ASEAN Fuel Economy Roadmap

for the Transport Sector 2018-2025:

with Focus on Light-Duty Vehicles
ASEAN Fuel Economy Roadmap for
the Transport Sector 2018-2025:
with Focus on Light-Duty Vehicles

The ASEAN Secretariat

Jakarta
The Association of Southeast Asian Nations (ASEAN) was established on 8 August 1967. The Member States of the
Association are Brunei Darussalam, Cambodia, Indonesia, Lao PDR, Malaysia, Myanmar, Philippines, Singapore, Thailand
and Viet Nam.
The ASEAN Secretariat is based in Jakarta, Indonesia.

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Catalogue-in-Publication Data

ASEAN Fuel Economy Roadmap for Transport Sector 2018-2025: With Focus on Light-Duty Vehicles
Jakarta, ASEAN Secretariat, February 2019

388.0959
1. ASEAN – Transportation – Policy
2. LDV – Fuel Economy Platform

ISBN 978-602-5798-32-0

ASEAN: A Community of Opportunities for All

With the Support of:

The ASEAN Fuel Economy Roadmap for the Transport Sector 2018-2025: With Focus on Light-Duty Vehicles has been
produced with the support of the German international development agency Deutsche Gesellschaft für Internationale

Change Mitigation in the Land Transport Sector of the ASEAN Region Phase II, funded by the German Federal Ministry for
Economic Cooperation and
Development.

Findings, interpretations and conclusions expressed in this publication are based on information gathered by GIZ and its

GIZ or ASEAN does not guarantee the accuracy or completeness of information in this document, and shall not be held
responsible for any errors, omissions or losses which emerge from its use.

The text of this publication may be freely quoted or reprinted, provided proper acknowledgement is given and a copy containing
the reprinted material is sent to the Community Relations Division (CRD) of the ASEAN Secretariat, Jakarta.

General information on ASEAN appears online at the ASEAN Website: www.asean.org

Copyright Association of Southeast Asian Nations (ASEAN) 2019.

All rights reserved.

Table of Contents
Table of Contents ....................................................................................................................... 3
Table of Figures, Tables and Boxes ........................................................................................... 5
Abbreviations............................................................................................................................... 7
Preface ................................................................................................................................ 11
Executive summary .....................................................................................................................
1 Introduction .......................................................................................................................... 17
1.1 Regional policy context: KLTSP, fuel economy platform and this roadmap.................... 17
1.2 ..................................................................................................... 19

2 Current status in the ASEAN region ................................................................................... 21

2.1 Economic development and motorisation ...................................................................... 21
2.2 LDV energy use and CO2 emissions ............................................................................. 22
2.3 The LDV market in the ASEAN region ........................................................................... 23
2.4 LDV fuel economy in the ASEAN region and the Member States .................................. 24
2.5 Overview of LDV fuel economy policies in the ASEAN regio ......................................... 26
2.6 Gaps and Barriers .......................................................................................................... 28

3 Vision, goals and recommended actions towards 2025 ................................................... 30

3.1 2025 Vision ..................................................................................................................... 39
3.2 Aspirational goals towards 2025 .................................................................................... 30
3.3 Recommended actions to meet the goals ...................................................................... 33

4 Options for fuel economy policy development ................................................................. 36

4.1 methodologies..................................................................... 37
4.2 Consumer information .................................................................................................... 40
4.3 Fiscal policy measures ................................................................................................... 41
4.3.1 Fuel economy-based vehicle registration tax feebate schemes............................ 41
4.3.2 Fuel economy-based vehicle circulation tax.......................................................... 42
4.3.3 Fuel taxation .......................................................................................................... 43
4.4 Regulatory policy measures ........................................................................................... 43
4.4.1 Fuel economy standards ....................................................................................... 43
4.4.2 Fuel quality regulation ........................................................................................... 44
4.5 Vehicle maintenance ...................................................................................................... 44
4.6 In-use fuel economy measures ...................................................................................... 45

5 Annex
5.1 Global context for fuel economy policy........................................................................... 46
5.1.1 Transport energy use, emissions and climate change .......................................... 46
5.1.2 Light-duty vehicle fuel economy standards around the world ............................... 46
5.2 policy ............................ 47
5.2.1 Introduction to LDV fuel economy technology ....................................................... 49
5.2.2 .............................................. 49
5.2.3 economy policy
within AMSs .......................................................................................................... 53
5.2.4 Impact assessment of the aspirational fuel economy goal .................................... 55
5.3 Existing fuel economy policies in ASEAN Member States ............................................. 59
5.4 Gaps and barriers to fuel-economy policy in ASEAN and AMS ..................................... 64
5.4.1 The lack of knowledge and data for developing fuel economy baselines ............. 64

3
 5.4.2 The role of second-hand imported vehicles .......................................................... 65
5.4.3 Administrative barriers for fuel economy policy development ............................... 66
5.4.4 Behavioural challenges ......................................................................................... 66
5.5 Policy and technical toolbox for comprehensive fuel economy policy ............................ 67
5.5.1 International experience: strategies for fuel economy improvement ..................... 67
5.5.2 Strategies for consumer awareness of fuel consumption...................................... 68
5.5.3 Feebate design and implementation ..................................................................... 70
5.5.4 Circulation tax design and implementation............................................................ 74
5.5.5 Fuel tax design and implementation...................................................................... 76
5.5.6 Design and implementation of fuel economy standards........................................ 76
5.5.7 Air pollutant emission standards and fuel economy .............................................. 81
5.5.8 Fuel quality regulation ........................................................................................... 84
5.6 Methodological considerations ....................................................................................... 86
5.6.1 Options for determining the level of ASEAN’s aspirational LDV
fuel consumption goal ............................................................................................. 86
5.6.2 light commercial vehicles in major markets ...... 89
5.6.3 Examples of light-duty vehicles ............................................................................. 90
5.6.4 Conversion factors ................................................................................................ 90
5.6.5 Fuel economy versus fuel consumption ................................................................ 91
5.7 Widening the scope beyond LDV fuel economy............................................................. 92
5.7.1 Heavy-duty vehicle fuel economy.......................................................................... 92
5.7.2 Electric vehicles and shared mobility .................................................................... 95
5.7.3 Two-wheelers ........................................................................................................ 97

6 References ............................................................................................................................ 99

4
Table of Figures, Tables and Boxes

in the ASEAN region.................................................................................................................. 22

Figure 2: Energy-related CO2 emission external costs in the ASEAN region by sector in 2018 and 2025
22
Figure 3: Overview of vehicle sales and production in the ASEAN region
(Excluding two- and three-wheelers) ......................................................................................... 23
Figure 4: Fuel Economy Baselines Study conducted by GFEI in ASEAN and the World......................... 24
Figure 5: New LDV characteristics in the ASEAN region compared to the world in 2015 ........................ 25
Figure 6: New LDV characteristics in Indonesia, Malaysia, the Philippines, Thailand and
the ASEAN region in 2015......................................................................................................... 26
Figure 7: Non-mandatory fuel consumption standards for passenger cars in Thailand
and Viet Nam compared to the mandatory standard in the EU ................................................. 28
Figure 8: Enacted and Proposed LDV Fuel Economy Targets around the World –
.. 30
Figure 9: The ASEAN LDV fuel consumption goal in comparison to enacted and proposed

represent passenger cars and light trucks together. ................................................................. 31

Figure 10: Schematic overview of the roadmap vision, goals and actions ................................................. 35
Figure 11: Overview of fuel economy policy measure categories .............................................................. 36
Figure 12: Global urban and non-urban transport CO2 emissions ............................................................. 46
Figure 13: Global passenger light-duty vehicle emission reduction potential ............................................. 47
Figure 15 GFEI target to double vehicle fuel economy by reducing new vehicle fuel
consumption by 50% by 2030 ................................................................................................... 47
Figure 14: Overview of the global status of light-duty and heavy-duty vehicle fuel economy policies ....... 48
Figure 15: CO2 reduction potential and additional direct manufacturing costs for a segment c petrol
car for the years 2015, 2020 and 2025. .................................................................................... 51
Figure 16: Comparison of technology costs and fuel savings of passenger cars....................................... 52
Figure 17: LDV energy use in the ASEAN 2000 to 2050 under the benchmark scenario (BMS)
as well as the ASEAN Fuel Economy Policies Scenario (FEPS) .............................................. 56
Figure 18: LDV transport energy intensity in the ASEAN 2000 to 2050 under the benchmark scenario (BMS)
and the ASEAN Fuel Economy Policies Scenario (FEPS) ........................................................ 56
Figure 19: LDV wheel-to-wheel CO2 emissions in the ASEAN 2000 to 2050 under the benchmark
scenario (BMS) and the ASEAN Fuel Economy Policies Scenario (FEPS) .............................. 57
Figure 20: Total transport well-to-wheel CO2 Emissions and LDV emission reductions in
the ASEAN for selected years under the benchmark scenario (BMS) as well as
the ASEAN Fuel Economy Policies Scenario (FEPS) ............................................................... 57
Figure 21: Cumulative costs of new LDV purchases and fuel use 2018 to 2025 and 2018 to 2040
in the ASEAN region under a business- as- usual (BAU) as well as
the ASEAN FE RM Scenario ..................................................................................................... 58
Figure 22: Fuel economy baseline coverage of the ASEAN LDV market 2015.......................................... 64
Figure 23
related government agencies in Thailand ................................................................................. 66
Figure 24: Vehicle size evolution across the world 2005-15....................................................................... 67
Figure 25: Historical fuel economy improvement and annual fuel economy improvement
rate for selected EU countries and the EU27 ............................................................................ 67
Figure 26
for various LDV markets ............................................................................................................ 68
Figure 27: Fuel economy labels of Singapore, Thailand and Viet Nam ..................................................... 69
Figure 28: The fuel economy label of the United States............................................................................. 69
Figure 29: Schematic illustration of a fuel consumption -based feebate scheme....................................... 71
Figure 30: Feebate schemes of France 2016 and 2017 and Singapore 2015. The Singaporean
CEVS was replaced by a multi-pollutant Vehicular Emissions Scheme in 2018. ...................... 73
Figure 31: Annual average circulation and one-off registration tax for selected EU countries ................... 76
Figure 32: Sales by CO2 emission class (left), and sales by powertrain type (right), and powertrain
and sales-weighted average CO2 emissions and fuel consumption for Turkey, 2005 to 2015 . 77

5
Figure 33: Vehicle prices and taxation selected models in Turkey, Germany, France and the Netherlands. 78
Figure 34
emission standard ..................................................................................................................... 79
Figure 35: Weight- versus size- based fuel consumption and CO2 emission standard ............................. 80
Figure 36: CO2 emission target curves for PLDVs and LCVs in the European Union for the years 2017
to 2020 and post 2020............................................................................................................... 81
Figure 37: Overview of vehicle pollutant emission standards in selected AMSs and other global
jurisdictions................................................................................................................................ 83
Figure 39: Annual GHG emissions and fuel consumption from tractor-trailers and rigid trucks
............................................................................ 93
Figure 40
trailers over the world heavy duty vehicle cycle (WHVC) at empty, half, and full load .............. 94
Figure 41: Global electric vehicle stock by country .................................................................................... 96
Figure 42: Powertrain and fuel costs for conventional cars, battery electric vehicles and plug-in hybrids
for the years 2015 and 2030 for the US, China, Japan and Europe ......................................... 96
Figure 43: Motorcycle Sales and Production in ASEAN and the World...................................................... 98

Table 1: Summary of the goals and actions of the roadmap ..................................................... 15

Table 2: Vision and goals of the KLTSP with regard to sustainable transport ........................... 18
Table 3: Actions and milestones of the KLTSP with regard to fuel economy ............................ 18
Table 4: Vehicle ownership, saturation level and GDP per capita today and future projections 21
Table 5: Gasoline Prices in AMSs and Reference Countries .................................................... 28
Table 6: Suggested measures, indicators, conversion factors and methodologies
for fuel economy policy development, enacting and monitoring .................................. 38
Table 7: Enacted fuel consumption standards around the world............................................... 48
category .............................. 50
Table 9: Cost effectiveness of light-duty vehicle ........... 52
Table 10: Overview of the status of fuel economy policies in the ASEAN region ........................ 59
Table 11: Import regulation for used vehicles in the ASEAN region ............................................ 65
Table 12: Overview of annual circulation tax schemes around the world.................................... 75
Table 13: Overview of vehicle emissions .................................................................................... 82
Table 14: Pros and cons of harmonisation of ASEAN fuel quality standards .............................. 85
cars and light commercial vehicles in major markets ............ 89
Table 16: Examples of light-duty vehicles ................................................................................... 90
Table 17: Fuel
to the energy content of gasoline ................................................................................ 91
emission factors ............................................................................. 91
Table 19: Tractor-trailer baseline fuel consumption for various world markets ........................... 94

Box 1: Fuel consumption baseline setting methodology ........................................................... 39

Box 2: The Global Fuel Economy Initiative ................................................................................ 47
Box 3: Spotlight on modelling tools ........................................................................................... 54

6
Abbreviations
2DS 2-degree scenario
8DCT 8-gear dual-clutch transmission
ACE ASEAN Centre for Energy
ADB Asian Development Bank
ADEME French Environment and Energy Management Agency
(Agence de l’Environnement et de la Maîtrise de l’Énergie)
AMS ASEAN Member States
APAEC ASEAN Plan of Action for Energy Cooperation
ASEAN Association of Southeast Asian Nations
ASI avoid-shift-improve
AtkCPS Atkinson cycle engine with cam phase shifting
BAU business as usual
BEV battery electric vehicle
BMS benchmark scenario
BOI board of investment
CAFE corporate average fuel economy

CEGR cooled exhaust gas recirculation

CEVS carbon emissions-based vehicle scheme
CNG compressed natural gas
CO2 carbon dioxide
DEDE Department of Alternative Energy Development and

DLT Department of Land Transport

ED Excise Department
EE&C-SSN
EEA European Environmental Agency
EGSLT Expert Group on Sustainable Land Transport

EU European Union
EV electric vehicle
EVI Electric Vehicle Initiative
FEPIT Fuel Economy Policy Impact Tool
FEPS Fuel Economy Policy Scenario

7
gCO2 gramme carbon dioxide
GDP gross domestic product
GFEI Global Fuel Economy Initiative
GHG greenhouse gas
GIZ German international development agency (Gesellschaft für
Internationale Zusammenarbeit)
GVW gross vehicle weight
HC hydro carbon
HDV heavy-duty vehicle
HEPS High Energy Performance Standard
HFT heavy freight truck
ICCT International Council on Clean Transportation
ICE internal combustion engine
IEA International Energy Agency
IMMA International Motorcycle Manufacturers Association
ITF International Transport Forum
JC08 Japan Chassis 08
kg kilogramme
KLTSP Kuala Lumpur Transport Strategic Plan
km/L kilometre per litre
kW kilowatt
L litre
L/100km litre per 100 kilometres
LCV light commercial vehicle
LDV light-duty vehicle
LGE litres of gasoline equivalent
LGe/100km litres of gasoline equivalent per 100 kilometres
LPG
M5 manual 5-gear transmission
MEPS Minimal Energy Performance Standard
MFT medium freight truck
MPV multi-purpose vehicle
Mt megatonne
Mtoe megatonne of oil equivalent
NAMA Nationally Appropriate Mitigation Action
NDC Nationally Determined Contribution
NEDC New European Driving Cycle

8
NMT non-motorised transport
NO nitrous oxide
NO2 nitrous dioxide
OBD on board diagnostic
OECD Organisation for Economic Co-operation and Development
OICA International Organization of Motor Vehicle Manufacturers
(Organisation Internationale des Constructeurs
d’Automobiles)
OIE
ONEP
Planning
OTP
PC passenger car
PCD Pollution Control Department
PHEV plug-in hybrid electric vehicle
PLDV passenger light-duty vehicle
PM particulate matter
PPM parts per million
PTIT Petroleum Institute of Thailand
RL road load
SGTDI stoichiometric gasoline turbocharged direct injection
SOx sulphur oxides
SS start stop
SUV sports utility vehicle
TAI Thailand Automotive Institute
TISI Thai Industrial Standards Institute
UNEP United Nations Environment Programme
VAT value added tax
VTPI Victoria Transport Policy Institute
WHVC World Heavy Duty Vehicle Cycle
WLTC Worldwide Harmonized Light-Duty Vehicles Test Cycle

9
Preface

Within the next ten years, passenger car travel is projected to double across the ten Member
States of the Association for Southeast Asian Nations (ASEAN) (IEA 2012a). By 2025, sales
of passenger cars are estimated to be well above 3 million cars per year, from about 1.5
million in 2015 (OICA 2016). With increasing car ownership but overall still low motorisation
levels in ASEAN, it is realistic to expect substantial further growth in motorisation, along
with growth in fuel consumption and emissions of CO2 and other pollutants. As a result,
stepping up fuel economy policy efforts is vital for making these growth trends compatible
with climate change efforts, including towards urban air quality and the need for resource

transport agenda under the Kuala Lumpur Transport Strategic Plan 2016-2025 (KLTSP).

Strategic Goal, making fuel economy policy a priority for cooperation and implementation
across the region.

This document provides a roadmap for the development and implementation of fuel economy
policies for ASEAN Member States (AMS), aimed primarily at regulators in government
agencies who are or who should be involved in fuel economy policy development. The
roadmap is intended to serve as catalyser to engage all relevant stakeholders from
government, industry and academia. It not only addresses experts but can also be used to
inform the interested public about the issue of vehicle fuel economy.

This roadmap is meant to be used to advance fuel economy policies within the AMS, and
also for AMS to venture together towards more coherent and eventually common policy

measures, different data and regulatory requirements, and the steps for introducing them.

A vision, set of goals and list of recommended actions is presented as a comprehensive

set of recommendations for AMS to establish and implement successful fuel economy
policies, aiming for a common approach across ASEAN where possible. Furthermore, a
comprehensive annex is included, with detailed information on each topic of the roadmap,
such as global trends, country case studies, fuel economy policies of AMS, and related
issues like clean fuels, electric mobility, two-wheelers, freight vehicles, and more.

The vision, goals and policy recommendations in this roadmap are non-binding and recognise
the right of ASEAN and each AMS to develop their own goals and policies. Nevertheless,
the roadmap is meant to be a guideline for future regional and national initiatives in the
region.

11
Executive summary

Current status in the ASEAN region

Automotive fuel economy is part of the regional transport agenda of the Association of
Southeast Asian Nations (ASEAN) through the Kuala Lumpur Transport Strategic Plan 2016-
2025 (KLTSP). This roadmap implements the KLTSP’s Sustainable Transport Milestone
1.3.2, which is to ‘formulate a fuel economy roadmap for the transport sector in ASEAN
including policy guidelines.’ Fuel economy is represented in this document as a reduction in
fuel consumption per 100 km.

Motorisation in ASEAN is on a growth path, along with increasing incomes and car ownership.
However, overall motorisation levels remain relatively low in many ASEAN Member States
(AMSs). Passenger car travel is projected to double within the ASEAN region within the
next ten years (IEA 2012a), and sales of passenger cars could rise above 3 million cars
per year by 2025, from about 1.5 million in 2015 (OICA 2016).

However, the light-duty vehicles (LDVs) that are on the market in ASEAN are typically

vehicles sold in the region would suggest low fuel consumption per 100 km, the average of
vehicles sold in ASEAN is higher than, for example, in India, the European Union and Japan
(although lower than Canada and the US).

The average LDV fuel consumption per 100 km, averaged across the sales of all vehicles
in the market (i.e. sales-weighted average) was about 7.2 litres of gasoline equivalent
(LGe) per 100km in 2015 across Thailand, Indonesia, Malaysia, the Philippines and
Singapore (representing 95% of sales in the bloc), slightly higher than the world average
of 7.0 LGe/100km. The average across the Organisation for Economic Co-operation and
Development (OECD) is about 6.8 LGe/100km (GFEI 2017), indicating that in the long run,

There is a need for AMS and ASEAN to put commitments in place to reduce the emissions
of greenhouse gas (GHG) and to enhance the technological and innovation capabilities of
their automotive industries, by making policy initiatives to drive improvements. In a world
in which most major economies have introduced fuel economy targets for their markets,

in ASEAN. Putting in place goals and policies is important not only to avoid AMS falling

advantage for cars made in ASEAN in the global marketplace. Harmonising these policies
gradually among AMS is also important for market integration, as it will reduce the burden
of regulatory compliance for automakers operating across ASEAN.

13
tapped by curbing the trend towards bigger size, weight and performance of cars, and by

policy frameworks, including fuel economy standards, labels and differentiated taxation by
fuel economy, have proven to be successful around the world in catalysing such changes.

Some AMS are already taking action on fuel economy. Singapore, Thailand and Viet Nam
have introduced mandatory fuel economy labelling schemes for new passenger light-duty
vehicles (PLDVs). In Indonesia, such labels are voluntary and not yet standardised, while
Brunei Darussalam, Malaysia and the Philippines plan to introduce fuel economy labels.

All AMS have vehicle registration taxes in place, either a one-off tax for new cars, an annual
vehicle circulation tax, or both. In most cases, these taxes are related to vehicle attributes
such as price or engine displacement. Singapore and Thailand are the only countries with

Vehicle Scheme from 2013 assessed rebates or surcharges based on carbon emissions
of vehicles. The scheme was replaced in 2018 by the Vehicular Emissions Scheme,
which assesses a rebate or surcharge based on CO2 emissions and emissions of other
air pollutants. In Thailand, the registration tax for new vehicles has been based on CO2
emissions since 2016. Indonesia and Malaysia both deploy incentives for their domestic car

in 2013. Also in Viet Nam, voluntary fuel consumption limits have been introduced for
passenger cars in 2013. It is important to upgrade these standards over time in order to
ensure their effectiveness.

Against this background, the roadmap establishes a vision as well as goals and accompanying
recommended actions for ASEAN and its Member States up to 2025. While AMS retain the

of their implementation, the roadmap charts the course and offers broad guiding principles
on how to do so.

Vision and goals for the ASEAN fuel economy roadmap

The vision of this roadmap is to transform the ASEAN light-duty vehicle market into one

vision of the ASEAN Economic Community 2025, and ensuring the health and quality of life
of people across the region.

This roadmap sets six aspirational goals for ASEAN to help in moving towards this vision.
The headline goal is an aspirational target to reduce the average fuel consumption of
new light-duty vehicles sold in ASEAN by 26% between 2015 and 2025, which leads to
an improvement in average fuel economy to around 5.3 LGe/100km by 2025, from an
estimated 7.2 LGe/100km in 2015.

14
Table 1: Summary of the goals and actions of the roadmap

Goal Actions to achieve goal

Goal 1: Average fuel Action 1.1: Adopt an aspirational target to reduce average
consumption per 100 km of fuel consumption per 100 km of new light-duty vehicles sold in
new light-duty vehicles sold ASEAN by 26% between 2015 and 2025.
in ASEAN is reduced by 26%
between 2015 and 2025.
Goal 2: Common indicators Action 2.1: Agree on common indicators and methodologies
and methodologies as well as for measuring and analysing average new light-duty vehicle
baseline data for fuel economy fuel economy.

Action 2.2 Develop fuel economy baseline data to ensure that

and monitor fuel economy policies.

Goal 3: Regional cooperation, Action 3.1: Continue regional cooperation among relevant
national action, and fuel econo- stakeholders through events related to fuel economy.
my policy leadership are estab-
lished. Action 3.2 Enhance collaboration of government agencies,
research institutions, and automotive industry within and
between AMSs.
Action 3.3 Identify appropriate lead government agencies
within Member States.
Goal 4: Fuel economy label Action 4.1: Convene the agencies of AMS responsible
information is regionally aligned. for maintaining, implementing, or developing various
fuel economy labels to take stock and explore alignment
opportunities.
Action 4.2: Develop a common set of baseline information to
be included in member states’ fuel economy labels.
Goal 5: Introduction or enhance-
ment of fuel consumption- or CO2 based on fuel economy or on CO2 emissions at the national
level, where applicable, to incentivise consumers to purchase

implementation.
Goal 6: Adoption of national Action 6.1: Introduce and strengthen policy measures at
fuel consumption standards for national level that require manufacturers to meet stringent
LDVs in all markets, striving
towards a regional standard in CO2.
the long term.
Action 6.2 Develop an ASEAN wide light-duty vehicle fuel

and measures and the timing of their implementation, the roadmap charts the course
and offers broad guiding principles on how to do so. The roadmap therefore provides a
comprehensive suite of strategies and policies including labelling and public awareness,

15
annex describing related policies such as automotive emission standards, which may be
taken into consideration while implementing the fuel economy roadmap.

16
1 Introduction

With increasing car ownership but overall still low motorisation levels in ASEAN, it is realistic
to expect substantial further growth in motorisation. Within the next ten years, passenger
car travel is projected to double within the ASEAN region (IEA 2012a). Sales of passenger
cars are estimated to be well above 3 million cars per year by 2025, from about 1.5 million
in 2015 (OICA 2016).

Stepping up fuel economy policy efforts is vital for making these growth trends compatible
with climate change efforts, as well as with the drive for urban air quality and the need for

help cars made in ASEAN exportable to markets that have strict standards in place already,
and strengthen local innovation capability. To date, almost 90% of the global light-duty
vehicle market is already subject to fuel economy regulation (IEA 2016).

use for maintaining a constant velocity of a vehicle is directly proportional to vehicle mass
(through rolling resistance) and vehicle size (through frontal area and aerodynamic drag),
reduction of both would directly lead to less energy use. However, in many AMS, consumers
want larger and higher-performing vehicles. This highlights the importance of the second
strategy, making technical improvements to use less energy while providing the desired size
and performance. This can be achieved through more sophisticated engines and power
trains as well as the development of more aerodynamic body work or tyres with less rolling
resistance. See Annex Section 5.2.1 for more detail on LDV fuel-economy technology.

Globally, government regulation, incentives and standards have been the primary drivers
of improved technology in passenger vehicles and of shifting consumer demand towards

regional collaboration. This section will set the regional policy context for this roadmap and
delineate its scope.1

1.1 Regional policy context: KLTSP, fuel economy platform and this
roadmap
Sustainable transport is a fundamental pillar of ASEAN’s regional transport agenda under
the Kuala Lumpur Transport Strategic Plan 2016-2025 (KLTSP). The KLTSP goes beyond
its predecessors by including a standalone chapter on sustainable transport. This chapter
includes goals, actions and milestones as building blocks towards a policy framework for

and on regional cooperation, it serves the vision and goals of ASEAN transport ministers,
as shown in Table 1.

17
Table 2: Vision and goals of the KLTSP with regard to sustainable transport

Post-2015 vision for Towards greater connectivity, efficiency, integration, safety and
transport cooperation sustainability of ASEAN transport to strengthen ASEAN’s
competitiveness and foster regional inclusive growth and
development.
Sustainable Transport Formulate a regional policy framework to support sustainable
Strategic Goal transport, which includes low-carbon modes of transport, energy
efficiency and user-friendly transport initiatives, integration of
transport and land-use planning.
Sustainable Transport Intensify regional cooperation in the development of
sustainable transport-related policies and strategies
Sustainable Transport Identify and implement the key measures on sustainable
transport
Sustainable Transport Enhance human resource activities and institutions for
sustainable transport system

The KLTSP covers the full range of sustainable transport approaches, with measures to
‘avoid transport activity’, to ‘shift to environment-friendly transport modes’, and to ‘improve
the environmental performance of vehicles’. While decisive action is needed in all three
areas to meet goals under the Paris Climate Agreement and the 2030 development agenda,
this roadmap zooms in on the category of improve measures.

Given rapidly rising transport fuel consumption across most AMS, KLTSP sets the right
direction by not only mandating this roadmap (see KLTSP goal 1.3.2) but also by intensifying
knowledge exchange through a regional platform (see KLSTP goal 1.2.1).

Table 3: Actions and milestones of the KLTSP with regard to fuel economy

Sustainable Transport Initiate and support the development and implementation of

Action 1.3 fuel economy policies and standards as well as policies
towards cleaner fuels, and vehicles and vessels.
Sustainable Transport Establish a platform to discuss matters related to fuel economy
Milestone 1.3.1 for the transport sector.
Sustainable Transport Formulate a fuel economy roadmap for the transport sector in
Milestone 1.3.2 ASEAN, including policy guidelines.
Sustainable Transport Support the development and adoption of nationally
Milestones 1.3.3 appropriate policies for cleaner fuels and vehicles.

The regional platform has met three times since November 2016 in conjunction with the
Expert Group on Sustainable Land Transport (EGSLT) and brought together experts
from government, academia, non-governmental and international organisations. There is
increasing momentum at national level to advance fuel economy policies in the region, yet
also diversity in the status, stringency and progress of these policies among AMS. Therefore,
further regional exchange is important for learning from each other and for coordinating

18
policy approaches. In the context of national action, there has also been progress towards
KLTSP milestone 1.3.3 as some AMS cooperate with GIZ and/or other organisations to
advance their domestic fuel economy policies.

Generally, the roadmap focusses on the category of LDVs. Heavy-duty vehicles (HDVs) are
not in the scope due to their different characteristics in terms of technology and data, which
necessitate different regulatory strategies. Annex Section 5.7.1 explains the challenges and
opportunities for HDV fuel economy policy.

PCs with a gross vehicle weight (GVW) of no more than 3,500 kg and no more
than 10 seats (thus covering all kinds of cars, vans, multi-purpose vehicles (MPVs),
sports utility vehicles (SUVs), jeeps, pick-up trucks and van-based minibuses).
LCVs for cargo transport with a GVW of no more than 3,500 kg.
Minibuses with no more than 16 seats and a GVW of no more than 3,500 kg.
Indigenous vehicles such as three-wheelers and jeepneys are not included in the

while jeepneys typically weigh more than 3,500 kg (GVW) and take more than 16
passengers.

Timeframe
This roadmap covers the timeframe until 2025. This year was chosen in order to align with
the 10-year planning horizon of higher-level strategies such as the ASEAN 2025 Roadmap
and the Kuala Lumpur Transport Strategic Plan (KLTSP).

Newly registered vehicles versus vehicle stock

The vehicle-related policies proposed in this document focus on newly sold or newly

time in an AMS). This is due to the rapid growth of the new LDV market as well as the

vehicle stock. The in-use stock contains many vehicles which 15 years are or older, and it
2
emission information. Only policies
targeting the use
fuel taxation or eco-driving campaigns).

Vehicle technology
This roadmap focuses on the use of conventional, readily available and cost-effective
vehicle technologies such as advanced internal combustion engines (ICE), including those
using gasoline or diesel but also alternative fuels such as compressed natural gas [CNG]

19
dominate vehicle sales within the roadmap 2025 timeframe and offer great opportunities to
effectively reduce energy use and emissions.

Vehicles with advanced power trains such as battery electric vehicles (BEVs) or plug-
in hybrid electric vehicles (PHEVs) also play an increasingly important role for reducing
transport energy consumption and emissions. Therefore, Section 5.7.2 of the roadmap
looks into fuel economy policy design aspects for these types of vehicles.

Measures and units

in terms of litres of gasoline equivalent consumed per 100 kilometres (LGe/100km).2,3 This
is the unit used in most countries in Africa, Asia, Canada and Australia. Similarly, the EU
2
emitted per kilometre travelled (gCO2/km),
2
emission conversion factors
for different fuels are listed in Table 17 of Section 0 in the Annex. Many Latin American
countries as well as India and Japan use kilometres travelled per litre of fuel used (km/l)
as their measurement unit, which is basically the inverse unit of LGe/100km. Similarly, the
United States measures fuel economy in miles per gallon. See Annex Section 5.6.5 for a

consumer perspective.

Fuel consumption, CO2 emissions and air pollutants

2
emissions through
a conversion factor. While the emission of other air pollutants such as particulate matter
(PM), oxides of nitrogen (NO and NO2, commonly together referred to as NOx), oxides
of sulphur (SOx), un-burnt hydrocarbons (HC) and carbon monoxide (CO) are important,
these other air pollutants are regulated using different types of regulation and with generally
different technology solutions. Therefore this roadmap focuses on fuel consumption,
expressed as CO2 emissions where relevant. For further background on the relationship
between air pollution and fuel economy, see Section 5.5.7 in the Annex.

2 In order to account for the different energy densities of liquid fuels such as gasoline and diesel, all volumetric fuel
consumption values are normalised to the energy content of gasoline, i.e. litres of gasoline equivalent (LGe, conversion
factors see Table 17 in Section 5.7).
3 This unit of measure, in common parlance, is known simply as “fuel consumption”, and shall be referred to as such
throughout the rest of this document.

20
2 Current status in the ASEAN region

Fuel economy policy is quickly evolving around the world. Today, over 80% of the global LDV
market is in countries with fuel economy regulations in place. As these countries accelerate
their efforts, ASEAN may risk falling behind technologically, remaining a market for lower-
technology vehicles while losing opportunities to export vehicles in the competitive global
market. Annex 5.1 provides an overview of policy developments around the world. This
global overview demonstrates what is possible in terms of policy ambition and technical
potential for fuel economy improvement, offering context for ASEAN.

2.1 Economic development and motorisation

The 10 countries of the ASEAN region are home to a total population of about 615 million
people as of 2014 (IRENA & ACE 2016). The gross domestic product (GDP) of the region
was about USD 2.4 billion in the same year. The region has enjoyed average economic
growth of 5.2% per year over the last 23 years and is projected to continue at a comparable
rate of 4.8% p.a. until the year 2025. With per capita incomes projected to rise from about
USD 3,900 in 2014 to more than USD 5,600 by 2025, the road vehicle stock will face

The AMS are very diverse in both their economic development and their motorisation
status. In 2014, per capita income ranged from USD 1,000 in Cambodia to USD 59,400 in
Singapore (Table 4). Incomes are expected to grow by another 12% to 70% from 2014 to
2025, with the regional spread in per capita incomes expected to remain wide.

Table 4: Vehicle ownership, saturation level and GDP per capita today and future projections

Lao PDR

Viet Nam3

Source: 1) APERC; 2) IRENA & ACE 2016

Note: 3) Vehicle ownership and saturation data in Viet Nam refers to cars only

characteristics need to be considered. These include projections of GDP per capita,

estimates regarding the future levels of urbanisation, the type of urban areas, and the
country’s capacity to accommodate increased levels of individual motorisation, as well as
the provision of mobility alternatives in the form of well-developed public transport systems.
Clearly, Singapore has by far the lowest saturation level, while Malaysia is projected to take
a European-like transport path.

21
policies according to their current and future motorisation rates. Most AMS are projected to
see increased motorisation levels and thus increased fuel use as well as emissions of CO2
and pollutants, along with a surge in expenditures on fuel. Brunei Darussalam already has

air pollution in its densely populated urban area.

2.2 LDV energy use and CO2 emissions

Final energy use in the ASEAN region almost doubled between the year 2000 and 2013

almost constant share of total energy use over time. The transport sector is one of the main
drivers of energy use and its weight has increased in recent years. While in 1990 transport
accounted for about 21% of ASEAN’s energy consumption, it grew to about 28% in 2013
(Figure 1, right).

Source: Ace 2015

The 2016 Renewable Energy Outlook for ASEAN (IRENA & ACE 2016) estimates that about
400 Mt of CO2 were emitted by the transport sector in ASEAN in the year 2014 (equivalent
to about 30% of total energy related CO2 emissions), and that transport CO2 emissions
could grow by 35% until 2025 under business-as-usual conditions (Figure 2).

Source: IRENA & ACE 2016

Figure 2: Energy-related CO2 emission external costs in the ASEAN region by sector in 2018 and 2025

22
2.3 The LDV market in the ASEAN region
The ASEAN region is both a sizeable vehicle consumer as well as vehicle producer. In 2015,
about 2 million passenger cars were sold in the AMS, with Indonesia, Malaysia and Thailand
as the largest markets (Figure 3). In addition, about 1.15 million commercial vehicles were
sold in the region. At more than 3.1 million newly registered cars and commercial vehicles
in 2015, the ASEAN market is the sixth-largest vehicle market in the world. These numbers
underline the importance of cooperation within the ASEAN region: Counted in isolation,
even Indonesia, the region’s largest vehicle market, would only rank 18th globally.

Comparing vehicle sales with production reveals that AMS are net vehicle exporters (Figure
3). This is particularly true for commercial vehicles, where production numbers have been
about 40% to 50% higher than sales numbers, while in terms of motorcycles and scooters,
almost all these vehicles produced in the region are also sold there.

Sales Brunei Sales Lao PDR

Darussalam

Source: OICA 2016, AAF 2017

Since 2005, the ASEAN vehicle sales have grown by more than 50%. The production of
passenger cars has even doubled since 2007. The increasing motorisation levels indicate a
huge growth potential of the ASEAN vehicle market. This underlines the urgency of putting
in place stringent fuel economy policies.

23
2.4 LDV fuel economy in the ASEAN region and the Member States
In order to understand the new LDV fuel economy trend, baseline data has been compiled
and analysed for the region. Baseline data means information on sales-weighted average
fuel consumption of newly registered LDVs for at least one historical year.4 This information
is required to evaluate the status quo, to establish any fuel economy policy, and to evaluate
its effectiveness.

Fuel consumption baselines for several AMS as well as for other countries are shown in

and regions. While new LDV fuel consumption was 7.8 LGe/100km in the United States in
2014, it was as low as 5.1 LGe/100km in Japan in 2013. Furthermore, there is a clear trend
towards lower fuel consumption over time.

New LDV fuel consumption within AMS is relatively high when compared to the rest of the
world. Average fuel consumption in 2015 was between 7.7 LGe/100km for the Philippines
and 6.6 LGe/100km for Malaysia. The sales-weighted average new LDV fuel consumption
for ASEAN as a whole is about 7.2 LGe/100km.5 It is thus higher than the world average
of about 7.0LGe/100km. By means of comparison, the OECD average for new LDV fuel
consumption of about 6.8LGe/100km for the year 2015 (GFEI 2017) indicates that there is
considerable space for technological improvement in the rest of the world including ASEAN.
The variation of average new LDV fuel consumption among the AMS is moderate, which
indicates that the LDV markets in these countries are somewhat comparable to each other.

Source: ICCT 2015, GFEI 2016 and GFEI 20176

Figure 4: Fuel Economy Baselines Study conducted by GFEI in ASEAN and the World

4 See Box 1 for the baseline calculation methodology on page 23

5

sales-weighted average fuel consumption of newly

registered LDVs for ASEAN as a whole.
6

chart may be lower if LTs are included.

24
Based on data of the Global Fuel Economy Initiative (GFEI) for Indonesia, Malaysia, the

from the world average: It is about 30% less powerful (77 kW in ASEAN vs. 112 kW for the
world average), engine displacement is about 10% lower (1.8 L in ASEAN vs. almost 2.0 L
for the world average), the vehicles are on average 8% lighter (1,240 kg in ASEAN vs.
almost 1,350 kg for the world average) and about 5% smaller (3.9 m² in ASEAN vs. almost
4.1 m² for the world average). See Figure 5 below.

Based on the relatively high fuel consumption of new LDVs in ASEAN compared to other
regions of the world mentioned above, it is clear that there is a technology gap: Although
ASEAN cars are on average less powerful, with smaller engines, lighter and smaller in size,
they still consume more fuel. This technology gap results from the absence of stringent fuel
economy policies.

New LDVs in Indonesia cost about USD 18,000 in 2015, compared with USD 26,000 on
average, globally, and about USD 23,000 in non-OECD countries (GFEI 2016a). They were
also somewhat less powerful, smaller and lighter than the ASEAN average (Figure 6). The

sold in non-OECD countries. Across ASEAN, where the average price of vehicles was USD
18,500 in 2015, trends are similar.

Note: Based on New LDV Data For Indonesia, Malaysia, the Philippines and Thailand for the year 2015
Data source: GFEI 2017

Figure 5: New LDV characteristics in the ASEAN region compared to the world in 2015

In Thailand, new LDVs are relatively heavy and large (Figure 6). They show high displacement
but rather low average power rating. In addition, new LDVs in Thailand are characterised by

fact that more than 30% of newly registered LDVs in Thailand are pick-up trucks (GIZ 2017).
Although these are rather large and heavy, they are mainly propelled by diesel engines
which have high engine displacement at lower power rating. It is important to acknowledge

economy improvement is most likely not possible without a reduction in average vehicle
size.

25
Source: GFEI 2017
Figure 6: New LDV characteristics in Indonesia, Malaysia, the Philippines, Thailand and the ASEAN region in
2015

A comparison between the characteristics of new LDVs in Malaysia and the Philippines
shows that they are relatively similar with respect to power, engine size and vehicle
dimensions (Figure 6). However, average fuel consumption of new LDVs is very different in
the two countries: While Malaysian cars consume on average on 6.6 LGe/100km, new cars
in the Philippines consume around 17% more, with an average fuel consumption of more
than 7.7 LGe/100km. This might be linked due to the fact that Malaysian per capita GDP is
about three times higher than in the Philippines, allowing consumers to buy more expensive

In summary, it can be noted that fuel economy improvement potential is great in all AMSs,
but for varying reasons. While countries with higher per capita income and already high
motorisation rates need to curb the trends towards increasing car size and car performance,
those countries with lower per capita income need to make sure that state-of-the-art
technology becomes mainstream. In some cases, for example in Thailand, legislation needs
to ensure that the purchase of appropriate vehicles is incentivised, i.e. the share of pick-up
trucks should represent the need to transport goods rather than being primarily used for

passenger seats increased over time seems to indicate the opposite (GIZ 2017).

2.5 Overview of LDV fuel economy policies in the ASEAN region

The current status of fuel economy policy development varies across the region. While

measures over the last years.

Singapore, Thailand and Viet Nam have mandatory labelling schemes for new PLDVs in
place. Fuel economy labels are voluntary in Indonesia (Policy Overview Table 10 in the
Section 5.3 of the Annex). Brunei Darussalam, Malaysia and the Philippines are planning
to introduce fuel economy labels, while no such plans currently seem to exist in Cambodia,
Lao PDR or Myanmar.

26
All AMS have vehicle registration taxes in place, either a one-off tax for new cars, an annual
vehicle circulation tax, or both (Table 10 in the Annex Section 5.3). In most cases, these
taxes are related to vehicle attributes such as price or engine displacement. Singapore

introduced the Carbon Emission Based Vehicle Scheme (CEVS) in 2013 to tax vehicles
based on their carbon emission, but in 2018 transitioned to a new mechanism, the
Vehicular Emissions Scheme (VES), which in addition to assessing vehicles based on CO2
emissions, also assesses them based on hydrocarbon, carbon monoxide, nitrogen oxides
and particulate matter emissions to calculate rebates and surcharges.7 In Thailand, the
registration tax for new vehicles has been based on CO2 emissions since 2016. More detail
on the Singapore VES as well as the Thai vehicle registration tax is provided in Table 10
of the Annex Section 5.3. Indonesia and Malaysia provide tax incentives for the domestic

towards industry development, rather than ]the objective of reducing fuel consumption.

No AMS has mandatory fuel economy, fuel consumption or CO2 emission standards in

fuel consumption limits were introduced for two-wheelers and passenger cars in 2013. The
standards for passenger cars in Thailand and Viet Nam differentiate classes of vehicles
based on weight, as seen in the stepwise chart in Figure 7. Brunei Darussalam has indicated
in its Nationally Determined Contribution to the Paris Climate Agreement that it wants to
adopt the EU’s CO2 standards for LDVs.

A comparison of the voluntary standards in Thailand and Viet Nam to the mandatory
standard in the European Union is shown in Figure 7. It is evident that both the Vietnamese
fuel consumption standard as well as the Thai MEPS and HEPS are much less stringent
than the EU CO2 emissions standard. In fact, the Vietnamese standards as well as the
Thai MEPS allow fuel consumption to be about twice as high as the European limits for a
certain weight interval. Such weak and voluntary standards apply limited pressure on car

Table 5 shows gasoline prices in AMSs and selected reference countries. The prices
are divided into several categories. The category ‘high subsidies’ denotes countries with
gasoline price below the world market price for crude oil and includes Brunei Darussalam.
The category ‘subsidies’ is used for countries with gasoline price being below the price in
the US, which is assumed to be at a cost covering retail price.

Clearly, fuel taxes show a broad variance among the AMS, with Brunei Darussalam and
Malaysia on the very low end, and Singapore reaching EU price levels. Fuel taxes are a

thus be a key starting point towards effective fuel economy policies.

7 More information about the Singapore VES can be found at https://www.lta.gov.sg/apps/news/page.aspx?c=2&id=37654ca8-

ef14-4c1a-851d-06fc527f839f

27
Figure 7: Non-mandatory fuel consumption standards for passenger cars in Thailand and Viet Nam compared
to the mandatory standard in the EU

Table 5: Gasoline Prices in AMSs and Reference Countries

ASEAN Member States

Viet Nam

Lao PDR

Source: GIZ 2015

2.6 Gaps and Barriers

Gaps and barriers to development and implementation of fuel economy policy in ASEAN
and AMS can be distinguished into several categories, including: a lack of knowledge and

that are entering the region; challenges in identifying administrative responsibility for fuel
economy; and, the inertia of consumers to change their behaviour.

28
These key gaps and barriers are being addressed, but efforts will still need to be made in
order to facilitate the eventual implementation of fuel economy policy across ASEAN. For
example, baseline data for Brunei Darussalam, Cambodia, Lao PDR, Myanmar and Viet
Nam are currently lacking. However, Myanmar and Viet Nam are working on their baselines
with support by GFEI and by GIZ respectively. Similarly, administrative responsibilities

technology and manage fuel consumption in the passenger vehicle sector. These themes
are explored in detail in the Annex to this document, Section 5.4.

and AMS to develop more well-informed policies that match their circumstances and help
them achieve better outcomes are also available. Tools and methodologies from globally-

AMS to consider as they develop policy for their jurisdictions in Section 5.2.3 of the Annex.

29
3 Vision, goals and recommended
actions towards 2025

3.1 2025 Vision

major LDV markets of the world except for ASEAN have set fuel consumption targets

motorisation and a growing regional automotive industry, AMS have the opportunity to close
the gap towards international best practices. With the right policies in place and reasonable

background:

The vision of this roadmap is to transform the ASEAN light-duty vehicle market into one

vision of the ASEAN Economic Community 2025, and ensuring the health and quality of life
of people across the region.

Source: ICCT 2015, GFEI 2016 and GFEI 2017

2025 targets representing passenger vehicles and light trucks

3.2 Aspirational goals towards 2025

reference to the data collected and analysed within Section 2. At the same time, they
are founded on international experience and success stories to effectively develop and
implement fuel economy policies.

30
Goal 1: Average fuel consumption per 100 km of new light-duty vehicles sold in
ASEAN is reduced by 26% between 2015 and 2025.

step forward in the near term. It provides long-term planning direction for manufacturers
and enables governments to monitor progress against the aspirational target. It serves to
benchmark potential reductions in energy demand, GHG emissions, and fuel costs, and is
thus an important component of regional economic and climate policy making.

The aspirational goal represents an average annual improvement of 3% and leads to a

regional average fuel consumption of around 5.3 LGe/100km by 2025, from an estimated
7.2 LGe/100km in 2015. When compared to the goals of other jurisdictions, most have
either more ambitious improvement rates (>4% per year), more stringent target values (<5
LGe/100km), or have target years earlier than 2025 (see Table 8 on page 38). In addition,
the goals of most of the other countries or regions have been formalised in the form of
mandatory fuel economy standards.8

Source: ICCT 2015, GFEI 2016 and GFEI 2017

Goal 2: Common indicators and methodologies as well as baseline data for fuel

Using common indicators and methodologies can make fuel economy efforts of AMSs
comparable, reduce policy development costs, and allow for faster and less expensive
testing of automotive fuel consumption. Furthermore, it may simplify customs procedures

8 The 2025 fuel consumption goal has been determined based on a process in which representatives of the ASEAN Expert

is to double the fuel economy improvement from the 1.5% BAU improvement rate to 3% per year.

31
among countries and facilitate the development of Mutual Recognition Agreements. Last

the compliance burden for manufacturers and build the foundation for regional policy
approaches.

Goal 3: Regional cooperation, national action, and fuel economy policy leadership
are established

The determination of responsible lead agencies in each AMS can create an institutional
“home” for fuel economy and strengthen inter-institutional coordination. Continued and
enhanced regional cooperation through knowledge exchange, research, and partnership
among government, researchers, and industry is vital to build a strong basis of know-how,
capacities and data in each AMS.

Goal 4: Fuel economy label information is regionally aligned

Making fuel economy information transparent to consumers plays an important part in

information displayed on fuel economy labels, and agreeing on similar rating systems and
benchmarks within the ASEAN region, facilitates manufacturers and importers to provide
best available technology vehicles, and helps consumers to make more informed choices.
Regional harmonisation can also help address barriers such as small markets and limited
institutional capacity to develop labels. Furthermore, having regionally aligned fuel economy
labels may enhance trade of LDVs between AMSs and support exports of LDVs by AMS
beyond the bloc.

Goal 5: Introduction or enhancement of fuel economy- or CO2

policies

vehicle purchase and use, only a few AMS effectively use vehicle and fuel taxes to control
With a clear
focus on the emissions output or fuel consumption of the vehicle as an alternative taxation
basis, the cleanest vehicle technology becomes more affordable to consumers and their market
adoption accelerates.
technology-neutral and based on fuel economy or CO2 emissions, is thus a crucial medium-
term goal to achieve the vision of this roadmap.

Goal 6: Adoption of national fuel economy standards for LDVs, striving towards a
regional standard in the long term

standards has proven to be the most effective policy package in other countries. Therefore,
AMS should either introduce standards or strengthen them where they exist already. This
roadmap further suggests working towards establishing an ASEAN-wide fuel consumption
or CO2
sold in the region.

32
3.3 Recommended actions to meet the goals
Goal 1: Average fuel consumption per 100 km of new light-duty vehicles sold in
ASEAN is reduced by 26% between 2015 and 2025.
Action 1.1: Adopt an aspirational target to reduce average fuel consumption per
100 km of new light-duty vehicles sold in ASEAN by 26% between 2015 and 2025. The
target should be adopted as part of this roadmap.

Goal 2: Common indicators and methodologies as well as baseline data for fuel
economy are defined
Action 2.1: Agree on common indicators and methodologies for measuring and
analysing average new light-duty vehicle fuel economy
suggestions for indicators and methodologies that should either be commonly used or that

in AMS, to agree on a baseline of common metrics to be used throughout the region and to
works towards an agreement on fuel economy testing methodologies.

information and data to develop, enact, and monitor fuel economy policies. AMS
which have no baseline data yet need to start compiling and analysing the data needed
to establish a baseline (see Box 1: Baseline setting methodology). AMS whose baseline
data have been computed by an external party should consider validating and updating
the data independently in order to strengthen domestic capacity and procedures. For
tracking progress, the sales-weighted average new LDV fuel consumption data needs to be
assessed on a regular basis.

Goal 3: Regional cooperation, national action, and fuel economy policy leadership
are established
Action 3.1: Continue regional cooperation among relevant stakeholders through
events related to fuel economy. Such events as Fuel Economy Platform Forums have
proven to be an effective avenue for the development of this roadmap.

Action 3.2 Enhance collaboration of government agencies, research institutions, and

automotive industry within and between AMS. Academic experts can help generate the
knowledge, analysis, and expertise needed for fuel economy policy development. However,
tackling knowledge gaps together requires good connections between researchers and
policymakers. Researchers therefore need to be involved in the regional policy dialogues
on fuel economy. Car manufacturers, associations, and importers must be involved in
the process of developing stringent fuel economy policies, including engagement in both
regional and national policy dialogues. This collaboration could help enhance the capacity
of AMS including in the areas of type-approval procedures, testing capacity, in-use fuel

Action 3.3 Identify appropriate lead government agencies within Member States. Since
many ministries and authorities such as the Ministry of Finance, the Ministry of Energy,
the Ministry of Economy and the Ministry of Transport are concerned with fuel economy-
related legislation and regulation, a leading agency in each AMS needs to be assigned

33
in order to coordinate and guide the work across all stakeholders with other AMS. At the
regional level, coordination is needed among the ASEAN sectoral bodies which are relevant
for fuel economy issues, e.g. Transport (ASEAN Land Transport Working Group, ASEAN

Standards (ASEAN Consultative Committee on Standards and Quality), Environment

Goal 4: Fuel economy label information is regionally aligned

Action 4.1: Convene the agencies of AMS responsible for maintaining, implementing, or
developing various fuel economy labels to take stock and explore alignment opportunities.

Action 4.2: Develop a common set of baseline information to be included in AMSs’

fuel economy labels. As a guide for AMS, Chapter 7 introduces international best practices
for labelling scheme designs.

Goal 5: Introduction or enhancement of fuel economy- or CO2 emission-based

fiscal policies

or CO2 emissions at the national level, where applicable, in order to incentivise

Where such policies are not in place yet, the

steps to develop and introduce them. Where they are in place, government should regularly
review their effectiveness, increase their stringency over time, and close loopholes that may

measures.

As AMS develop
and implement their respective policies, it is vital that they engage in regional dialogue on
successes and issues encountered, allowing AMS to learn from each other.

Goal 6: Adoption of national fuel economy standards for LDVs, striving towards
a regional standard in the long term
Action 6.1: Introduce and strengthen policy measures at national level that require

on fuel consumption or CO2. Section 4.4 provides design considerations for the package
of policy measure to introduce and implement fuel economy standards. The domestic

efforts across the region. Lessons can be drawn from ongoing regional efforts to achieve
9

9
asean-eu/asean-shine/

34
Vision
Transform the ASEAN light duty vehicle market into one of the world's most fuel efficient by 2025, helping to meet regional and
national goals for sustainable transport, energy efficiency and climate change mitigation, while supporting the vision of the
ASEAN Economic Community 2025, and ensuring health and quality of life of people across the region

1: Average fuel consumption per 100 km of new light duty vehicles sold in ASEAN
is improved by 26% between 2015 and 2025
Goals

6: Adoption of national
2: Common 3: Regional
5: Introduction or fuel economy
indicators and cooperation, national
4: Fuel economy enhancement of standards for LDVs in
methodologies as action, and fuel
label information is fiscal policies based all markets striving
well as baseline data economy policy
regionally aligned on fuel economy or towards a regional
for fuel economy are leadership are
CO2 emissions standard in the long
defined established
term

2.1: Agree on common 3.1: Continue regional 4.1: Convene the 5.1 Introduce and 6.1: Introduce and
indicators and cooperation among agencies of AMS strengthen fuel strengthen policy
methodologies policymakers and experts responsible for fuel economy or CO2 measures at national
economy labels emission-based fiscal level
2.2 Develop fuel 3.2 Enhance collaboration
of government agencies, 4.2: Develop a common policy
economy baseline 6.2 Develop an
data research institutions, and set of baseline 5.2 Exchange lessons ASEAN wide light duty
automotive industry information learned on fiscal vehicle fuel economy
3.3 Leadership on the issue policy implementation standard
of fuel economy policies

Figure 10: Schematic overview of the roadmap vision, goals and actions

35
4 Options for fuel economy policy
development

economy policy measures. Each section focuses on one policy measure presented as a
table. Each section also corresponds to a section of the Annex where the measures are

quality and emission reduction equipment. These options are not presented here but are
discussed in the annex for interested readers.

Fuel economy policies can be categorised by their target group (Figure 10). Fiscal
instruments such as vehicle and fuel taxation or direct subsidies (for example for very

On the other side, regulatory measures such as fuel-economy standards as well as

pollutant-emission and fuel-quality standards oblige manufacturers and importers to supply
the required technology to the market. Last but not least, adequate consumer information
(for example through fuel economy labelling schemes) is essential to ensuring that the

purchase decision.

Figure 11: Overview of fuel economy policy measure categories

36
Fuel economy policy development should follow a set of best-practice guidelines to effectively
lead to the intended results while minimising unintended side effects. Fuel economy policy
measures should meet the following criteria:

1. Comprehensive – Fuel economy policies should be developed in a way that they

apply to all LDVs and not only passenger cars. This ensures that manufacturers and
consumers cannot circumvent the objective of improving fuel economy by offering
and purchasing vehicle types that are not be affected by fuel economy policies. Such

vehicles and excluded from fuel economy measures applied to passenger cars.
2. Long-term – Both manufacturers and consumers can much better anticipate the

the following 10 to 15 years.

3. Periodically revised – All fuel economy policy schemes need to be subject to
periodical revisions. They should be adjusted to technology and market developments
to address rebound effects or unintended costs.
4. Technology-neutral –
vehicle technologies (for example hybrid cars), fuel economy policies should
be based on common indicators, such as fuel consumption (LGe/100km) or CO2
emission (gCO2/km) that apply to all powertrain options in a similar way.
5. Continuous – When developing fuel economy-based tax schemes, continuous
functional relationships between fuel economy and taxation should be preferred to
the use of bins and step functions. This limits unintended market distortions and the

minimal real-world changes.10

The strongest impact on improving LDV fuel economy improvement is by combining both
consumer- and manufacturer-targeted fuel economy policies. This can be observed in
most European countries, which are characterised by the presence of strong regulatory
measurements, multiple fuel economy- or CO2 emissions-based vehicle taxation schemes,
and comprehensive consumer information. A discussion on the importance of combined
regulatory, taxation and consumer information strategies can be found in a policy and
technical toolbox in Section 5.5 of the Annex.

This roadmap proposes the use of measurement units, indicators, conversion factors and
methodologies outlined in Table 6. It therefore proposes to use fuel consumption and CO2

LDVs. Energy use should be expressed as litres of gasoline equivalent, instead of using
the volumetric fuel demand in litres, in order to account for the different energy densities of
various liquid and gaseous fuels.

10
below 4LGe/ 100km, 4 to 8LGe/100km, 8 to 12 LGe/100km, above 12LGe/100km) creates incentive to manufacturers
whose vehicles are close to a lower bound to perform very minor changes (e.g. changing for a somewhat lower resistance

37
the tested new LDV fuel consumption as well as sales-weighted average of tested new LDV
CO2

Table 6: Suggested measures, indicators, conversion factors and methodologies for fuel economy policy
development, enacting and monitoring

In addition, a set of standardised conversion factors to normalise the energy content of

also various biofuel blends (depending on different crops such as palm oil [for biodiesel] or
sugar cane [for bioethanol]) need to be developed and used collectively within the ASEAN

emissions.

Last but not least, there needs to be agreement on methodologies such as the test
procedures used to determine vehicle fuel consumption as well as CO2 and air pollutant
emissions. While most AMSs are currently using the New European Driving Cycle (NEDC),
a timely shift to the recently developed World Light-Vehicle Test Cycle (WLTC, UNECE
2013) should be considered.

The outdated NEDC is suspected to be largely responsible for the increasing gap between
tested and real-world on-road fuel consumption of new vehicles (ICCT 2015b). The much
more diverse WLTC is aiming at substantially reducing this gap.

AMS should refrain from the development of their own test drive cycles. The introduction

vehicle market, and unnecessarily increases costs for manufacturers and, by extension, for
consumers.

Common indicators and methodologies are also a precondition for the implementation of
mutual recognition agreements. This could allow one AMS to recognise the fuel consumption
testing results performed in another AMS, rather than having to invest in (re-)testing.

38
Box 1: Fuel consumption baseline setting methodology

Any fuel economy policy requires the information on tested fuel consumption or CO2 emissions to be

2
emission data is most often not available.

2
data needs to
be added to the registration data. Due to the diversity of the vehicle market, it is most often not possible

accurate baseline is to have data available for at least 85% of all newly registered vehicles in one year.

Once fuel consumption data has been added to the national new vehicle registration data, the sales-
weighted average fuel consumption can be calculated using the following equation:

Equation 1

With: FC = weighted average fuel consumption

Regi = number of newly registered vehicles of type i
FCi = fuel consumption of vehicle of type i

39
4.2 Consumer information
Type of measure Use of on-vehicle labels and other technologies to clearly describe
fuel economy and other fuel consumption and environmental infor-
mation to the consumer.
Principle

Uses laboratory test procedures or in-use monitoring to clearly in-

dicate fuel consumption to the consumer in an easy-to-understand
format.

Relates consumer behaviour to savings in fuel, CO2 emissions and

fuel cost.
Rationale Consumers are given the ability to compare vehicles not just on
look, feel, or technology but also according to fuel consumption and
operating cost. Given this information, consumers may change their
purchasing or operational behaviours.
Key Aspects A common methodology is used to measure fuel economy and is
displayed in a standardised fashion, such as a label or a fuel econ-
omy tracker.

Labels are able to offer a qualitative comparison to other similar ve-

hicles so that consumers can understand the relative performance
of the vehicle they are looking at.

Fuel-economy trackers allow consumers to observe the changing

fuel economy of their vehicle and adjust behaviour as necessary.
Building Blocks A standardised methodology for testing fuel economy of vehicles
included in a labelling scheme, and a database of vehicles to com-
pare the labelled vehicle to.

A standardised method of indicating relative performance compared

to other models of vehicles, or previous points in time.

A display format that can easily communicate information to con-

sumers and convince them to change behaviour, including local
language, easy-to-understand units and appropriate graphic design.
Case Studies1 Fuel economy labels in US, China, Singapore, Thailand, Viet Nam
and other countries.

Fuel economy websites and trackers such as Little Bear (China),

One Motoring (Singapore), Spritmonitor (Germany).
Impact Rating Medium
Complexity Rating Low
Detailed Annex Section 5.5.2

40
4.3 Fiscal policy measures

(ICCT 2011). While the primary purpose of vehicle and fuel taxes is to raise government
funds (which ideally should be used to cover transport-related expenditures), they should

4.3.1 Fuel economy-based vehicle registration tax feebate schemes

Type of measure
new or used imported car or new domestically manufactured car.
Principle Based on vehicle fuel consumption (LGe/100 km) or vehicle CO2
emissions (gCO2/km).

The value of the tax gradually increases with fuel consumption or

CO2 emission according to a continuous function.

CO2 emission threshold (i.e. pivot point) can be exempted from

taxation or even be eligible to a rebate.

Can also include a component based on pollutant emissions (e.g.

NOx).
Rationale

can offset possible technology costs.

Key aspects By adjusting slope and pivot point of the tax function, the scheme
can be developed in order:

o to generate government revenues – the tax scheme does

o
often more expensive vehicles) are used to pay the re-

periodically.
Prerequisites Fuel economy or CO2 emission information is required for all newly
registered vehicles.

A fuel-economy labelling scheme to inform the consumer needs to

be in place.

41
Case studies Carbon Emission-Based Vehicle Scheme (CEVS) and the new Ve-
hicular Emissions Scheme (VES) in Singapore.

Bonus-malus system in France.

Vehicle registration tax in the Netherlands.

Impact rating High
Complexity rating Medium
Detailed annex Section 5.5.3

4.3.2 Fuel economy-based vehicle circulation tax

Type of measure Vehicle registration tax paid on an annual basis for all vehicles in

Principle Based on vehicle fuel consumption (LGe/100 km) or vehicle CO2

emissions (gCO2/km).

The value of the tax gradually increases with fuel consumption or

CO2 emission according to a continuous function.

Can also include a component based on pollutant emissions (e.g.

NOx).
Rationale

can offset possible technology costs.

Key aspects The starting point of the tax function, can be set in a way that ve-
hicles below a fuel consumption (or CO2 emission) threshold are
exempted from the annual circulation tax.

-
ed periodically.
Prerequisites Fuel economy or CO2 emission information is required for all vehi-

A fuel-economy labelling scheme to inform the consumer needs to

be in place.
Case studies Annual vehicle registration tax in various European countries as
well as China and Japan
Impact rating High
Complexity rating Medium
Detailed annex Section 5.5.4

42
4.3.3 Fuel taxation
Type of measure Excise tax paid on fuels at the station
Principle
station.

Can be differentiated by fuel type.

Alternative fuels such as CNG, LPG or low-carbon biofuels can be

taxed at a reduced rate.
Rationale
cars.
Key aspects
volatile, the fuel tax needs to be adjusted periodically to prevent a
rebound effect.
Prerequisites A fuel-economy labelling scheme to inform the consumer needs to
be in place.
Case studies Fuel taxation and new vehicle fuel economy in Turkey.
Impact rating High
Complexity rating Low
Detailed annex Section 5.5.5

4.4 Regulatory policy measures

4.4.1 Fuel economy standards
Type of measure Regulation which sets limits to vehicle fuel consumption or CO2
emissions for brand-new vehicles
Principle All new vehicles in the market need to comply with a fuel economy
target, or alternatively a CO2 emission target.

The standard can either be set for each model or segment (Option
1), or as a corporate average fuel economy target (Option 2).

For Option 1 standards, all vehicles which do not meet the stan-
dard are not allowed to be sold in the market

based on the sales-weighted average fuel economy of all vehicles

sold by the manufacturer/importer within a certain time frame. In

importer.
Rationale
setting targets for all actors involved.

43
Key aspects Corporate average fuel economy standards are largely preferable

Fuel economy standards can incorporate further vehicle attributes

such as vehicle weight or footprint to better account for varying
market portfolios of different manufacturers.

Fuel economy standards need to be revised periodically to account

for technology development.
Prerequisites Fuel economy or CO2 emission information is required for all
brand-new vehicles entering the market, i.e. it needs to be part of
the information provided by manufacturers for homologation2 of a
new vehicle.

Corporate average fuel economy standards require close collabo-

ration with manufacturers and/or importers during target setting as
well as compliance.

The administrative framework to set the target, to check compli-

ance and to enforce the targets needs to be in place.
Case studies Corporate average fuel economy standard of the United States
(CAFE); EU LDV CO2
standards in China and India.
Impact Rating High
Complexity Rating High
Detailed Annex Section 5.5.6

4.4.2 Fuel quality regulation

Requiring fuel quality to be in-line with the requirements of modern engine and exhaust
treatment systems is necessary to achieve fuel economy improvement and air pollution
reduction targets. For example, fuels with higher octane levels can reduce knock in engines
and facilitate higher compression ratios for more a complete fuel combustion and thus a

become clogged with ash, which would otherwise result in higher fuel consumption. ASEAN
currently has a workstream under the Energy sector working on harmonising efforts around
fuel quality across the region. Details about this policy strategy are noted in Annex 5.5.8.

4.5 Vehicle maintenance

example, in the EU a vehicle inspection is obligatory for all cars older than four years, and
then needs to be repeated every two years for all passenger cars that are not used for
commercial purpose, while commercially-used passenger cars need to be inspected one

44
During the vehicle inspection, if a vehicle has an on-board diagnostic device (OBD), it can
be quickly evaluated by computer for any problems with the engine or emission control

diesel vehicles complying with Euro V standards are equipped with adequate OBD systems,
thus reducing testing costs for the consumer. This may be one rationale for hastening the
advance of emission control standards in vehicles.

In addition, vehicle inspections also inspect other parts of the car such as tyres, transmission
and axles that impact rolling resistance and thus fuel economy.

4.6 In-use fuel economy measures

In-use fuel economy measures mainly concern the way vehicles are driven, unlike the way

eco-driving trainings lead on average to a 15% to 20% reduction of fuel consumption, with
10% as long-term reduction. It is therefore a cheap and useful measure to complement fuel
economy policies which mainly target the vehicle itself.

According to a later study (UC Riverside 2015), intelligent transport systems can be

systems. Vehicle systems comprise all kind of driver assistance, including to keep front
and rear distance or to change lanes. Adaptive cruise control systems will evolve into
cooperative adaptive cruise control systems, where vehicles communicate with each other

cars, where input from the driver is reduced to a minimum.

corridor management and travel demand management, all of which rely on the increased

reduce congestion. Travel information systems mainly comprise technologies to better route
the driver such as geographical positions systems (GPS).

All of these technologies will lead to an increased level of automation of driving, which again

such as low-emission zones, road pricing, congestion charging, and reduction of parking

some of these measures could include exemptions or additional rights in cases where fuel
consumption or CO2

Measuring in-use fuel consumption, e.g. through digital applications that crowd-source data
from drivers, can also be a means to verify type-approved fuel consumption, allowing to
compare lab test results with real-world performance.

45
5 Annex

5.1 Global context for fuel economy policy

5.1.1 Transport energy use, emissions and climate change

this oil was consumed by the transport sector (IEA 2016 KWES). In terms of greenhouse
gas (GHG) emissions, transport accounts for about 26% of energy-related CO2 emissions
worldwide (IEA 2015), and added up to more than 10 megatonnes of CO2 equivalent (Mt
CO2e) in 2016 (Figure 12).

Figure 12: Global urban and non-urban transport CO2 emissions

Source: IEA 2016

Cars were the single largest category of emitter with a share of more than 34% of all
transport emissions (including international shipping and aviation). Together with LCVs and
minibuses, LDVs were responsible for more than 41% of all transport emissions globally in
2015.

In 2017, the Global Fuel Economy Initiative (GFEI) assessed the GHG emission reduction

passenger cars were to be improved to a global average of 4.4 LGe/100km by 2030 (from
about 8.8 LGe/100km in 2005), and if the entire PLDV stock achieved a fuel consumption
of 4 LGe/100km by 2050 (GFEI 2017). It turned out that this target, which was based on
readily available, cost-effective technologies, would almost stabilise CO2 emissions from
PLDVs at the 2015 level by 2050 (Figure 13).

At the same time, reduced fuel use greatly helps to curtail air pollution as well as leading

its scenario between 2015 and 2050 to be in the order of USD 8 trillion worldwide (GFEI
2016a).

46
Figure : Global passenger light-duty vehicle emission reduction potential
Source: GFEI 2016a

Box 2: The Global Fuel Economy Initiative

The Global Fuel Economy Initiative (GFEI) was launched at the

2009 Geneva Motor Show to form a body to assist governments
and transport stakeholders to promote better fuel economy. Using
the skills and expertise of the GFEI partners (the International
Energy Agency (IEA), United Nations Environment Programme
(UN Environment), the International Transport Forum of the
OECD (ITF), the International Council on Clean Transportation
(ICCT), the Institute for Transportation Studies at UC Davis, and
the FIA Foundation), the initiative invested a lot of effort to bring
Figure 15 GFEI target to double vehicle
political agenda, and to support developing and emerging
fuel economy by reducing new vehicle
economies on the way to take stock of the current national sales-
weighted new vehicle fuel consumption (i.e. the baseline fuel
consumption) and develop fuel economy policies such as a CO2 tax, feebate schemes, labelling, and
standards.

The GFEI has set the target to reduce LDV fuel consumption of all vehicles in the stock by 50% from
8.8 LGe/100km in 2005 to 4.4 LGe/100km in 2050 (GFEI 2017). To reach this target, fuel consump-
tion of all new LDVs needs to reach 4.4 LGe/100km by 2030.

5.1.2 Light-duty vehicle fuel economy standards around the world

Many countries have adopted ambitious fuel economy policies. While in 2005 only 60%
of the global PLDV and only 4% of the heavy-duty vehicle (HDV) market were covered by
fuel-economy or CO2-emission standards, by 2015 almost 90% of the PLDV and more than
40% of the HDV market was subject to such regulations (Figure 14). In markets where new
vehicles are not covered by fuel economy policies, manufacturers are still able to sell less

The dominance of regulated LDV markets means countries that rely mostly on imported
cars can introduce ambitious fuel economy policies and will obtain better new vehicles at
competitive prices. Additionally, countries with domestic vehicle manufacturing industry can
make their vehicles more competitive on the international market through the introduction
of effective fuel economy policy measures.

47
Figure 14: Overview of the global status of light-duty and heavy-duty vehicle fuel economy policies
Source: IEA 2016

Table 7 shows fuel-economy and CO2

from around the world, exhibiting a variation in vehicle fuel consumption across markets.
While US LDVs consumed almost 8 LGe/100km on average in 2014, LDVs in Europe only
consumed about 5.5 LGe/100km in the same year. Nonetheless, the United States together
with Canada are the only countries with fuel consumption targets set out to the year 2025.
By that time, thanks to stringent standards in place, the US LDV fuel consumption will be
almost 40% lower than in 2018.

Table 7: Enacted fuel consumption standards around the world

Table 7 also highlights the annual fuel consumption improvement rates inherent with the
presented standards. All countries except Saudi Arabia have improvement rates close to or
above 3% per year, with Korea opting for almost 8% annual reduction of fuel consumption
of new PCs, and China envisaging a 6% improvement rate between 2015 and 2020. Linear
extrapolations of the already enacted fuel economy and CO2 emission standards out to

48
2030 indicate that many of those countries are on track to meet the GFEI target of 4.4
LGe/100km by 2030.

Although the trend is undoubtedly positive, it should be noted that all targets are based on
tested new vehicle fuel economy. Unfortunately, recent publications by the International
Council on Clean Transportation (ICCT) have demonstrated the increasing gap between
tested and real-world, on-road fuel consumption (ICCT 2015a). While 10 years ago, this
difference accounted for about 10% to 15%, it is as high as 30% on average as of 2018,
with some cars having a real-world fuel consumption 50% higher than the laboratory test.
This increasing gap is in part a result of auto manufacturers optimising their vehicles to
perform well on tests. In the worst cases, it was due to manufacturers illegally programming
vehicles to perform well on tests. This underlines the constant need for fuel economy policy
to be carefully designed and implemented in a strong and pragmatic fashion. For example,
introducing in-use testing to fuel economy policy could be an innovative way to ensure
manufacturers are developing vehicles that will reduce fuel consumption and CO2 emissions
in the real world.

Generating recommendations for the ASEAN Fuel Economy Roadmap involves both
economic and environmental considerations. This section analyses the various perspectives
on developing the aspirational goals, focusing on why fuel economy policy is important
to achieving broader positive environmental and economic outcomes, as well as how the

5.2.1 Introduction to LDV fuel economy technology

It combines information on fuel economy improvement potential with technology costs and
resulting pay-back times.

As outlined earlier in the document, several options exist to reduce the sales-weighted
average fuel consumption of new LDVs. The principle ones are: 1) the reduction of average
vehicle size and weight through a market shift towards smaller vehicle segments; 2) the

technology.

options. Nonetheless, since consumers demand larger and better performing cars, the
focus of this section will be on technology improvement.

A selection of the most common technological measures to improve the fuel economy of
LDVs is provided in Table 8. These measures are divided into four categories of improvement:
the engine itself; the vehicle drive-train; the weight and aerodynamic performance of the

49
packages for different vehicle classes exist. A detailed summary of technical reports by
Ricardo or FEV Inc. are provided in the easy-to-digest overview titled Summary of the EU
Cost Curve Development Methodology (ICCT 2012a).

An example of a simulation-based cost curve is provided in Figure 16, representing the CO2
emission reduction potential and respective costs for a segment-C gasoline car against a
2010 baseline car of the same size class for the European car market.11 Future additional
costs are estimated for the years 2015, 2020 and 2025. This is due to technologies becoming
cheaper as a function of deployment and time, in a process dubbed ‘technological learning’.

Table 8

Source: based on ICCT 2012a; Ricardo 2012

The analysis shows that as of 2015 a 32% CO2 emission reduction down to 95gCO2/km (i.e.
the EU 2021 PLDV emission standard) could be achieved at a cost of around EUR 1,750
per car and by applying measures such as start-stop technology in combination with strong
engine downsizing to a displacement of 800ccm, based on a stoichiometric gasoline
turbocharged direct injection engine. These costs could drop to about EUR 1,000 by the
year 2025.

11 In this case, a 2010 Ford Focus 1.6L with no turbocharging and a manual six speed gear shift was used as the baseline
vehicle. It has a tested fuel consumption of 6.4 LGe/100km (based on NEDC).

50
A 50% reduction to only 70gCO2/km (equivalent to 2.9 LGe/100km) is feasible at 2015
costs of about EUR 3,500, possibly dropping to EUR 2,250 by 2025. This very low fuel
consumption can only be achieved through full hybridisation of the vehicle in combination

the use of low rolling resistance tyres.

Similar results are obtained for other vehicle segments. The report shows that on average
a 30% CO2 emission reduction to 95 gCO2/km (~3.9 LGe/100km, from 5.3 LGe/100km for
all PLDVs in 2012 in the EU) could be achieved for all new passenger cars at additional
costs of around EUR 1,100 per vehicle by the year 2020 (dropping to EUR 1,000 in 2025).
Similarly, the average CO2 emission of all new LCVs could drop by 30% to about 120 gCO2/
km (~4.5 LGe/100km) by 2020 at additional per vehicle costs of approximately EUR 2,000
(dropping to EUR 1,800 by the year 2025).

Figure 15: CO2 reduction potential and additional direct manufacturing costs for a segment c petrol car for the
years 2015, 2020 and 2025.
Note: M5: manual 5 gear shift; SS: start-stop (idle-off) technology; SGTDI: Stoichiometric gasoline turbocharged
direct injection; 8DCT: 8-speed dual clutch (automated) transmission; CEGR: cooled exhaust gas recirculation;
RL: road load; AtkCPS: Atkinson cycle engine with cam phase shifting
Source: ICCT 2012a

The publication concluded that ‘the introduction of neither electric or hybrid vehicle
2
target’ of 95 gCO2/km, i.e.
3.9 LGe/100km for the year 2021 (ICCT 2012a).

The much higher baseline fuel consumption of 7.2 LGe/100km (2015) in the ASEAN region
compared to about 5.5 LGe/100km (2014) in the European Union might indicate that the
additional per-vehicle cost to achieve a 30% fuel consumption reduction could actually be
lower than in Europe. On the other hand, since, on average, LDVs are assumed to be much
cheaper in ASEAN region compared to the EU, it is likely that per-vehicle costs to achieve
the same fuel economy improvement are higher than in the EU. Nonetheless, assuming
even twice the per-vehicle cost compared to Europe, a 30% fuel consumption reduction for
PLDVs could be achieved at an additional cost of EUR 2,200 per car (EUR 4,000 for LCVs).

51
In any case, fuel economy improvement in the order of almost 50% can be achieved without

vehicles in the ASEAN region.12 Ambitious fuel economy targets in the ASEAN region can
be achieved based on cost-effective vehicle technology already sold in large numbers
elsewhere in the world. The fact that many AMSs do not have own vehicle manufacturing
capacities and, taken in isolation, are of relatively small market size should not be a limiting

example through the use of better materials, longer development times, and the demand for
additional and more complex vehicle subsystems (e.g. turbo chargers). However, numerous

yield overall cost savings after taking into consideration the costs of fuel saved over the
vehicle lifetime (Figure 16).

Figure 16: Comparison of technology costs and fuel savings of passenger cars
Source: IEA 2012

Table 9

Source: GFEI 2016a

12 Based on achieving 3.9 LGe/100km (i.e. the EU 2021 standard of 95 gCO2/km) down from 7.2 LGe/100km in the ASEAN
today.

52
Payback periods based on fuel savings and average compliance vary between two and
2
-emission
regulation.

In addition, fuel-economy policies can help improve the balance of trade for AMS, which
are largely oil importing countries. In 2013, the region’s net import of oil was more than
USD 100 billion (ACE 2015). Each dollar that ASEAN consumers spend on imported energy
cannot be spent on other products or services, and could be redirected to create more

USD 9 billion can be saved in the ASEAN region by 2025.

amounts of money, at both household and national levels. Increasing vehicle fuel economy

with national economic development, as well as efforts to reduce energy dependency and
air pollution.

AMSs

options. A simple CBA compares only a few monetary values over time: 1.) the value of fuel

1. the impact of fuel economy policies on future sales-weighted new LDV fuel
consumption; and
2. the impact of improved new LDV fuel economy on the average fuel economy of the
entire rolling LDV stock, energy use, emissions and fuel costs.
The impact of vehicle and fuel taxation schemes on future average fuel economy of newly
registered LDVs can be estimated using the freely available Fuel Economy Policy Impact
Tool (FEPIT) developed by the International Energy Agency (see Box 3, below).

In order to assess the energy savings, emission reductions and fuel cost savings stemming
from the introduction of fuel economy policies, a simple transport model is needed, able to
estimate future energy use, emissions and fuel costs based on projections of travel demand.

The previously estimated average annual new LDV fuel economy improvement rate can then
be used as an input for the transport model. By comparing a business-as-usual scenario
(BAU), which has no changes in vehicle and fuel taxation, with a scenario incorporating the
tax reforms and the resulting changes in new vehicle fuel economy, the fuel, emission and
cost reduction potential of the proposed changes in taxation can be estimated up until the
targeted year.

On the costs side of the CBA, the additional average per-vehicle costs to achieve a certain fuel

53
economy improvement need to be estimated. As outlined in Section 5.2.1, comprehensive
and expensive studies have been undertaken by Ricardo and FEV Inc. (Ricardo 2012,
FEV 2012) for Europe. Similar studies can be found for the US. Although LDVs in the
ASEAN are on average much cheaper than in Europe and North America, the results might
be transferable to a certain extent. Given the available literature, even if large levels of

as a function of fuel economy improvement can be obtained. As a result, the effort and

might not be necessary for the purposes of developing fuel economy targets.

Fuel Economy Policies Implementation Tool (FEPIT)

FEPIT13 has been developed by the International Energy Agency and can be downloaded for free. This
tool enables the estimation of future sales-weighted average fuel economy of new LDV sales. A key
result of FEPIT consists of an annual fuel economy improvement rate of the entire new LDV market of a
country between a historical base year and a set target year.

FEPIT estimates the effect of implementing one or more fuel economy policies based on their design
as well as information regarding the historical sales-weighted average fuel economy of new LDVs as
well as the current policy and market environment (such as the level of vehicle registration tax or the
level of fuel duties). The estimates of the expected impacts are based on a set of elasticities linking the
policy characteristics with changes in the output variables. In FEPIT, the current vehicle market needs

providing both the market share as well as the sales-weighted average. Once the status quo with respect
to LDV market and vehicle taxation is described in FEPIT, the effect of various fuel economy policies on
future average new LDV fuel economy can be tested. Such policies include the following:

1) a fuel economy standard

2) a feebate scheme for a one-off registration tax for newly registered light-duty vehicles (LDVs)
3) a feebate scheme for an annual registration tax of LDVs
4) an adjusted fuel tax

For the purposed of this analysis, the effect of the proposed feebate scheme on future average sales-
weighted new LDV fuel economy will be estimated.

Fuel Economy Standards Evaluation Tool (FESET)14

The New Vehicle Fuel Economy and CO2 Emission Standards Emissions Evaluation
Guide has been developed by GIZ with support from the ICCT, together with a Microsoft
Excel-based spreadsheet tool (FESET) to help in calculating the CO2 mitigation impacts
of existing or planned fuel economy standards in a country or region. It provides guidance
on the structure of mitigation effects, on determining the baseline and calculating emission
reduction, and on monitoring, compliance and enforcement.

The ADB Transport Databank Model

This model has been designed to simulate national transport scenarios, taking into
account all modes (i.e. road, rail, water and air), and to project transport activity, energy
use, emissions and costs for urban as well as non-urban transport. Transport activity is a
function of socio-economic input data such as GDP and population projections, in order to

13 The model as well as a user guide and a methodology report are available at: https://www.iea.org/topics/transport/
subtopics/globalfueleconomyinitiativegfei/fepit/
14 Tool guide https://www.changing-transport.org/wp-content/uploads/2017_FES_GHG_Evaluation_Guide.pdf Tool download:
https://www.changing-transport.org/wp-content/uploads/Tool_FESET.xlsm

54
take into account increases in welfare and thus vehicle ownership. The model considers
a great variety of vehicle types, powertrain technologies and fuels, and provides a default
set of transport policy measures, which can be applied in order to build various sustainable
transport scenarios.

baseline data. Parameters such as vehicle fuel economy, vehicle lifetime or historical
average fuel economy improvement rates are fed into the Transport Baseline Model, which
then calculates travel activity, modal structure, fuel use and emissions (alongside further
outputs with regard to safety and workforce) for the business-as-usual scenario (BAU).

alternative scenarios can be developed, calculated and compared to the BAU scenario.15

5.2.4 Impact assessment of the aspirational fuel economy goal

models can be utilised to predict the reduction of fuel consumption and CO2 emissions as

(BMS) and the fuel consumption as a result of the BMS into the future. Then, based on the

fuel economy compared to the likely predicted costs.

The scenarios are based on estimated population and GDP growth, where the BMS assumes
vehicle ownership to increase from about 70 LDVs per thousand capita in 2015 (equivalent
to about 44 million LDVs) to about 110 LDVs per thousand capita in 2025 (~75 million LDVs)
and more than 315 LDVs per thousand capita in 2050 (~246 million LDVs).

In the benchmark scenario (BMS), average reduction in fuel consumption of new LDVs is
estimated to maintain its historical rate of about 1% per year over the coming decades.
Starting at 7.2 LGe/100km for new LDVs in 2015, average new LDV fuel consumption comes
down to 6.6 LGe/100km by 2025, and 5.3 LGe/100km by 2050. Applying the targeted annual
fuel economy improvement rate between now and 2025 of 3% as per the fuel economy
policy scenario (FEPS)new LDV fuel consumption reaches 5.3 LGe/100km in 2025. After
2025, annual fuel economy improvement rate for ICE-powered LDVs is assumed to drop to
1%, since conventional technology is reaching its improvement limits, and sales-weighted
average fuel consumption of new LDVs would fall to 3.3 LGe/100km by 205016.

15 http://transportdata.net/en/page/11
16 Shares of new vehicle powertrain technologies are identical in both the BAU and ASEAN FEPS. By 2025, conventional
ICE cars still account for 95% of sales, the remaining 5% are hybridised vehicles. The share of diesel cars drops from
about 37% in 2015 to about 25% in 2025. Even in the benchmark scenario it is assumed that by 2050, about 30% of newly
sold cars are hybridised, and 5% each are battery electric and plug-in hybrid vehicles.

55
 180,000 60%

150,000 50%
Energy use ktoe

120,000 40%

90,000 30%

60,000 20%

30,000 10%

0 0%
2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050
LCV and minibuses PC Business as usual 3% annual FE improvement Reduction compared to BAU

Figure 17: LDV energy use in the ASEAN 2000 to 2050 under the benchmark scenario (BMS) as well as the
ASEAN Fuel Economy Policies Scenario (FEPS)
Source: Own analysis

Compared to the BMS, reducing new LDV fuel consumption to 5.3 LGe/100km by 2025
already leads to a 9% reduction of overall annual energy use of all LDVs in the stock in the
FEPS (Figure 17).

200.0 70%
60%
Energy intensity

160.0
ktoe per PKM
ktoe per TKM

50%
120.0 40%
80.0 30%
20%
40.0
10%
- 0%
2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050
BMS Passenger LDV transport FEPS Passenger LDV transport
BMS Freight LDV transport FEPS Freight LDV transport
Reduction BMS Passenger LDV transport Reduction FEPS Passenger LDV transport
Reduction BMS Freight LDV transport Reduction FEPS Freight LDV transport

Figure 18: LDV transport energy intensity in the ASEAN 2000 to 2050 under the benchmark scenario (BMS) and
the ASEAN Fuel Economy Policies Scenario (FEPS)
Source: Own analysis

The implementation of LDV fuel economy policies alone has a strong potential to greatly
contribute to the aspirational target to reduce energy intensity of the ASEAN economy by
30% by 2030. While in the benchmark scenario, the energy intensity of LDV passenger
and freight transport decreases by 16% and 20% compared to 2005, the energy intensity
reduction exceeds the aspirational target in the FEPS and reaches 30% and 33% for
passenger and freight transport, respectively (Figure 19).

56
 600 60%
Well-to-wheel emissions Mt CO2
500 50%

400 40%

300 30%

200 20%

100 10%

0 0%
2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050

LCV and minibuses PC Business as usual 3% annual FE improvement Reduction compared to BAU

Figure : LDV wheel-to-wheel CO2 emissions in the ASEAN 2000 to 2050 under the benchmark scenario
(BMS) and the ASEAN Fuel Economy Policies Scenario (FEPS)
Source: Own analysis

emissions in 2
the LDV transport sector. As for energy use, annual CO2 emission reductions account for
9% by 2025, about 17% by 2030 and almost 35% by 2050 (Figure 20).

1,400.0 14%
WTW CO2 emissions MtCO2

1,200.0 12%
1,000.0 10%
800.0 8%
600.0 6%
400.0 4%
200.0 2%
- 0%
BMS FEPS BMS FEPS BMS FEPS BMS FEPS BMS FEPS BMS FEPS
2015 2020 2025 2030 2040 2050
Road Rail Water Air Total transport WTW CO2 emission reduction

Figure 20: Total transport well-to-wheel CO2 Emissions and LDV emission reductions in the ASEAN for selected
years under the benchmark scenario (BMS) as well as the ASEAN Fuel Economy Policies Scenario (FEPS)
Source: Own analysis

transport CO2 emissions reduction of 2% in 2025 compared to the BMS, and 6% by

this contribution to emission reductions, LDV fuel economy improvement is an important

component when developing Nationally Determined Contributions (NDCs) and Nationally
Appropriate Mitigation Actions (NAMAs) to mitigate climate change.

57
 2018 to 2025 2018 to 2030 2018 to 2050
2000 4000 8000

1500 19 -9 3000 6000 149

48 -67 -489
billion billion -638

Billion USD
-115 billion

Billion USD
-28 billion billion billion
Billion USD

USD USD USD billion

billion USD billion USD
1000 2000 USD 4000 USD
USD USD

500 1000 2000

0 0 0
BMS

BMS

BMS
FEPS

FEPS

FEPS

BMS

BMS

BMS
FEPS

FEPS

FEPS
BMS

BMS

BMS
FEPS

FEPS

FEPS
New vehicle Fuel costs Total 2018 to New vehicle Fuel costs Total 2018 to New vehicle Fuel costs Total 2018
expenditures 2018 to 2025 2025 expenditures 2018 to 2030 2030 expenditures2018 to 2050 to 2050
2018 to 2025 2018 to 2030 2018 to 2050

PC LCV Minibuses

Figure 21: Cumulative costs of new LDV purchases and fuel use 2018 to 2025 and 2018 to 2040 in the ASEAN
region under a business- as- usual (BAU) as well as the ASEAN FE RM Scenario
Source: Own analysis

Most importantly, the scenarios show that the implementation of stringent fuel economy
policies to achieve the proposed fuel consumption target of 5.3 LGe/100km for new LDVs
is economically feasible. When comparing cumulative additional costs resulting from the
purchase of better vehicle technology with estimated cumulative fuel savings, it turns out

roadmap are achieved. Already by the year 2025, about USD 9 billion can be saved in the
ASEAN region. If stringent fuel economy policies are continued, cumulative savings could
add up to USD 67 billion by 2030 and almost USD 500 billion by the year 2050 (Figure 21).

58
5.3 Existing fuel economy policies in ASEAN Member States
Table 10: Overview of the status of fuel economy policies in the ASEAN region

Brunei Darussalam Cambodia

Fuel economy baseline Working on developing the baseline. No baseline calculations.
Fuel economy labelling and public information - No labelling scheme in place.
programmes
Fuel economy related tax instruments -
Fuel economy standards Plans to introduce EU equivalent standards. No fuel economy standards in place.
Fuel taxation - -
Pollutant emissions standards - -
Fuel quality standard - Euro II-compatible.
Import of used vehicles - -

59
 Indonesia Lao PDR
Fuel economy baseline Fuel economy baselines established for LDVs and 2-wheelers No baseline calculations.
in 2012. Baseline calculations also available in GFEI WP15
(GFEI 2017).
Fuel economy labelling and Voluntary labelling by manufacturers based on test data from No labelling scheme in place.
public information programmes type approval process.
Eco-driving programmes and intensive public policy dialogues.
Fuel economy related tax Low Cost Green Car Programme including zero luxury sales Duty reduction for LDVs using clean energy e.g. electric
instruments tax (LST) for 120ccm vehicles (diesel: 150ccm) with FE> vehicles.
20km/litre or 128 gCO2/km. To be replaced by Low Carbon
Emission Vehicles Program (2017), which foresees a 50%
LST reduction for advanced technology vehicles (e.g. hybrid,
alternative fuels) with fuel economy greater to 28 km/l and 5%
LST reduction for 20-28 km/l.
Fuel economy standards Establishment of standards currently not under discussion. No fuel economy standards in place.
Fuel taxation - Gasoline: 15%
Special gasoline: 20%
Diesel: 5%
Pollutant emissions standards Euro 2 (LDVs) and Euro 4 since 2016. Fuel quality is monitored by Ministry of Science and Tech-
Expected to adopt Euro 4 standards for gasoline vehicles in nology. Ministry of Natural Resources and Environment has
2017, diesel vehicles will follow. recently approved the National Environmental Standards
EURO III for 2-wheelers already in place. which mentions vehicle pollutant emission standards. Biofuel
production has been initiated by the private sector, however,
the government has set up policies to promote biofuel produc-
tions and use, such as tax exemption, no import duty on pro-
duction machinery etc. The government aims to reach a 10%
.share of total transport energy consumption with biofuels
Fuel quality standard 2000 ppm sulphur diesel. -
Import of used vehicles - Stopped import of second-hand LDVs in 2012.

60
 Malaysia Myanmar
Fuel economy baseline Baseline calculations available in GFEI WP15 (GFEI 2017). No baseline calculations available yet, but ongoing
support through GFEI for establishing baseline.
Fuel economy labelling and public Ongoing preparation to introduce fuel economy (FE) label, which No labelling scheme in place. The transport sector
information programmes requires validation of OEM information. UNECE-drive cycles are
not considered suitable for Malaysian conditions. The idea is to plan, which was launched early 2016 and is pending
parliamentary approval. Available at: http://www.
burmalibrary.org/docs22/2015-12-Myanmar_Energy_
Master_Plan-spdf-red.pdf
Fuel economy related tax A fee has to be paid for imported vehicles, which is
instruments waived for electric vehicles. The amount depends on
which aims to develop Malaysia as the regional hub for energy- the engine capacity.
The fees for imported buses are lower than for private
differentiated by kerb weight. cars.

duties. In 2015, 32.6% of the sold cars were EEVs. The target
number of EEV sales is 1 million units by 2020.
Fuel economy standards The National Automotive Policy 2014 report suggests fuel -
consumption standards as the basis to incentivise OEMs to
produce EEVs.

international benchmarking. The unit gCO2/km is to be used

once EURO IV is introduced nationwide. It should focus on
LDVs, including passenger cars, light commercial vehicles and
2-wheelers.
Fuel taxation - -
Pollutant emissions standards - .Euro II standards are under discussion
Fuel quality standard In 2015, Euro V-compatible diesel has been introduced across .Euro II-compatible fuel standards are under discussion
Malaysia. Euro II-compatible diesel production remains permit-
ted. RON97/Euro 4-compatible gasoline is available nationwide.

.are ongoing
Import of used vehicles - Myanmar allows second-hand vehicles of no more than
four years older than the current calendar year to be
imported to the country, and only left-hand drive.

61
 The Philippines Singapore
Fuel economy baseline Baseline calculations completed in 2013 for 176g/km before Carbon Emission-based Vehicle Scheme (CEVS) in 2012, 168g/
LDVs. Baseline calculations also available in km after CEVS (2013). The scheme covers passenger cars and taxis.
GFEI WP15 (GFEI 2017).
Fuel economy labelling and public Roll-out of labelling scheme for passenger Mandatory fuel economy labelling for passenger cars and light commercial vehicles
information programmes
Roadmap. lta.gov.sg/lta/vrl/action/pubfunc?ID=FuelCostCalculator
Re-launch of fuel economy run initiative in
2016. Driver training programmes exist in the
private sector.
Fuel economy related tax instruments The development of tax incentives is foreseen The CEVS was a feebate scheme to incentivise consumers to purchase cars

and revised once in July 2015. The revision tightened the carbon emission bands
to account for technology improvement. The CEVS was replaced in January

major pollutants, including hydrocarbon, carbon monoxide, nitrogen oxides

and particulate matter emissions, along with carbon dioxide (representing fuel

it also includes an on-vehicle label describing these emissions and rebates or

surcharges, and also provides this data to the public in an online database.
Fuel economy standards The development of a fuel-economy standard No fuel economy standards in place.

roadmap in 2015. Development of national

technical regulation (MEPS) for automobile fuel
consumption is tentatively planned for 2018.
Covers LDVs only.
Fuel taxation - Gasoline: 15%
Special gasoline: 20%
Diesel: 5%
Pollutant emissions standards So far, Euro 2 is required for new LDVs. Euro The CEVS was replaced in January 2018 with a new Vehicular Emissions Scheme
IV was supposed to be introduced by 2016
depending on the fuel availability. Euro III is the .of them
.current standard in place for 2-wheelers
Fuel quality standard The current sulphur limit for diesel is 500ppm. Euro V-compatible standards for fuel quality, from September 2017 onwards Euro
Euro II- and Euro IV-compatible fuels are 6-compatible standards for petrol and from January 2018 Euro VI-compatible fuel
supplied to the market. Since January 2017, standards for diesel too. The fuel quality standards are regulated by the national
Euro 4-compatible fuel standards will be in environment agency, and revised regularly (e.g. the sulphur content in diesel is
place for RON97 gasoline, from 2018 onwards measured regularly).
Euro 4-compatible fuel will be the standard for
.RON95 gasoline
Import of used vehicles - -
 Thailand Viet Nam
Fuel economy baseline Fuel economy baselines for the years 2012 to 2015 in 2017 No baseline calculations.
GIZ. Baseline calculations also available in GFEI WP15
(GFEI 2017).

Fuel economy labelling and Fuel-economy and CO2 label mandatory for LDVs since Voluntary from 1 January 2014 and mandatory from 1 January
public information programmes January 2016 (Eco-Sticker). 2015. Only applied to private cars with 7 or fewer seats. From 1
www.car.go.th website showing info on every car that has January 2018 applicable to private cars with 9 or fewer seats. Online
Eco-Sticker. information for consumers available at:
http://www.vr.org.vn/vaq/Tieuthu_Nlieu/List_Tieuthu_nlieu.asp
Fuel economy related tax Excise tax based on CO2 emissions since 2016. The Eco- Only applied for private cars and LDVs with engine displacement less
instruments Car programme phase II provides tax incentives to the than 2.0 litres. Only applied for private cars with 9 seats or fewer.
car manufacturers such as cooperate income tax (CIT)
exemptions for 6 years, reduction of import duty on imported
parts, exemption of import duty on machinery. To qualify for
the programme, fuel economy must be 23km/litre or more.
Fuel economy standards Voluntary MEPS & HEPS (km/l) for diesel and gasoline A study on fuel consumption standards for LDVs and motorbikes
vehicles have been drafted in 2013 by DEDE (Ministry of was completed in 2013. The non-mandatory standard on limit of fuel
Energy) together with Thailand Automotive Institute, but consumption for passenger cars and 2-wheeled motorcycles and
remain under discussion (the measures were postponed to mopeds has been issued by the Ministry of Science and Technology
secure an additional review by domestic industry) in the form of fuel consumption limits (L/100km). TCVN 9854 2013:
Voluntary MEPS for motorcycles regulated by TISI. But no Limits on fuel consumption for new passenger cars. TCVN 7356:
one adopted so far 2014: Limits on fuel consumption for new motorcycles.
Covers light-duty vehicles and 2-wheelers.
Fuel taxation - -
Pollutant emissions standards LDVs need to comply with Euro IV standard since 2012. The Type approval procedures require new vehicles to meet certain
Eco Car phase II programme raised the benchmark for clas- emission standards. All manufacturers and importers of new vehicles
need to provide the necessary documents with pollutant emissions
.standard is considered by 2020 (included CO2) and fuel consumption of the vehicle type to Viet

manufactured, assembled and imported passenger cars mandatory

from 1 January 2017. Euro III for manufactured, assembled and
imported motorcycles mandatory from 1 January 2017.
Fuel quality standard .50ppm sulphur diesel is available Gasoline: Sulphur Euro 2-compatible max 500mg/kg; Euro
4-compatible max 50 mg/kg; diesel: Sulphur Euro II-compatible max
500mg/kg; Euro IV-compatible max 50 mg/kg.
Euro II and Euro IV fuel will be supplied in the market by 2017.
Import of used vehicles Besides an exception for importing one second-hand vehicle Used cars can only be imported if they are not older than 5 years.
per person on a personal basis (already owned by the
person), Thailand does not allow the import of second-hand
vehicles.
63
5.4 Gaps and barriers to fuel-economy policy in ASEAN and AMS
5.4.1 The lack of knowledge and data for developing fuel economy baselines
The development of fuel economy baselines is essential. First, they create an understanding
of the status quo of new vehicle fuel economy in a country. Second, they serve as a starting
point for the development of fuel consumption targets. Last but not least, they are needed
to monitor the progress of average new LDV fuel consumption over time.

Section 2.4 already discussed available fuel consumption baselines for Indonesia, Malaysia,
the Philippines, Singapore and Thailand. However, fuel consumption baseline data are
not yet available for Brunei Darussalam, Cambodia, Lao PDR, Myanmar and Viet Nam.
However, Myanmar and Viet Nam are working on their baselines with support from GFEI
and GIZ, respectively.

Although these countries account for less than 5% of the ASEAN LDV market (Figure
22) and do not impact the aggregated results of the region dramatically, it is important to
determine the sales-weighted average new LDV fuel consumption within these markets
as soon as possible. Establishing the fuel consumption baselines can also serve to build
capacity among the relevant government agencies and is thus a substantial step towards
the development and implementation of fuel economy policies.

Figure 22: Fuel economy baseline coverage of the ASEAN LDV market 2015
Source: OICA 2016

5.4.2 The role of second-hand imported vehicles

The import of used vehicles can pose challenges to the introduction of fuel economy policies.

data, since vehicle labelling programmes became mandatory only about that time in Japan.

United Kingdom, fuel economy labelling did not become mandatory until 2005.

64
An overview on import regulations for used vehicles in the AMS is provided in Table 9.

Table 11: Import regulation for used vehicles in the ASEAN region

Import of used
Age restriction Emission standard
vehicles
Cambodia Yes - -
Private: 3

registration
Brunei Darussalam Yes -
Commercial: 5

registration
Indonesia No - -
Lao PDR Yes - -
Malaysia Yes 5 years -
Myanmar Yes 4 years -
The Philippines No - -

needs to comply with

Singapore Yes 3 years
domestic standards

Thailand No - -
Viet Nam Yes 5 years -
Source: UN Environment TBP

Used imported vehicles should comply with the air pollution regulation for newly registered

to import vehicles that may be slightly older than those with current limits but have the same
technical standards as new vehicles in the region.

consumption or CO2-emission data based on the test cycle of the country of origin of the
vehicle. Fuel consumption values based on other cycles (e.g. Japanese JC08 or US CAFE)
can then be transformed into NEDC equivalents using conversion formulas published by
ICCT (ICCT 2014).

To better understand the importance of used imported vehicles it is therefore necessary to

investigate the share of used imported cars as a proportion of all newly registered vehicles.

5.4.3 Administrative barriers for fuel economy policy development

During various fuel economy workshops carried out by GIZ, it turned out that fuel economy
policy making is often a subject without a permanent institutional home base. In many cases,
the issue of fuel economy policy falls under the responsibility of numerous government
agencies, which are often organised under different ministries. A stakeholder diagram
to illustrate the roles and responsibilities of government agencies related to vehicle fuel

65
Eleven different agencies are involved with the development of various fuel economy
policies, which in this case are categorised as consumer information-related, regulatory or

is situated at a cross-section of all policy areas.

Figure
agencies in Thailand
Source GIZ 2017

It is thus important to appoint a lead agency to coordinate the development and implementation
of fuel economy policies. Each of the other relevant institutions should also appoint a key
contact person to deal with the topic.

In addition, some of the proposed fuel-economy policy measures require more administrative
infrastructure than others. The introduction of fuel-economy standards based on corporate

First of all, it requires a close collaboration between the government agency and the
vehicle manufacturers and/or importers. Since fuel consumption targets are set for each
manufacturer individually and are based on historical market portfolios (see Section
4.4), the target setting as well as monitoring and compliance checking process require

enforcement action needs to be taken against cases of non-compliance, it also requires the
set-up of the legislative framework as well as an agency to administrate such issues, i.e. to

(Figure 24) are helpful for orientation.

5.4.4 Behavioural challenges

that are considered in making a decision, and is often not the most important purchase
criteria. In addition, many new car buyers have issues with anticipating longer-term savings.
As summarised in a publication on feebate schemes by ICCT, “customers are loss averse

the purchase” (ICCT 2010). Future petroleum prices are highly uncertain, and so are future

Financial incentives in combination with a fuel economy label that clearly presents future
fuel cost savings or savings on additional expenditures compared to the average car can

66
Apart from the above, behavioural changes are needed with respect to car size and utility.
Over the past 10 years, large and medium-sized SUVs and pick-ups, especially the latter,
have gained market share around the world. This trend is particularly pronounced in non-
OECD countries (Figure 24) and needs to be reversed for ambitious fuel consumption
targets to be achieved.

Source: GFEI 2017

Figure 24: Vehicle size evolution across the world 2005-15

5.5 Policy and technical toolbox for comprehensive fuel economy policy
5.5.1 International experience: strategies for fuel economy improvement
Between 2012 and 2015, the Netherlands, Cyprus and Bulgaria achieved the highest annual
improvement rates of between 4% and 5% (Figure 25). Three of the four biggest European
economies (France, Germany and Italy) achieved improvement rates of around 3%, and the
entire EU27 reached 2.9% annual fuel economy improvement.

Annual improvement
Average new LDV fuel economy rate 2012 to 2015
7.0 5.0%
Lge /100km (based on NEDC)

6.5 4.0%

6.0
3.0%
5.5
2.0%
5.0

1.0%
4.5

4.0 0.0%
2012 2013 2014 2015

Netherlands Cyprus Bulgaria France Germany Italy United Kingdom EU 27

Figure 25: Historical fuel economy improvement and annual fuel economy improvement rate for selected EU
countries and the EU27
Source: own calculations based on European Environment Agency (EEA) Data

It needs to be noted that these high improvement rates have been achieved despite the
already good baseline fuel economy for passenger cars of 5.6 LGe/100km back in 2012
(compared to 7.2 LGe/100km in the ASEAN in 2015 for passenger cars and light trucks).

67
The countries with highest annual improvement rates are characterised either by a relatively
high baseline fuel consumption (e.g. Bulgaria, Cyprus) or by very progressive fuel economy
policies (e.g. the Netherlands).

Nonetheless, impressive fuel economy improvement can be achieved with the implementation

2005 and 2015, average fuel consumption of new LDVs improved by 3.9% per year, while
at the same time, the size of cars of all segments slightly increased (GFEI 2017).

A clear relationship can be observed between the strong fuel economy policies and the level
of sophistication of vehicle engine technology. The ratio of fuel consumption per unit power
(LGe/100km per kW) can be used as an indicator of modernity of engine technology. New
LDVs in almost all OECD countries achieve low per-kW fuel consumption at relatively high
power ratings, while the opposite is true for many non-OECD markets. Among the presented
countries, average new LDVs in Indonesia have the highest per-kW fuel consumption while
average power rating is the second-lowest after India. This is a clear indication of the use of
outdated technology – naturally aspirated engines with lower compression ratios.

Figure 26
Source: GFEI 2017

5.5.2 Strategies for consumer awareness of fuel consumption

On-vehicle labels and other technologies that clearly describe fuel economy and other fuel
and environmental information to consumers are highly effective for allowing consumers to
make decisions about which vehicle to purchase. In addition, labels are a key means for
governments to centralise data with regards to fuel consumption of vehicles.

Although some ASEAN countries have already developed fuel economy labels (see Section
2.5), often important information is missing. Figure 27 shows the labels of Singapore,
Thailand and Viet Nam. They all show fuel consumption in L/100km, but only Singapore’s
label enables the consumer to understand whether the stated fuel economy is good or bad.

68
 Singapore

Vietnam
Viet Nam Thailand

Figure 27: Fuel economy labels of Singapore, Thailand and Viet Nam

In contrast, US fuel economy labels contain a complete set of information, as shown in

Figure 28.

The data provided not only informs about fuel consumption and emissions but offers additional

average car. This information is very helpful to consumers as it allows them to directly
compare short-term and long-term costs and savings of different cars under consideration.

1 Power train and fuel

2.+5. Fuel economy and fuel consumption
3. Vehicle class and fuel consumption range
4. Saved/additional fuel costs compared to the
average car
6. Annual fuel costs
7. Fuel consumption and greenhouse gas rating
8. CO2 emissions
9. Air pollutants rating
10. Assumptions for fuel cost calculation
11. Code to read with smart phone
12. Link to government website and fuel cost
calculator

Figure 28: The fuel economy label of the United States

Source: Fueleconomy.gov 2017

69
In addition to fuel economy labels, other consumer awareness tools are available, such as
websites, fuel consumption trackers and fuel economy runs. Fuel economy websites are
often provided by governments and provide information on fuel economy of all vehicles
approved for sale in their jurisdictions. The US EPA website, www.fueleconomy.gov,
provides comprehensive information on tested fuel economy of vehicles available in the
US, as well as information on strategies for saving fuel, self-monitoring of fuel consumption,
and information about advanced vehicles and technologies. The website of China’s Ministry
of Industry and Information Technology (MIIT) on fuel consumption (www.chinaafc.miit.gov.
cn) also provides a comprehensive list of the fuel economy ratings of vehicles approved
for use in China. Yet these websites need not be operated by governments. Websites such
as www.spritmonitor.de and Little Bear Fuel Consumption (www.xiaoxiongyouhao.com in
Chinese) offer publicly collected data on thousands of vehicle models provided by users in
real-world conditions.

Meanwhile, a number of products exist that can connect to a vehicle’s on-board diagnostics
(OBD) computer to report fuel consumption in real time, and record it either for real-time
display, or to display over time depending on different driving conditions and speeds, or to
help diagnose problems with cars.

Finally, governments and car clubs can undertake fuel economy runs, bringing cars out to
track or highway conditions to demonstrate real-world fuel economy and to raise awareness

runs have been undertaken in a number of AMS to bring awareness to this issue.

5.5.3 Feebate design and implementation

Feebates can take the form of vehicle registration tax schemes, where the purchase of

Feebates need to be based on either vehicle fuel consumption or CO2 emission as the main
indicator and can be set up to generate government revenues to be cost-neutral or to result
in net costs.

The latter is illustrated in with decreasing fuel consumption. Whether a feebate scheme is
revenue-generating, cost-neutral or cost-incurring depends on the pivot point. The strength

70
 Variant 2: Change slope
Fee
Variant 1: Shift pivot point
Monetary unit

Pivot point
Rebate

Fuel consumption (in Lge/100km)

Figure : Schematic illustration of a fuel consumption -based feebate scheme

If the pivot point is set lower than the current fuel consumption baseline (to the left of the
historical sales-weighted average new LDV fuel consumption), the system will be revenue-
generating, as the larger part of the new vehicle purchases will be located within the blue
area along the feebate function. The inverse is true in the case where the pivot point is
shifted to the right (Variant 1), above the current sales-weighted average fuel consumption.
In this case more vehicles will be eligible for a rebate.

The slope of the feebate function is equally important. A steeper slope increases the incentive

costs to the government.

of the rebate function to the left of the pivot point with a steeper fee function to the right.

a system without changing slopes.

In any case, feebate schemes need to be adjusted to the market development on a periodic

making the system a victim of its own success. Most systems today are based on bi-annual

point to the left over time.

A freely available feebate design tool can be downloaded from the ICCT website17. This

historical LDV sales. Key parameters such as the pivot point as well as the slope and the
form of the feebate function can be estimated based on input data such as recommended
future government revenues. It also provides estimates regarding the effect of the feebate
scheme on future sales-weighted average new LDV fuel consumption and CO2 emissions.

17 The tool can be downloaded from: http://www.theicct.org/feebate-simulation-tool

71
Since feebates are based on a continuous function that directly adds a price tag to fuel

times.

administrative infrastructure. Most ASEAN countries already have a vehicle registration tax
in place. These structures can be used to turn a registration tax based on price or engine
displacement into a feebate scheme based on fuel consumption or CO2 emissions.

In addition, the need for data to characterise the LDV market is much less comprehensive
than in the case of a corporate average fuel consumption standard. While a feebate scheme
requires the existence of the fuel consumption baseline data as well as additional data such
LDV market share by segment and price, (and potentially by power, weight and vehicle
footprint), a standard requires the close interaction between the responsible government

Some argue that the principal aim of feebate schemes is to incentivise manufacturers to

2010). While this is true for larger vehicle markets with own manufacturing capacities, this is
less the case in the AMSs. In the ASEAN region, a regional fuel-economy standard could be
the means to convince manufacturers and importers to improve their offer. Complementarily,
feebates would directly address the consumers. Collecting fees and offering rebates directly
to the consumer seems to be the only way to quickly implement feebate schemes in the
region, mainly building on the existing vehicle registration tax structures and using the
administrative infrastructure.

The collection of the feebate needs to be under the responsibility of a ministry that has
already been involved in vehicle taxation (e.g. in Thailand that would be the Department
of Land Transport). The executive arm to enforce the collection of the feebates should

national legislation).

The introduction of a mandatory fuel economy label for cars is highly conducive to the
success of these policies, as it allows consumers to completely understand the rationale
and decision-making basis for fees or rebates related to the feebate programme. Countries
which allow for the import of used vehicles need to put the importers in charge of providing
2
conformity.

Case studies

The most prominent feebate scheme, the consumer-oriented French bonus-malus system,
was introduced in 2008. Since then, it has been revised almost every year. It is essentially
a one-off vehicle registration tax, which can be positive, zero or negative, depending on the

72
car’s CO2 emissions. Its feebate function for the years 2016 and 2017 are shown in Figure
31. In the early days of the scheme, consumers were more enthusiastic than expected,

average new vehicle CO2 emissions were reduced by 1 gCO2/km on average per year,
annual reductions amounted to 9 gCO2/km and 7 gCO2/km for the years 2008 and 2009
(ADEME 2011).

In the ASEAN region, Singapore is the only country with a feebate scheme in place. In the

the French system, especially at its extreme ends. Vehicles with emissions below 95 gCO2/
km (~4.1 LGe/100km) were eligible for rebates of more than USD 20,000 (Figure 30). On
the other side, vehicles emitting more than 230 gCO2/km (~9.9 LGe/100km) were charged
more than USD 20,000. The programme was replaced in 2018 with a multi-pollutant feebate
scheme called the Vehicular Emission Scheme. In the new VES, vehicles that ambitiously
reduce all emissions will receive greater rebates, and those that produce more of all
emissions will see higher fees, up to USD 20,000.18

30,000
y = 74x - 7,346
20,000

10,000 y = 160x - 25,580

USD

-
0 50 100 150 200 250 300 350
-10,000

-20,000 y = 54x - 6,163

-30,000
gCO2/km
Singapore 2015 France 2016 France 2017
Linear (Singapore 2015) Linear (France 2016) Linear (France 2017)

Figure : Feebate schemes of France 2016 and 2017 and Singapore 2015. The Singaporean CEVS was
replaced by a multi-pollutant Vehicular Emissions Scheme in 2018.
Source: Caradisiac 2017, LTA 2017

Both the French and the Singapore schemes contain step functions. While these functions
make the schemes easier to understand for consumers, the steps can create undesired
side effects. They create some incentive to the manufacturers to game the rules, in cases
where some of their models are only little above a threshold between tax classes. In such
cases, fuel consumption can be reduced through measures such as slightly better tyres or
changed engine management, resulting in much lower registration taxes in return for only

its purpose. This is particularly true for a system with large steps, e.g. in Singapore.

18 Land Transport Authority. December 2017. JOINT MEDIA RELEASE BY THE LAND TRANSPORT AUTHORITY (LTA)
& NEA - NEW VEHICULAR EMISSIONS LABEL FROM 1 JANUARY 2018. https://www.lta.gov.sg/apps/news/page.
aspx?c=2&id=37654ca8-ef14-4c1a-851d-06fc527f839f

73
Similarly, the steps can create market distortions in cases where comparable vehicles of

tax bracket. Therefore, feebate schemes based on linear and continuous functions are
highly preferable to schemes based on functions with discrete steps. This issue was partly
addressed in the 2016/2017 revision of the French feebate scheme.

A more detailed discussion about the features of various feebate schemes can be found in
Best Practices for Feebate Program Design and Implementation (ICCT 2010).

5.5.4 Circulation tax design and implementation

Type of measure Vehicle registration tax paid on an annual basis for

Principle Based on vehicle fuel consumption (LGe/100 km) or

vehicle CO2 emissions (gCO2/km)

The value of the tax gradually increases with fuel

consumption or CO2 emission according to a contin-
uous function

Can also include a component based on pollutant

emissions (e.g. NOx)
Rationale
incentivise the consumer to switch towards the pur-
-
nology costs
Key aspects The starting point of the tax function can be set in
a way that vehicles below a fuel-consumption (or
CO2-emission) threshold are exempted from the
annual circulation tax

needs to be adjusted periodically

Prerequisites Fuel-economy or CO2-emission information is re-
quired for

A fuel economy labelling scheme to inform the con-

sumer needs to be in place
Case studies Annual vehicle registration tax in various European
countries as well as China and Japan (see Table
12).
Impact rating High
Complexity rating Medium

74
Similar to a registration tax, the primary purpose of circulation tax is to create revenues
for the government. When based on fuel consumption (or CO2 emissions), it can be used

already have schemes in place, where all LDVs in the stock needs to be registered on an
annual basis. Based on fuel consumption or (CO2 emissions) these annual registration taxes
(referred to as circulation tax in the following to better distinguish them from the one-time
new LDV registration tax discussed in Section 4.3.1) provides an incentive to both choose

or used car. Thus, in contrast to a feebate scheme, a fuel consumption-based circulation tax
acts both on newly registered and already existing vehicle stock and is a complementary
measure to a feebate scheme.

A circulation tax can be designed in a way that is equal to a one-off registration tax over

vehicles and vehicles in the stock, they can be combined with attributes to control pollutant
emissions. For example, a circulation tax scheme can contain a component that depends
on the Euro emission standard of the vehicle, progressively adding costs with decreasing
standards. It can also contain a component for taxing NOx emissions, thus discouraging old
diesel cars with no effective exhaust treatment. Such a NOx component has recently been
introduced within a vehicle registration tax in Chile (Lopez 2014), where the registration tax
is designed to mimic circulation over a particular time horizon.

Table 12: Overview of annual circulation tax schemes around the world

Country Annual circulation tax

Austria Circulation tax based on engine power. EVs are exempted.
Denmark Annual circulation tax based on fuel consumption. BEVs weighing < 2000 kg are exempted.
Germany Circulation tax based on engine displacement and CO2 emission. EVs are exempted for 10 years.
Netherlands Circulation tax based on the vehicle weight, fuel type, and CO2 emission. BEVs and most PHEVs are exempted.
Sweden Road tax based on CO2 emission. EVs are exempted.
United Kingdom Excise duty from second year of purchase based on the CO2 emission and vehicle price. BEVs and some PHEVs are exempted.
Norway Circulation tax about EUR 350.
China Vehicle and vessels fee based on engine displacement and price. EVs are exempted.
Japan Tonnage tax based on vehicle weight. EVs are exempted. Automobile tax based on engine displacement. EVs are exempted 50%.

Source: ICCT 2014a

Similar to the feebate scheme, an annual circulation tax based on fuel economy or CO2
emission should build on existing administrative structures, and requires the respective

for cars with ages of 15 years and more. As manufacturers were not required to provide fuel
consumption/CO2
above the age of 10 years. In this case, functions based on attributes such as engine
displacement, power and fuel type will need to be developed to quantify circulation tax
values.

Case studies

An overview of various annual circulation tax schemes is provided in Table 12. The tax
schemes in Denmark, Germany, the Netherlands, Sweden and United Kingdom are
based on either fuel consumption or CO2 emission, among other attributes such as engine

75
displacement, fuel type, vehicle price and weight. It can be seen that in many of the
schemes electric vehicles (EVs) and PHEVs are exempted from the circulation tax. This is
an important observation: Although fuel economy policies mainly target conventional cars,
the proper inclusion of advanced vehicle technologies is a crucial component for the longer-
term transition towards these powertrains.

Figure 31 on the left shows average annual circulation tax values for new vehicles for
either gasoline and diesel or all cars (“generic”). The amount of the circulation tax varies

in Denmark. The right side of Figure 31 shows the average one-off registration for selected
EU countries. Again, the spread is large, reaching from about EUR 200 in Belgium to more
than EUR 5,000 for diesel cars in the Netherlands.

Figure : Annual average circulation and one-off registration tax for selected EU countries
Source: Adapted from Malina 2016

In fact, circulation taxes are about an order of magnitude smaller than registration taxes.
This illustrates the complementary nature of circulation taxes: Even over a longer period of

Furthermore, since annual circulation taxes are future expenditures, which are not to be paid

not fully internalise them at the time of purchase.

5.5.5 Fuel tax design and implementation

Fuel taxes are the most effective way of pricing externalities related to motorised transport.

are therefore a powerful means to control rebound effects.

The overall target of fuel economy policies is to reduce fuel use, emissions and related
costs. Improved vehicle fuel economy on its own might not necessarily lead to that target, as
consumers might decide to increase annual driving as a result of lower per-kilometre costs.
Therefore, pricing the use of vehicles is essential to reduce energy use and emissions.

Extensive literature exists on fuel price and income effects on vehicle travel and fuel use. A
comprehensive review of fuel price elasticities is contained in a 2017 publication by Victoria
Transport Policy Institute (VTPI 2017). According to Goodwin, Dargay and Hanly (Goodwin

76
et al 2004), a long-term fuel price increase causes vehicle travel and fuel consumption to
decline, with the reduction in fuel consumption about twice the decline in kilometres travelled.
According to their review, this can be explained by the fact that the effect of purchasing

the reduction in vehicle ownership and annual driving. Fuel taxes are thus a proven means
to directly affect fuel economy of new cars.

Long-run elasticities of vehicle travel with respect to fuel prices are between -0.3 and -0.8,
making fuel tax adjustments an effective instrument to limit rebound effects from increased
vehicle fuel economy, even if, for various reasons, fuel taxes might not be the instrument of
choice for stimulating vehicle fuel economy improvement.

Case study
Turkey is among the countries with the highest fuel prices in the world. In 2014, the average
price of one litre of gasoline was USD 2.06, while one litre of diesel cost about USD 1.90.

The high fuel price in combination with a high vehicle registration tax and the proximity to
the EU as a market for vehicle exports makes Turkey one of the countries with the most

registration tax with vehicle price, the system effectively contributes to improved LDV fuel
economy over time. In 2015, average new LDV fuel consumption was about 5.2 LGe/100km
(NEDC). Starting at 7.2 LGe/100km in 2005, fuel consumption fell by almost 30% by 2015,
at an annual improvement rate of 3.3%.

Figure : Sales by CO2 emission class (left), and sales by powertrain type (right), and powertrain and sales-
weighted average CO2 emissions and fuel consumption for Turkey, 2005 to 2015
Source: GFEI 2017

The high vehicle taxation is illustrated in Figure 33 for a set of common car models among
countries in Europe. Although similar models are cheaper in Turkey than in France, Germany
or the Netherlands, the tax burden is higher. This is especially true for larger and more
luxurious cars: A medium-size VW Passat has a tax burden of about 140% of its price, in the
case of a Mercedes E class, taxes account for almost 200% of the vehicle price. Although

turned out to be effective.

77
Figure : Vehicle prices and taxation selected models in Turkey, Germany, France and the Netherlands.
Source: ICCT 2016

5.5.6 Design and implementation of fuel economy standards

regions have followed, and since 2015 almost 90% of the global vehicle market has been
regulated in this respect.

was introduced in 2005. At the time, each vehicle model had to comply individually with a
minimum performance standard (MPS). Under Phase III, introduced in 2012, the regulation
changed towards a corporate average fuel consumption standard. In this case, the
production-weighted average fuel consumption of all vehicles produced by a manufacturer

consumption standards are tightened from phase to phase, individual vehicles, particularly

with the implementation of New Energy Vehicle (NEV) quotas, companies also need to
manufacture a certain proportion of electric or plug-in hybrid electric vehicles annually, or

or vehicle weight need to be taken into consideration to account for the different sales
portfolios among manufacturers. Therefore, fuel consumption or CO2 emission targets are
set taking into account the sales-weighted average size or weight of all vehicles sold by a
certain manufacturer in a certain year.

fuel consumption or CO2 emission standards has been summarised by ICCT (ICCT 2011a)
and is illustrated in Figure 34.

78
Three main issues need to be investigated beforehand:

1. What is the current sales-weighted (or production-weighted) average new LDV fuel
consumption or CO2 emission as a function of the vehicle utility parameter (i.e. size
or weight)?
2. What is the targeted sales-weighted average fuel consumption or CO2 emission?
3. What is the average percentage reduction to shift from the current sales-weighted
fuel consumption or CO2 emission to the future target value?
The purple line in Figure 35 denotes the present sales-weighted average CO2 emissions
of all LDVs in the market as a function of a vehicle attribute such as size or weight (on the

percentage CO2 emission reduction y to each point on the purple curve. This results in
the blue 100% slope curve. A standard based on such a 100% slope curve would provide

2
emission target. Therefore, the blue 100% slope curve needs to be tilted
around the previously set overall CO2 emission or fuel consumption target (step 3). On the
2
emission (or fuel consumption)
target to be met by all manufacturers, regardless of the average size or weight of the
vehicles they sell. A viable compromise between the request to diversify the CO2 emission
targets among different manufacturers, and the risk that manufacturers are provided with an

found. According to the summary provided by ICCT, previous studies indicate a 40% slope
to be a good compromise to set up a weight-based target value curve.

Figure
Source ICCT 2011a

Many discussions have been around the question whether vehicle size or vehicle weight is the
better attribute to set up fuel economy regulation. Light-weighting of vehicles is a promising

weight-based system, the reduction of average vehicle weight to reduce fuel consumption

79
and CO2 emissions would lead to a tightened fuel consumption or CO2 emission target (see
Figure 36, left). In the case of a size-based system, the fuel consumption or CO2 emissions

individual vehicle basis provides a strong incentive for light-weighting to the manufacturer.

Figure : Weight- versus size- based fuel consumption and CO2 emission standard
Source ICCT 2011 EU emission

Case study
The European Union has implemented a standard specifying the sales-weighted average
CO2 emission to reach 95 gCO2/km (~4.1 LGe/100km) for PLDVs by 2021 and 147 gCO2/
km (~6.3 LGe/100km) for LCVs by the year 2020. It is a corporate average standard with

weighted average vehicle weight of the year prior to the target year. The resulting target
curves for PLDVs and LCVs as a function of vehicle weight are shown in Figure 37.

CO2 emission targets. Super credits can be allocated for low-emission vehicles emitting
less than 50 gCO2/km. These vehicles are given a higher weight of up to three times the
actual sales numbers when calculating the sales-weighted average emissions. E85 extra
credits have been introduced to account for the lower emissions of vehicles which can use
E85 biofuel blends (containing up to 85% of bioethanol in the petroleum fuel blend). Last
but not least, manufacturers can apply for approval of eco-innovations at the European

weighted average emissions can be reduced by up to 7 gCO2/km (EEA 2015).

80
 400

350
Sales weighted average emissions
300

250
(gCO2/km)

200

150

100

50

0
1000 1200 1400 1600 1800 2000 2200 2400 2600 2800 3000
Sales weighted average vehicle weight (kg)

PLDVs 2017 - to 2020 PLDVs post 2020 LCVs 2017 - to 2020 LCVs post 2020

Figure : CO2 emission target curves for PLDVs and LCVs in the European Union for the years 2017 to 2020
and post 2020
Source: Own calculations based on EEA 2015

5.5.7 Air pollutant emission standards and fuel economy

It is important to distinguish between CO2 emissions and pollutant emissions (see Table 13).
Air pollutants include particulate matter (PM), nitrogen oxides (NO and NO2, often referred to
together as NOx), sulphur oxides (SOx), un-burnt hydrocarbons (HC) and carbon monoxide
(CO). The two categories of emissions and their respective policies often cause confusion.
Carbon dioxide, or CO2, is a greenhouse gas, but is not considered a toxic pollutant as
such. Although CO2 emissions and pollutant emissions both result from burning fuels, their
methods of control are very different, from technological and regulatory perspectives. CO2
emissions are reduced by lowering fuel consumption and adjusting energy sources, while
air pollutants are reduced through the use of technologies such as catalytic converters and

technologies. Hence, a large and powerful SUV can emit very small amounts of air pollutants

that consumes a lot of fuel and emits a lot of CO2.

The implementation of stringent fuel economy policies, pollutant emission standards and
fuel quality standards need to go hand-in-hand to ensure the following:

important to avoid an increased rate of dieselisation (induced by fuel economy

policies), which might occur as a response to fuel-economy pressures without

more particulate matter (PM) than most recent Euro V and IV vehicles. This shift
can also be avoided by banning diesel LDVs and ensuring adequate supplies of
gasoline.
2. The required fuels are available on the market. Vehicles complying with tightened

fuels. These need to have high octane ratings and low sulphur contents in order to

81
 ensure a controlled combustion process under high pressure and temperatures as
well as to prevent the generation of soot.

Table 13: Overview of vehicle emissions

Can be
Pollutant Classification filtered/captured on- Reduction method Regulation
board a vehicle
Reduced fuel
consumption, reduced CO2 emission standard (or indirectly
Carbon dioxide (CO2) Greenhouse gas No
carbon content in the through fuel consumption standard)
fuel
Particulate filters,
Particulate matter (PM) Air pollutant Yes Euro I-VI, US Tier 1 and 2 among others
improved combustion
Nitrogen oxides (NO and Catalytic converter,
NO2, often referred to as Air pollutant Yes exhaust gas recirculation Euro I-VI, US Tier 1 and 2 among others
NOx) (EGR)
Reduced sulphur content
Sulphur oxides (SOx) Air pollutant No Euro I-VI, US Tier 1 and 2 among others
in the fuel
Catalytic converter,
Un-burnt hydrocarbons (HC) Air pollutant Yes Euro I-VI, US Tier 1 and 2 among others
improved combustion
Carbon monoxide (CO) Air pollutant Yes Catalytic converter Euro I-VI, US Tier 1 and 2 among others

The regulation of air pollutants often refers to the European Euro I to VI standards for
diesel vehicles and Euro 1 to 6 standards for gasoline vehicles. These pollutant emissions
standards should not be confused with carbon emission or fuel consumption standards.
While the former is concerned with the reduction of air pollution, the latter is concerned with
the reduction of GHG emissions and fuel consumption by vehicles.

The air pollutant emission standards for passenger vehicles do have some relationship
to fuel consumption, but the connection has been demonstrated to be of less importance

turbocharging in diesel engines, require higher-quality fuels in order to operate properly, and
higher fuel quality standards are often driven by more stringent vehicle pollutant emission
standards.

An overview of current pollutant emission standards for PLDVs in selected AMS is illustrated
in Figure 38.

Fuels matching the Euro 4/IV standard are now available in Brunei Darussalam, Indonesia,
Malaysia, the Philippines, Singapore and Viet Nam, and Euro 5/V in Singapore. Indonesia
only provides Euro 4 gasoline, while diesel there has very high sulphur concentration.
Cambodia, Lao PDR and Myanmar plan to adhere only to the standards of Euro 2/II or even
Euro 1/I fuels until the beginning of the 2020s.

while lowering the concentration of harmful components such as benzene in order to comply
with those higher Euro standards.

82
Figure : Overview of vehicle pollutant emission standards in selected AMSs and other global jurisdictions
Source: Clean Air Asia, 2015

Case study
Between the years 2000 and 2012 the share of diesel vehicles among new LDVs grew from
17% to more than 40% globally (ICCT 2012). At the same time, fuel consumption of new
LDVs in India remained low, at around 6 LGe/100km, while vehicle size increased by about

certainly accounts for a large part of the stable and low average LDV fuel consumption.

Nonetheless, under the current pollutant emission regulation, diesel LDVs are allowed to
emit about three times more NOx and about 10 times more particulate matter compared
with gasoline cars. Both, NOx and particulate matter emissions are at the source of

cardiopulmonary mortality” (ICCT 2012) can be clearly detected. According to calculations

performed by ICCT, almost 10,000 premature deaths could be provoked through the
emissions of particulate matter by the year 2030, if pollutant emission standards are not
tightened.

In this case study, although CO2 emissions may have decreased due to dieselisation, air

83
5.5.8 Fuel quality regulation

Type of measure Regulation which sets fuel quality requirements for a num-
ber of physical and chemical properties
Principle All fuels for sale in the market must meet the requirements
Rationale The standard pulls clean fuels into the market, which are
a requirement for the implementation of pollutant and fu-
el-economy standards

Standards for vehicle pollutant emission, fuel quality and

fuel economy are tightly linked to ensure that the potential

Key aspects The EU fuel quality standards Euro I to VI are often used as
-
ment all over the world

Fuel quality standards needs to be tightened periodically to

Fuel quality standards also regulate the blend shares and

Prerequisites The administrative framework needs to be in place to set

the target, to check compliance by regularly testing fuels
and to enforce the standards
Case studies Euro VI standard in the EU, EPA gasoline and diesel stan-
dards the US, Bahrat IV in India, China IV/V
Impact rating High
Complexity rating High

Fuel quality standards regulate the physical properties as well as the chemical composition
of fuels. They also contain regulation on composition and shares of biofuels, which are
blended with gasoline and diesel in order to reduce their carbon footprint.

84
Table 14: Pros and cons of harmonisation of ASEAN fuel quality standards

Pros Cons
Flexible cross-border trade Higher fuel costs
Consumer Confidence in fuel quality
Reduced health risk
Reduced exhaust emissions
Environment Reduced emissions of GHGs
Better air quality
Investment needs to upgrade
Higher economic value
refineries
Increased freight transport
Higher production costs
efficiency
Economy Increased economy of scale in fuel
trading
Increased secturity of supply with
respect ot ASEAN strategic reserve
ASEAN has no enforcement
mechanism in place to convert
Other
harmonization efforts into
national law

Source: Adapted from Thitiratsakul 2016

downsized or down-speeded all require high-quality fuels with high octane ratings. Meeting
Euro standards with respect to the concentration of harmful components such as benzenes
and achieving higher octane ratings at the same time requires substantial upgrading of

The Petroleum Institute of Thailand (PTIT) has compiled the pros and cons of harmonised
fuel quality standards in the ASEAN region (Table 14). While advantages are evident, the

The study Cleaning Up the On-Road Diesel Fleet (CCAC 2016) details the investment needs

and ensuring increased hydrogen supply in order to reduce sulphur levels to 50ppm would
require investment of around USD 4,000 per barrel per day of additional low sulphur diesel

diesel production, investment amounts to about USD 200 million. The study published by
CCAC estimates the total investment needs to produce 50ppm sulphur diesel in South-East
Asia amount to USD 13 billion.

Case study

ambitious fuel quality standards as well as to increase its independence from fuel imports.

85
According to the study, from 2009 gasoline and diesel fuels domestically produced at the

limit of 500ppm. By 2016, fuels need to comply with Euro IV, with sulphur content limited to
50ppm. Since 2018, domestically produced gasoline and diesel need to comply with Euro
V, which requires sulphur levels to be below 10ppm. This development goes hand-in-hand
with the requirement for new vehicles in the country to meet Euro IV by 2017 and Euro V
by 2022.

been upgraded to produce Euro V fuels by 2016, and construction has started on several

pushed to 2021. Altogether, according to the original plan, between 57 and 70 million tons of
crude oil can be processed to Euro IV and V fuels when the initiative is complete, although
the original timeline to complete construction by 2018 faces delays. In total, upgrading the
billion
to USD 44 billion.

If the projects come online as planned, Viet Nam will become a high-quality fuel producer. Its
success in this will depend in part on its ability to increase both fuel quality and production
capacity at the same time. The ability to attract foreign capital also partly relies on the fact
that a market for these fuels is guaranteed through the introduction of the respective Euro
standards for cars as well as the regulation of the fuel market. By managing to obtain interest

contracts for longer term supply with own crude oil, the avenue towards the production of
clean fuels ahead of time seems to be paved.

According to CCAC some key take-aways can be formulated:

National government takes the lead in setting an ambitious fuel quality standard,
starting with major cities. This builds demand for low-sulphur fuels, sends a clear
signal to producers.

Funding for upgrades is often a combination of both public and private funds, made

and yields.
(CCAC 2016)

5.6 Methodological considerations

5.6.1 Options for determining the level of ASEAN’s aspirational LDV fuel consumption
goal

goal. In brief, the options were:

86
 1) Based on 2030 GFEI target
2) Based on arithmetic mean of existing LDV fuel economy improvement rates
3) Based on arithmetic mean of existing 2020 LDV fuel consumption targets
4) Based on a 40% fuel consumption reduction target by 2030
5) Based on a doubling of historical LDV fuel economy improvement rates

In addition, the EGSLT members had the possibility of proposing further alternative options
but none did so. The Expert Group decided in favour of option 5. Further elaboration of
each proposed option can be found below:

Option 1: Based on the 2030 new-vehicle fuel economy target by GFEI

Option 1 is based on the target set by the Global Fuel Economy Initiative (GFEI) to double
LDV fuel economy of all vehicles in the stock by 2050 by reducing fuel consumption by 50%
from 8.3 LGe/100km in 2005 to 4.2 LGe/100km by 2050 (GFEI 2017). To reach this target,
fuel consumption of all new LDVs needs to reach 4.2 LGe/100km 20 years earlier, by 2030.
This value is used to set the fuel economy target in Option 1.

Based on the estimated ASEAN-wide new LDV fuel consumption of 7.3 LGe/100km for the
year 2015, an LDV fuel consumption target of 4.2 LGe/100km by 2030 implies an annual
LDV fuel economy improvement rate of 3.7%. This would mean a 2025 fuel consumption
target of 5.0 LGe/100km for the ASEAN region.

Such a 2025 target is above the arithmetic mean of all existing LDV fuel consumption
targets for that year (~4.5 LGe/100km) in countries with regulation covering both PCs and
LCVs. The implied annual fuel economy improvement rate of 3.7% is a little below the
arithmetic mean for other regions.

Please note that for this exercise, linear extrapolations based on the annual improvement
rates have been used to estimate fuel consumption targets beyond the time frames set
in the respective regulation of the country or region (values in red). This methodology is
valid for smaller differences with regard to the time frame (e.g. the EU 2021 target vs. an
estimated 2025 target based on the 2014 to 2021 improvement rate), but provides only a
rough estimate for time frames that stretch further beyond that of the regulations (e.g. in the
case of Mexico and Brazil where the actual target years are 2016 and 2017, respectively).

Option 2: Based on the average LDV fuel economy improvement rate indicated by
existing LDV fuel economy regulation around the world

Option 2 is based on the average annual fuel economy improvement rate of 4.1%, which
is derived from existing LDV fuel economy regulations in other regions of the world. This
improvement rate is then applied to the estimated ASEAN-wide base year fuel economy of
7.3 LGe/100km (2015). The calculation results in an ASEAN-wide LDV fuel consumption
target of 4.8 LGe/100km for the year 2025.

87
Option 2 implies a total reduction of LDV fuel consumption of 34% between 2015 and
2025. By 2025, the ASEAN target of 4.8 LGe/100km would still be somewhat above the
arithmetic mean of the existing LDV fuel consumption targets (4.5 LGe/100km). By 2030,
the extrapolation of the ASEAN fuel consumption target (3.9 LGe/100km) would be below
the target proposed by the GFEI (4.2LGe/100km).

Option 3: Based on the average of all LDV fuel consumption targets for the year 2020
around the world

Option 3 is based on the arithmetic mean of all existing absolute fuel consumption targets
for LDVs around the world for the year 2020. Thus, the average fuel consumption of
5.6 LGe/100km is set as the target value for that year. In addition, the resulting fuel economy
improvement rate of 5.2% per year from 2015 to 2020 (again based on the ASEAN-wide
2015 baseline fuel consumption of 7.3 LGe/100km) is used to determine the 2025 target,
which then accounts for 4.3 LGe/100km.

The 2025 LDV fuel consumption target of 4.3 LGe/100km represents a 42% reduction
compared to the year 2015 in the ASEAN region. By 2025, fuel consumption of new LDVs in
the ASEAN region would be somewhat below the arithmetic mean of existing fuel economy
regulation (4.5 LGe/100km). The annual average fuel economy improvement rate of 5.2%
would be above the global average of 4.1% for all LDVs and 4.2% for PCs only. If linearly
extrapolated out to 2030, the ASEAN-wide fuel consumption target would be 3.3 LGe/100km,
indicating that in this case, the annual fuel economy improvement rate would need to be
lowered after the year 2025.

Option 4: 40% reduction of LDV fuel consumption by 2025 compared to 2015

Option 4 suggests setting a 40% LDV fuel consumption reduction target by 2025 compared
to the 2015 baseline fuel consumption of 7.3 LGe/100km in the ASEAN region. In this
case, average new LDV fuel consumption would drop to 4.4 LGe/100km by 2025, which is
about equal to the arithmetic mean of existing new LDV fuel consumption targets by that
time (4.5 LGe/100km). Annual fuel economy improvement rate would reach 4.9%. With no
further adjustment to the post-2025 LDV fuel economy improvement rate, new LDV fuel
consumption would reach 3.4 LGe/100km by 2030.

Option 5: Based on doubling the historical global fuel economy improvement rate
between 2005 and 2015

Between 2005 and 2015, the global average fuel economy improvement rate accounted for
1.5% per year (GFEI 2017).

Option 5 is based on doubling the historical fuel economy improvement rate to 3.0% and
applying it to the ASEAN new LDV baseline fuel consumption of 7.3LGe/100km in 2015.
This results in a 2025 ASEAN new LDV fuel consumption target of 5.4 LGe/100km for the
year 2025.

88
compared to regions with LDV fuel economy regulation already in place (5.4LGe/100km vs.
4.5 LGe/100km, respectively). The 2025 fuel consumption target of the ASEAN will then be
just 0.1 LGe/100km lower than the EU baseline LDV fuel consumption for the year 2015.

Table 15

Source: IccT 2015c, own defInITIon

89
5.6.3 Examples of light-duty vehicles
Table 16: Examples of light-duty vehicles

90
5.6.4 Conversion factors
Table 17
of gasoline

Fuel Base unit Multiplicator Target unit

Gasoline 1.00
Diesel 1.08
L/100km Lge/100km
CNG (retrofit adjustment) 1.12
LPG (retrofit adjustment) 1.15

Table 18

Fuel Base unit Multiplicator Target unit

Gasoline 23.2
Diesel 24.8
Lge/100km gCO2/km
CNG 18.8
LPG 21.1

5.6.5 Fuel economy versus fuel consumption

Both measures are widely used around the world. Nonetheless, the use of fuel consumption
(L/100km) instead of fuel economy (km/L) is preferable from a regulatory point of view.

In the end, we are interested in quantifying the fuel savings while performing the same
transport demand, i.e. travelling the same distance. The good thing with fuel consumption
is that the incremental fuel savings to perform a certain transport demand stay the same

of 15 L/100km and 14 L/100km versus the difference between 6 L/100km and 5 L/100km
stays the same: Fuel savings account for 1 L when travelling a distance of 100km no matter
if one compares vehicles with high or low fuel consumption.

In the case of fuel economy (measured in km/L), the difference in fuel consumption between a
car running 10 km/L and a car running 11 km/L (10.0 L/100km vs 9.1 L/100km, respectively)
equals 0.9 L/100km. The same difference between a car running 20 km/L and a car running
21 km/L (5.0 L/100km versus 4.8 L/100km) shrinks to fuel savings of only 0.2 L/100km.

example, reduced vehicle registration tax (i.e. -USD 500 per 1 km/L increased fuel economy),
then the net value of saving 0.9 L/100km at low fuel economy levels would equal the same
USD 500 as saving only 0.2 L/100km at higher fuel economy levels. Such a system would
be likely to fail over time, since the same incentive would be paid for increasingly slim gains

Energy use by vehicles can also expressed in terms of CO2 emitted. CO2 emissions can

CO2
climate change policy, and therefore some jurisdictions choose to use gCO2/km as the

91
unit of regulation. However, there are advantages in targeting fuel consumption instead.
The concept is closer to consumers and more closely related to costs of vehicle operation.
Furthermore, using energy consumption as a comparative measure can help compare the

are fuelled with gasoline, diesel, biofuels or electricity. Finally, measures to regulate fuel

such as vehicle labelling.

5.7 Widening the scope beyond LDV fuel economy

Improving the fuel economy of conventional LDVs is an imperative step on the way to reduce
energy use and emissions in line with mitigating climate change to a maximum temperature
increase of 2 degrees Celsius above preindustrial levels by the end of this century. However,

the emissions from the transportation sector as a whole, including non-road modes such as
air, rail and shipping, need to be cut substantially in the future, compared to a business-as-
usual scenario. Therefore, the strategy of avoid-shift-improve (ASI) has been promoted by
numerous stakeholders in the global transport and energy scene. Its main components are
outlined in Figure 39.

Avoid Shift Improve

Improve the energy
Shift travel to more efficient
Avoid the need to travel efficiency of the
modes
transportation technologies
Integration of land use Shift of individual motorized Improve the fuel efficiency
planning and transport passenger transport to of conventional technology
Application of smart public transport Switch to new vehicle
logistics Shift of motorized transport technology
Use of telecommunication to non-motorized transport Shift to alternative and low
technologies Shift of freight transport to carbon fuels
high efficiency/high load
factor modes
Use of intelligent transport
demand management

Figure : Overview of the avoid-shift-improve strategy to reduce energy use and

emissions in the transport sector

wheelers.

5.7.1 Heavy-duty vehicle fuel economy

As of 2015, medium freight trucks (MFT, 3.5t < GVW < ~15t) and heavy freight trucks (HFT,
GVW > ~15t) accounted for almost one quarter of total GHG emissions from transport, in spite

92
of the relatively low number of these vehicles compared to passenger cars. Furthermore,
less than half of the global MFT and HFT market has been regulated with respect to fuel
economy (Figure 41). Tractor-trailer combinations and rigid trucks are responsible for the
largest part of the medium and heavy-duty vehicle stock and energy use. It is thus evident

emissions and fuel costs.

Figure : Annual GHG emissions and fuel consumption from tractor-trailers and rigid trucks worldwide by

Source: GFEI 2016b

Technology Potential of Heavy-Duty Trucks in Major Markets Around the World (GFEI

and heavy freight trucks has the potential to almost stabilise energy use and emissions at
year-2015 levels on a global scale by the year 2035 (Figure 40).

Nonetheless, compared to LDV fuel economy policy making, it is more complicated

to develop effective fuel economy measures for heavy road freight transport. The most

economy. Conditions vary from long haul at relatively constant speeds on highways, to
urban delivery with large portions of stop-and-go, to use of trucks at construction sites and

2
it requires the laboratory testing of a large number of vehicles or the use of programmes
combining laboratory test results and computer simulation software.

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Figure 40
over the world heavy duty vehicle cycle (WHVC) at empty, half, and full load
Source: GFEI 2016b

The impact of loading on truck fuel consumption is shown in Figure 42. The consumption
increase from an empty to a fully loaded tractor-trailer combination is about 80% to 90% in

drops with load: A fully loaded truck consumes about a third less the fuel per kg payload
compared to a half-loaded truck. This comparison clearly shows not only the importance

heavy-duty road freight sector.

Table : Tractor-trailer baseline fuel consumption for various world markets

Baseline fuel Baseline fuel

Payload consumption consumption
Driving Cycle (kg) (L/100km) (Lge/100km)
Brazil WHCV 19,500 39.8 43.0
China WHCV-China 25,000 41.6 44.9
Europe VECTO Long-Haul 19,300 33.6 36.3
India WHCV-India 27,230 54.8 59.2
United States US Phase 2 Cycles 17,237 40.4 43.6

Source: GFEI 2016b

simulation are shown for Brazil, China, Europe, India and the United States in Table 19.
These results indicate large variations among regions: While new tractor-trailers in Europe
consume on average about 36 LGe/100km, trucks of the same category consume more than
59 LGe/100km in India. Truck fuel consumption in Brazil, China and the US is about 30%
higher than in Europe. In the cases of India and China, the much higher fuel consumption

on technology differences.

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Although no heavy-duty vehicle fuel economy regulation is yet implemented in Europe, high
fuel prices have clearly incentivised manufacturers and hauling companies to opt for better
technology. Since fuel costs constitute a major part of hauling costs, high fuel prices have a
strong impact on the economics of hauling companies.

Policy support

and haulers to buy them, would be to completely cut fuel subsidies where still applied.
Furthermore, fuel taxes on diesel would need to be increased to a level where fuel
costs become a decisive factor in consumer decisions. This is generally when additional

of small hauling companies (IEA 2017a). Nonetheless, the lack of capital to renew truck

could be addressed by offering cheap and targeted credits to small hauling companies.

The introduction of fuel-consumption or CO2-emission standards for rigid trucks and tractor-
trailer combinations is another strong measure to be considered in the ASEAN region.
Prominent examples are the standards for tractor-trailer combinations in the US and the
Chinese HDV standard covering tractor-trailers, straight trucks, dump trucks, coaches and
city buses (ICCT 2015e). While the US standard is a corporate average standard based
on engine testing and vehicle modelling, forming two separate parts during the approval
procedure, the Chinese standard is a pass-fail system. All vehicles need to comply with a
dedicated benchmark and cannot be approved for sale in the Chinese market in cases of
non-compliance (ICCT 2015e).

Last but not least, consumer information and driver trainings are both important parts of
effective HDV fuel economy improvement. So far, in the ASEAN region truck manufacturers
are not obliged to disclose any fuel consumption or CO2 emission data. Starting to introduce

providing better information to the consumers. Furthermore, training drivers to drive in a

driving licence. This is especially true as a large share of trucks used and sold in AMS still
have manual transmission.

5.7.2 Electric vehicles and shared mobility

According to IEA’s 2017 Global Electric Vehicle Outlook (EVI 2017), new EV registrations hit
a sales record in 2016, accounting for more than 750,000 vehicles sold worldwide. With the
global passenger car sales accounting for almost 70 million vehicles in the same year, the
share of electric cars increased to a little more than 1%. China, by far the largest EV market,
accounted for almost 40% of global EV sales.

By 2016 the global EV vehicle stock had reached about 2 million cars (Figure 43), with
China and the US home to more than half of the global EV stock. So far, battery electric
vehicles make up more than two-thirds of the global EV stock. The remaining third are plug-
in hybrids which can both be plugged-in to charge a battery as well as use an on-board,
petrol-fuelled engine to power the vehicle, which are mainly sold in Europe, Japan and the
US.

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Figure 41: Global electric vehicle stock by country
Source: IEA 2017
Note: The electric car stock shown here is primarily estimated on the basis of cumulative sales since 2005. When

with expected trends in sales.

Although electric vehicle sales are strong, they still are mainly driven by policy support.
According to IEA analysis (IEA 2017), ownership costs of BEVs and PHEVs were still

(including the engine, transmission and energy storage) and fuel costs for conventional cars
(ICE), battery electric vehicles (BEV) and plug-in hybrids (PHEV) for the US, China, Japan
and Europe for the years 2015 and 2030. Fuel costs comprise cumulative costs for gasoline
and/or electricity (including taxes) over a period of 3.5 years, as well as potential individual
infrastructure costs for home charging, which are not covered in the fuel costs.

Figure 42: Powertrain and fuel costs for conventional cars, battery electric vehicles and plug-in hybrids for the

Source: IEA 2017

The analysis shows that in 2015, BEVs are on average USD 3,000 to USD 6,000 more
expensive than conventional vehicles based on total cost of ownership over a time of 3.5
years. By 2030, BEVs and PHEVs are fully competitive in Europe, mainly due to high fuel
prices and smaller average vehicle size. In the rest of the world, the costs gap is also

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The IEA investigated an additional case in which annual kilometres driven are tripled in order
to represent the driving patterns of taxis and shared cars. In this case, BEVs and PHEVs
become competitive with conventional cars in all regions by 2030. This analysis underlines

can be of special interest in the context of densely populated urban areas in the ASEAN

an increased use of car sharing, can reduce energy use, emissions and costs dramatically.

congestion.

Policy support
Fuel economy policies need to be set up to incentivise the sales of electric vehicles right
from the beginning: As lined out in earlier sections, fuel-economy or CO2-emission taxation
schemes are favourable for electric vehicles, but can be improved by exempting the
registration of electric cars from taxation until the market volume has reached a certain
level (EVs are exempted from registration taxes in China, Denmark, Germany, India (partly),
Netherlands, Norway, Sweden and United Kingdom).

vehicles are eligible for substantial rebates in the order of several thousand USD (e.g.
feebate schemes in Singapore, France).

Average corporate fuel consumption or CO2 emission standards can be set up in a way that
EVs are weighted several times their actual sales numbers through the use of multipliers
(super credits) or through counting the electricity consumption as zero fuel consumption in
order to incentivise manufacturers to bring EVs on the market (e.g. EU LDV CO2 emission
standards, US CAFE). Jurisdictions such as China and California have brought Zero-
Emission Vehicle standards into place that require automotive companies to produce or

that electric vehicles are not necessarily zero emission, but emissions occur at the source
of electricity, rather than at the vehicle.

Apart from monetary incentives, soft measures such as preferential access to otherwise
restricted zones (e.g. low-emission zones), priority parking, road toll exemptions, the right
to use bus lanes etc. provide incentives to buy electric vehicles especially in urban areas.

As of 2018, direct subsidies (e.g. as part of a feebate scheme) or substantial tax exemptions
(especially in countries with high vehicle registration taxes) at the time of purchasing an
EV have the strongest impact on EV sales: Norway, the Netherlands and Sweden have
EV sales share in the order of 3.4% (Sweden) to 6.4% (Norway) while providing monetary
incentives in the range of USD 5,000 to USD 15,000 to EV buyers.

5.7.3 Two-wheelers
In ASEAN, two-wheelers are a major mode of transport. In fact, ASEAN has the highest
number of two-wheelers per capita in the region. In 2015, almost 10 million motorised two-
wheelers were newly registered in the ASEAN region, accounting for almost 20% of global
motorcycle sales. Sales of motorcycles peaked in 2011 and have decreased by 15% since

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then to 2015., . Around 94% of new motorcycles registered in the bloc have a displacement
of 50 ccm to 350 ccm (IMMA 2015).

Prospects to fully electrify motorcycles and scooters with moderate engine displacement are
high, and already today electric scooters are available at competitive costs, mainly on the
Chinese market. In 2016, about 26 million electric two-wheelers were sold in China, with an
on-road vehicle population of over 100 million (IEA 2017 EV). This roadmap calculates that
increasing shares of electric two-wheelers together with strategies to decarbonise power
generation can save more than 1 million tonnes of CO2 by year 2030 in ASEAN, and more
than 300 million tonnes of CO2 by 2050, if by then two-wheelers are more than 80% electric
and the carbon footprint of power generation is reduced by 70% compared to 2012 levels.

This roadmap therefore suggests providing strong incentives, such as registration tax
reductions or tax holidays for manufacturers of two-wheelers.

Figure : Motorcycle Sales and Production in ASEAN and the World

Source: AAF 2017, Marklines 2017

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Footnotes

2 Homologation is the process of certifying vehicles or vehicle components to make sure they comply with national or
regional environmental and security regulation. New car models need to be homologated to receive the permit for sale in
a certain country or region.

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