Global greenhouse gas (GHG) emission and fuel economy standards for light-duty vehicles (LDVs) have progressed significantly in a little more than a decade. Ten years ago, only four governments had introduced mandatory GHG emission/fuel economy standards: China, Japan, South Korea, and the United States. The European Union and Canada had announced their intention to introduce GHG emission standards, but neither government had a legislative framework in place. Today, 10 governments—Brazil, Canada, China, the European Union, India, Japan, Mexico, Saudi Arabia, South Korea, and the United States—have established fuel economy or GHG emission standards for LDVs. And all are among the top 15 vehicle markets worldwide: nearly 80% of new LDVs sold globally are currently subject to some kind of GHG emission or fuel economy standards. Other large markets, such as Australia, Thailand, and Vietnam, are in the process of developing standards as well.
This report is an update to a 2007 publication reviewing global standards. We examine how the GHG and fuel economy standards have changed over time, how the auto industry has reacted in different regions, and discuss how the standards may continue to evolve in the future. We compare characteristics of vehicle fleets in major markets and estimate the policy impacts of fuel economy standards on transport GHG emission levels around the world.
To summarize the state of GHG/fuel economy standards worldwide in 2017:
- Fuel economy regulations in most regions give manufacturers substantial flexibility in meeting their targets.
- Fuel economy standards for LCVs are evolving along with standards for passenger cars.
- The increasing gap between real-world and official fuel economy/CO2 emission value is a growing concern because it compromises the actual benefit of standards and undermines their legitimacy.
- A number of regions are adopting complementary policies to improve vehicle fleet fuel economy.
- Compared to business as usual, the standards that have already been adopted will significantly reduce GHG emissions. However, to offset the impact of a growing number of vehicles and increases in total vehicle kilometers traveled over the long term, regulation must spread beyond the 10 regions discussed in this report.
In general, the increasing willingness of governments to adopt and strengthen vehicle GHG emission and fuel economy standards reflects their growing understanding that reducing GHG emissions and fuel consumption is crucial to improving environmental health (including meeting global climate change commitments), ensuring energy security, shielding consumers from fluctuating oil prices, and driving technological innovation.