Policy Pathways Brief: Improving the Fuel Economy of Road Vehicles
Road vehicles typically account for three-quarters of transport energy use. Market-ready technologies for conventional gasoline and diesel vehicles can cost-effectively reduce the specific fuel consumption of new vehicles by half, providing significant benefits including lower costs and better air quality for consumers, improved industrial competitiveness and increased national energy security.
The International Energy Agency has identified three critical factors to guide policy makers in realising the potential benefits from improving the fuel economy of road vehicles.
Policy pathway to improving the fuel economy of road vehicles:
- Focus on improving the efficiency of the new vehicles using a combination of information measures (such as labels), fuel economy standards (such as the US CAFE standards), and fiscal measures (such as fuel taxes and rebates).
- Vehicle standards will be most effective in countries with a substantial existing or developing manufacturing base. In countries that primarily import vehicles, policy should initially centre on labelling and fiscal measures.
- Phase-out fuel subsidies and align automotive fuel taxes with vehicle fuel economy or CO2 emissions rates while simultaneously investing in public transport. If necessary implement other redistributive policies to ensure vulnerable social groups are not adversely affected. Consideration should be given to further incentives or rebates for advanced vehicles.
The full Policy Pathway offers guidance on implementing fuel economy measures for road vehicles and provides case studies from around the world. The report can be downloaded here