European and Japanese fuel economy initiatives: what they are, their prospects for success, their usefulness as a guide for US action

Abstract

The new Japanese weight class standards for fuel economy and European Voluntary Commitment for reducing carbon emissions, both aimed at light-duty vehicles, are likely to further separate the fuel efficiency of the Japanese and European fleets from the US fleet… . and they may put substantial pressure on both US manufacturers and the federal government to take action to narrow the growing fuel economy gap. This paper describes these two new initiatives, discusses some concerns with their outcome, and provides some insight into their potential applicability to the United States market. In particular, the paper compares the regulatory conditions governing fuel economy (test regimes, emissions standards) and the differences in the cost-effectiveness of new fuel economy technology (given differences in fuel prices, vehicle taxation, and other factors affecting technology cost/fuel savings tradeoffs) for the three markets. European and Japanese market conditions are more conducive to improving fuel economy because of less stringent emissions standards (that make direct injection engines more feasible and will likely allow better performance from them) and much higher fuel prices than in the US. However, factors such as high vehicle taxes and, in some European countries, a high percentage of company cars may narrow the gap between the US market and the European market. And very high rates of driving in the US also enhance the cost-effectiveness of efficiency technologies