Regulatory Factors in Europe, the US, and China – PART 1

There are a variety of regulatory factors in place in Europe, the US, and China to reduce pollution from passenger cars and light commercial vehicles. Although there are nine countries/regions that have emission regulations in place – Brazil, Canada, China, the European Union, India, Japan, South Korea, Mexico, and the United States, in this blog, we will explore vehicle emission standards and how they have evolved for the three largest vehicle fleet countries.

Contrasting emission standards is not easy because countries have adopted different approaches and have also set standards in different ways. Let’s explore these by country one by one:

  • The United States: Vehicle fuel economy has been regulated in the US through the US Environmental Protection Agency (EPA) and the National Highway Traffic and Safety Administration (NHTSA) since the mid-1970s and is commonly referred to as the CAFE (Corporate Average Fuel Economy) Standards. CAFE Standards set fuel economy standards for the US and are expressed in terms of miles per gallon (mpg) and have been remarkably flat at 27.5 mpg for about 30 years. Only the state of California set CO2 standards, which it started in 2009. While the CAFE Standards have not evolved over the years, vehicles have become more fuel efficient from about 28.5 mpg to about 36 mpg today. Technology is largely credited for improved fuel efficiency and not regulation in the US.
  • The European Union: A single unified emissions standard in the European Union, only came into effect in 1995 and is regulated by the European Commission. From initially voluntary CO2 tailpipe emission reduction agreements with the European Car Manufacturing Association (ACEA), the European Commission has since 2009 moved to a mandatory fleet-average CO2 emissions target of 130gCO2/km by 2015 and 95 gCO2/km by 2020 (see figure below) Currently, average CO2 emissions stand at about 125gCO2/km or about 5l/100km or about 47 mpg (or 11 mpg better than the average US vehicle).

EU fuel consumption

  • China: Since 2004, China has implemented a phased approach to fuel consumption standards (not emission standards like in the EU) regulated by the China Automotive Technology and Research Center (CATARC). Phase IV fuel consumption vehicle consumption standards are currently under development with the objective to have an average fleet consumption by 2020 of 5l/100 km or about 47 mpg (the current EU level).

Emission/consumption standards are not the only way to reduce CO2 emissions of vehicles, but the European and Chinese examples illustrate that they can effective tools to reduce CO2 emissions. Approaches differ widely with both the US and China setting consumption targets, while the EU focuses on CO2 targets.

In the next post we will explore other regulatory factors, such as taxation of cars, congestion charges, and fuel prices in Europe, the US, and China and how they developed over the years.