    21. MacKenzie, Don & Heywood, John B., 2015. "Quantifying efficiency technology improvements in U.S. cars from 1975–2009," Applied Energy, Elsevier, vol. 157(C), pages 918-928.
    22. Pei, Huanxin & Hu, Xiaosong & Yang, Yalian & Tang, Xiaolin & Hou, Cong & Cao, Dongpu, 2018. "Configuration optimization for improving fuel efficiency of power split hybrid powertrains with a single planetary gear," Applied Energy, Elsevier, vol. 214(C), pages 103-116.
    23. Wang, Sinan & Zhao, Fuquan & Liu, Zongwei & Hao, Han, 2018. "Impacts of a super credit policy on electric vehicle penetration and compliance with China's Corporate Average Fuel Consumption regulation," Energy, Elsevier, vol. 155(C), pages 746-762.
    24. Wells, Peter & Varma, Adarsh & Newman, Dan & Kay, Duncan & Gibson, Gena & Beevor, Jamie & Skinner, Ian, 2013. "Governmental regulation impact on producers and consumers: A longitudinal analysis of the European automotive market," Transportation Research Part A: Policy and Practice, Elsevier, vol. 47(C), pages 28-41.
    25. González Palencia, Juan C. & Sakamaki, Tsukasa & Araki, Mikiya & Shiga, Seiichi, 2015. "Impact of powertrain electrification, vehicle size reduction and lightweight materials substitution on energy use, CO2 emissions and cost of a passenger light-duty vehicle fleet," Energy, Elsevier, vol. 93(P2), pages 1489-1504.
    26. Shiau, Ching-Shin Norman & Michalek, Jeremy J. & Hendrickson, Chris T., 2009. "A structural analysis of vehicle design responses to Corporate Average Fuel Economy policy," Transportation Research Part A: Policy and Practice, Elsevier, vol. 43(9-10), pages 814-828, November.
    27. Whitefoot, Kate S. & Skerlos, Steven J., 2012. "Design incentives to increase vehicle size created from the U.S. footprint-based fuel economy standards," Energy Policy, Elsevier, vol. 41(C), pages 402-411.
    28. Bishop, Justin D.K. & Martin, Niall P.D. & Boies, Adam M., 2014. "Cost-effectiveness of alternative powertrains for reduced energy use and CO2 emissions in passenger vehicles," Applied Energy, Elsevier, vol. 124(C), pages 44-61.
    29. Wang, Zhao & Jin, Yuefu & Wang, Michael & Wei, Wu, 2010. "New fuel consumption standards for Chinese passenger vehicles and their effects on reductions of oil use and CO2 emissions of the Chinese passenger vehicle fleet," Energy Policy, Elsevier, vol. 38(9), pages 5242-5250, September.
    30. Du, Jiuyu & Meng, Xiangfeng & Li, Jianqiu & Wu, Xiaogang & Song, Ziyou & Ouyang, Minggao, 2018. "Insights into the characteristics of technologies and industrialization for plug-in electric cars in China," Energy, Elsevier, vol. 164(C), pages 910-924.
    31. Jun, Seung-Pyo & Yoo, Hyoung Sun & Kim, Ji-Hui, 2016. "A study on the effects of the CAFE standard on consumers," Energy Policy, Elsevier, vol. 91(C), pages 148-160.
    32. Hao, Han & Wang, Hewu & Ouyang, Minggao, 2011. "Fuel conservation and GHG (Greenhouse gas) emissions mitigation scenarios for China’s passenger vehicle fleet," Energy, Elsevier, vol. 36(11), pages 6520-6528.
    33. Sergey Paltsev & Y.-H. Henry Chen & Valerie Karplus & Paul Kishimoto & John Reilly & Andreas Löschel & Kathrine Graevenitz & Simon Koesler, 2018. "Reducing CO2 from cars in the European Union," Transportation, Springer, vol. 45(2), pages 573-595, March.
    34. Wang, Sinan & Zhao, Fuquan & Liu, Zongwei & Hao, Han, 2017. "Heuristic method for automakers' technological strategy making towards fuel economy regulations based on genetic algorithm: A China's case under corporate average fuel consumption regulation," Applied Energy, Elsevier, vol. 204(C), pages 544-559.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Liu, Xinglong & Zhao, Fuquan & Hao, Han & Liu, Zongwei, 2023. "Comparative analysis for different vehicle powertrains in terms of energy-saving potential and cost-effectiveness in China," Energy, Elsevier, vol. 276(C).
    2. Cui, Yuepeng & Zou, Fumin & Xu, Hao & Chen, Zhihui & Gong, Kuangmin, 2022. "A novel optimization-based method to develop representative driving cycle in various driving conditions," Energy, Elsevier, vol. 247(C).
    3. Chen, Yufeng & Ni, Liangfu & Liu, Kelong, 2021. "Does China's new energy vehicle industry innovate efficiently? A three-stage dynamic network slacks-based measure approach," Technological Forecasting and Social Change, Elsevier, vol. 173(C).
    4. Fuquan Zhao & Kangda Chen & Han Hao & Zongwei Liu, 2020. "Challenges, Potential and Opportunities for Internal Combustion Engines in China," Sustainability, MDPI, vol. 12(12), pages 1-15, June.
    5. Kangda Chen & Fuquan Zhao & Xinglong Liu & Han Hao & Zongwei Liu, 2021. "Impacts of the New Worldwide Light-Duty Test Procedure on Technology Effectiveness and China’s Passenger Vehicle Fuel Consumption Regulations," IJERPH, MDPI, vol. 18(6), pages 1-20, March.
    6. Harvey, L.D. Danny, 2020. "Rethinking electric vehicle subsidies, rediscovering energy efficiency," Energy Policy, Elsevier, vol. 146(C).
    7. Li, Yi & Wang, Zhaohua & Wang, Ke & Zhang, Bin, 2021. "Fuel economy of Chinese light-duty car manufacturers: An efficiency analysis perspective," Energy, Elsevier, vol. 220(C).
    8. Cui, Yuepeng & Xu, Hao & Zou, Fumin & Chen, Zhihui & Gong, Kuangmin, 2021. "Optimization based method to develop representative driving cycle for real-world fuel consumption estimation," Energy, Elsevier, vol. 235(C).
    9. Zhang, Tinglong & Li, Sasa & Li, Yifan & Wang, Weizhong, 2023. "Evaluation of technology innovation efficiency for the listed NEV enterprises in China," Economic Analysis and Policy, Elsevier, vol. 80(C), pages 1445-1458.
    10. Cha, Kyoung-Soo & Kim, Dong-Min & Jung, Young-Hoon & Lim, Myung-Seop, 2020. "Wound field synchronous motor with hybrid circuit for neighborhood electric vehicle traction improving fuel economy," Applied Energy, Elsevier, vol. 263(C).
    11. Kangda Chen & Fuquan Zhao & Han Hao & Zongwei Liu & Xinglong Liu, 2021. "Hierarchical Optimization Decision-Making Method to Comply with China’s Fuel Consumption and New Energy Vehicle Credit Regulations," Sustainability, MDPI, vol. 13(14), pages 1-25, July.
    12. Yurii Gutarevych & Vasyl Mateichyk & Jonas Matijošius & Alfredas Rimkus & Igor Gritsuk & Oleksander Syrota & Yevheniy Shuba, 2020. "Improving Fuel Economy of Spark Ignition Engines Applying the Combined Method of Power Regulation," Energies, MDPI, vol. 13(5), pages 1-19, March.
    13. Xinglong Liu & Fuquan Zhao & Han Hao & Kangda Chen & Zongwei Liu & Hassan Babiker & Amer Ahmad Amer, 2020. "From NEDC to WLTP: Effect on the Energy Consumption, NEV Credits, and Subsidies Policies of PHEV in the Chinese Market," Sustainability, MDPI, vol. 12(14), pages 1-19, July.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Kangda Chen & Fuquan Zhao & Han Hao & Zongwei Liu & Xinglong Liu, 2021. "Hierarchical Optimization Decision-Making Method to Comply with China’s Fuel Consumption and New Energy Vehicle Credit Regulations," Sustainability, MDPI, vol. 13(14), pages 1-25, July.
    2. Wu, Jingwen & Zhang, Tong & Liao, Hua, 2024. "Fuel economy standards: Regulatory loopholes and firms’ heterogeneous responses," Journal of Environmental Economics and Management, Elsevier, vol. 123(C).
    3. Wang, Sinan & Zhao, Fuquan & Liu, Zongwei & Hao, Han, 2018. "Impacts of a super credit policy on electric vehicle penetration and compliance with China's Corporate Average Fuel Consumption regulation," Energy, Elsevier, vol. 155(C), pages 746-762.
    4. Wang, Sinan & Zhao, Fuquan & Liu, Zongwei & Hao, Han, 2017. "Heuristic method for automakers' technological strategy making towards fuel economy regulations based on genetic algorithm: A China's case under corporate average fuel consumption regulation," Applied Energy, Elsevier, vol. 204(C), pages 544-559.
    5. Wu, Jingwen & Posen, I. Daniel & MacLean, Heather L., 2021. "Trade-offs between vehicle fuel economy and performance: Evidence from heterogeneous firms in China," Energy Policy, Elsevier, vol. 156(C).
    6. Lucas W. Davis & Christopher R. Knittel, 2019. "Are Fuel Economy Standards Regressive?," Journal of the Association of Environmental and Resource Economists, University of Chicago Press, vol. 6(S1), pages 37-63.
    7. Mathias Reynaert, 2021. "Abatement Strategies and the Cost of Environmental Regulation: Emission Standards on the European Car Market," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 88(1), pages 454-488.
    8. Hao, Han & Liu, Zongwei & Zhao, Fuquan, 2017. "An overview of energy efficiency standards in China's transport sector," Renewable and Sustainable Energy Reviews, Elsevier, vol. 67(C), pages 246-256.
    9. Li, Yi & Wang, Zhaohua & Wang, Ke & Zhang, Bin, 2021. "Fuel economy of Chinese light-duty car manufacturers: An efficiency analysis perspective," Energy, Elsevier, vol. 220(C).
    10. Koichiro Ito & James M. Sallee, 2018. "The Economics of Attribute-Based Regulation: Theory and Evidence from Fuel Economy Standards," The Review of Economics and Statistics, MIT Press, vol. 100(2), pages 319-336, May.
    11. Hao, Han & Wang, Sinan & Liu, Zongwei & Zhao, Fuquan, 2016. "The impact of stepped fuel economy targets on automaker's light-weighting strategy: The China case," Energy, Elsevier, vol. 94(C), pages 755-765.
    12. Hao, Han & Geng, Yong & Sarkis, Joseph, 2016. "Carbon footprint of global passenger cars: Scenarios through 2050," Energy, Elsevier, vol. 101(C), pages 121-131.
    13. Sen, Burak & Noori, Mehdi & Tatari, Omer, 2017. "Will Corporate Average Fuel Economy (CAFE) Standard help? Modeling CAFE's impact on market share of electric vehicles," Energy Policy, Elsevier, vol. 109(C), pages 279-287.
    14. Wang, Yiwei & Miao, Qing, 2021. "The impact of the corporate average fuel economy standards on technological changes in automobile fuel efficiency," Resource and Energy Economics, Elsevier, vol. 63(C).
    15. Li, Shanjun & Wang, Binglin & Zhou, Hui, 2024. "Decarbonizing passenger transportation in developing countries: Lessons and perspectives1," Regional Science and Urban Economics, Elsevier, vol. 107(C).
    16. Soren T. Anderson & James M. Sallee, 2016. "Designing Policies to Make Cars Greener: A Review of the Literature," NBER Working Papers 22242, National Bureau of Economic Research, Inc.
    17. Jenn, Alan & Azevedo, Inês & Michalek, Jeremy Joseph, 2019. "Alternative-Fuel-Vehicle Policy Interactions Increase U.S. Greenhouse Gas Emissions," OSF Preprints n69tp, Center for Open Science.
    18. Konishi, Yoshifumi & Managi, Shunsuke, 2020. "Do regulatory loopholes distort technical change? Evidence from new vehicle launches under the Japanese fuel economy regulation," Journal of Environmental Economics and Management, Elsevier, vol. 104(C).
    19. Raphael Calel & Jonathan Colmer & Antoine Dechezleprêtre & Matthieu Glachant, 2021. "Do carbon offsets offset carbon?," CEP Discussion Papers dp1808, Centre for Economic Performance, LSE.
    20. Yuan, Zhiyi & Ou, Xunmin & Peng, Tianduo & Yan, Xiaoyu, 2019. "Life cycle greenhouse gas emissions of multi-pathways natural gas vehicles in china considering methane leakage," Applied Energy, Elsevier, vol. 253(C), pages 1-1.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:appene:v:241:y:2019:i:c:p:257-277. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/wps/find/journaldescription.cws_home/405891/description#description .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.