Global Fuel Economy Initiative: Chile Case Studyccap.org/assets/Lopez-Global-Fuel-Economy... · Capacities in Chile • Strong institutions for enforcement of vehicle standards, •

Chile Case Study Global Fuel Economy Initiative

Gianni López Centro Mario Molina Chile

Global Fuel Economy Initiative: Chile

Case Study

Centro Mario Molina Chile

Global vehicle fleet


IEA





• Is a private institution created under the sponsorship of Nobel Prize Professor Mario Molina;

• His mission is to create capacities in South America to address the problem of air quality and climate change;

• Is a R&D Center under CORFO Law for the promotion of private investments in R&D;

• Is dedicated to research and studies in air pollution and energy in South America;

• Rise funds from private companies, governments and international institutions;


• Works in close relation with universities and research centers in USA, Norway, Sweden and Demark.

• Has agreements with UNEP to implement Global Regional Programs inLatin American Region:

• Partnership for Clean Fuels&Vehicles

• Global Fuel Economy Initiative

• Cimate and Clean Air Coalition


Chile:

- 16 millions inhabitants,

- 80% living in cities,

- Santiago most populated (6 millions)

- 3,6 millions of vehicles

- 320.000 vehicles sales per year (2012)

- 17.000 US$ average annual income


Vehicle fleet growth impact in Chile

• Energy risk increase (100% petroleum imported),

• Air pollution problems in Santiago and others big cities,

• Transports is responsible of 30% of national emissions of CO2.



0

500000

1000000

1500000

2000000

2500000

2008 2009 2010 2011 2012 2013 2014

Light and Medium Duty Vehicles Fleet in Santiago Metropolitan Region

World oil prices in three cases, 1990-2035

(2009 dollars per barrel) U.S. Energy Information Administration

+ Price

- Price

- D

eman

d

+ D

eman

d

Possible future sceneries for gasoline in Chile

High demand + high prices: - High probability -Strong impact in national economy - Political pressure for long term subsidies

Less demand + high prices: - Low probability in BAU situation

Less demand + Low prices: - Low probability

High demand + low prices: - Medium/Low probability - Strong increment of CO2 emission - Impact in local air quality

Short time subsidies/fuel tax discount

Better vehicle technology


164 163 157

168

158

175

142

191

178 174

-

50

100

150

200

250

1200 1300 1400 1500 1600 1700 1800 1900 2000 2100

Corporative CO2 Average 2012 – Top players chilean car market

Chevrolet

Hyundai

Toyota

Kia

Nissan

Suzuki

Chery

Mazda

Ford

Peugeot

Norma EU 2015

Norma EU 2021

[gr CO2/km]

GVW [kgs]



0

2000

4000

6000

8000

10000

12000

2008 2009 2010 2011 2012 2013 2014

Nuevos

Comercial Diesel Euro III y IV

Comercial Diesel Euro I y II

Comercial Gasolina

Liviano Diésel - Euro III/IV 2005 - 2007

Liviano Gasolina Euro III 2005 - 2007

Taxis

Liviano Gasolina - Euro I/II

Liviano Gasolina - sin catalizador

NOx Emissions from light and medium duty vehicles in Santiago Metropolitan Region

NOx annual emissions [ton]

First GFEI case study: Chile

• Started in 2010

• Focus on:

– Fuel Economy (FE) and emission baseline of vehicle market,

– FE labelling,

– FE and low emission vehicle policy proposal

• Expanding now to Peru, Uruguay and Paraguay


Capacities in Chile

• Strong institutions for enforcement of vehicle standards,

• importation of second hand cars is banned,

• Good fuel quality,

• Mature system for type approval and conformity of production of vehicle market,

• Vehicle model emissions and FE data available,

• Sales data available.


CO2/ FE Car Market Follow Up Official

report presented on September 2010

in a conference with Transport Vice

Minister and John German from ICCT


First Step: Characterization of Vehicle market

M1

N1 C I

N1 C II

N1 C III

N2

Light duty Commercial


80% 75% 73% 72% 69% 70%

20% 25% 27% 28% 31% 30%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2005 2006 2007 2008 2009 Oct/10

Comerciales

Livianos

240% sales increase in 5 years

Market average NOx emission comparison


23 times


Comments

• Vehicle market presents segments with different emissions,

• Light duty trucks and SUVs vehicles are taking more market share,

• Light duty trucks and SUVs diesel vehicles have high emissions of NOx and PM,

• Fuel consumption and CO2 emissions are high in comparison with international information.


Second Step: Fuel Economy Labeling

• Different format depending on nationals negotiations with car manufactures:

– Only absolute information, without references to the rest of the market,

– Running cost included

– Relative, considering comparison with other car model.

• Different link with incentives policies:

– In some cases labeling information used for tax o feebate systems.


Labeling in Europe at 2010

ICCT

Labeling in Europe at 2010

ICCT

FE Labeling in Chile

• Agreement between Ministries of Transport, Environment and Energy with Association of car manufactures/importers on December of 2010,


FE Labeling in Chile

• Voluntary until January 2012, then mandatory.

• Based on NEDC information from emission type approval process.

• Official decree of Transport Ministry says that any vehicle in a car dealer show room must exhibit the label.

• Applies for light duty vehicles.

• It´s the only one mandatory labeling system in LAC.



• Labeling is not enough;

• For example, a study of ADAC in Europe shows that running cost are important (more than environmental performance), but less than:

– Reliability of the car, comfort, vehicle type and price.

• It´s important to link labeling with FE incentives policies.


Third Step: Proposal of a First Fuel Economy Policy for Chilean Vehicle Market

New consumer discounting is fixable

• CO2 or fuel consumption standards

• Feebates: Pay manufactures and consumers up front for value of the fuel savings compare to benchmark, punishing vehicles with low energy efficiency.

• CO2 Tax: half feebate system, that punish vehicles with low energy efficiency.

Centro Mario Molina Chile Took from John German, ICCT

Feebate system


Fe

e

CO2 emission

Vehicle receive rebate Vehicle subject to fee

Pivot point or

benchmark

Fee = Slope x (Vehicle CO2 – Benchmark CO2)

Slope define marginal

cost and benefits

Mandatory date

Impact of Bonus/malus systems in vehicle market

Feebate proposal for Chile

The proposal is based on French Bonus/malus system, but including CO2 and local pollutants.

The objective is to promote more clean and efficient vehicles to reduce air pollution problems in big cities and to reduce national energy risk.


General Design


- Rebate for vehicles that meet low emissions standards; - Fee for vehicle that meet less restrictive emissions standards.

-Rebate for vehicles with high fuel economy, based on FE labeling; -Fee for less efficient vehicles, based on FE Labeling.

Price correction due to Air Pollution

Vehicle price Environmental

and energy correction

Price correction due to Energy Risk

Price correction due to Air Pollution

Chile market share for feebate class

For EURO vehicles


NOx Categoría Tipo NormaIncentivo

US$Desincentivo US$

Cero emisión 6 1000 0

M1 Gasolina EURO V / VI

M1 Diesel EURO VI

N1 Diesel Class I EURO VI

N1 Gasolina Class I EURO V / VI

N1 Gasolina Class II EURO V / VI

N1 Gasolina Class III EURO V / VI

N2 Gasolina EURO V / VI

M1 Gasolina EURO IV

M1 Diesel EURO V

N1 Gasolina Class I EURO IV

N1 Gasolina Class II EURO IV

N1 Gasolina Class III EURO IV

N1 Diesel Class I EURO V

N1 Diesel Class II EURO VI

N1 Diesel Class III EURO VI

N2 Gasolina EURO IV

N2 Diesel EURO VI

M1 Gasolina EURO III

M1 Diesel EURO IV

N1 Gasolina Class I EURO III

N1 Gasolina Class II EURO III

N1 Diesel Class I EURO IV

N1 Diesel Class II EURO V

N1 Diesel Class III EURO V

N2 Diesel EURO V

M1 Diesel EURO III

N1 Gasolina Class III EURO III

N1 Diesel Class I EURO III

N1 Diesel Class II EURO IV

N1 Diesel Class III EURO IV

N1 Diesel Class II EURO III

N1 Diesel Class III EURO III 0,5 ˂NOx ≤ 0,8

500 0

0 0

0 500

1

0 1000

Nox ≤ 0,1

0,1 ˂NOx ≤ 0,2

0,2 ˂NOx ≤ 0,3

0,3 ˂NOx ≤ 0,5

0 1500

5

4

3

2

Price correction due to Energy Risk


Footprint

Environmental and

energy price

correction for car

model i [Chilean $]

grs CO2/km


For a vehicle with a footprint equal to market average

Price correction due to Energy Risk [Chilean $]

1 US$= 500 Chilean $

Methodology for economic evaluation


2010 model database Possible improvements

In FE

Price corrections for year i

Vehicle demand per year i

Fiscal balance per year i

System adjustments

Escenario 2010


Segmento Norma Grs CO2/km Corrección de

precio

Sedanes 5 a 7 millones de $

Rio JB 1,4 DOHC Sedan 4P. T/M Motor Otto EUROIV 181 $ 142,896

Accent MC 1,4 DOHC Sedan 4P. T/M Motor Otto EUROIV 178 $ 102,687

Aveo LT NB AC 1,4 DOHC Sedan 4P. T/M Motor Otto EUROIV 197 $ 334,371

Yaris 1,5 DOHC Sedan 4P. T/M Motor Otto EUROIV 154 $ -190,420

Accent MC 1,6 DOHC Sedan 4P. T/M Motor Otto Tier 2 Bin5 178 $ -123,970

Station 10 a 20 millones de $

Explorer II XLT 4,0 SOHC V6 Station Wagon 5P. 4x4 T/A Motor Otto EUROV 375 $ 1,652,055

Captiva LT SU 2,0 SOHC Station Wagon 5P. AWD T/A Motor Diesel EUROV 225 $ 116,257

CX-9 3,7 DOHC Wagon 5P. 4x4 T/A Motor Otto EURO IV 437 $ 2,163,758

Impreza 2,0 R DOHC Wagon 5P. AWD T/A Motor Otto EUROV 194 $ -66,518

Pick up 7 a 10 millones

Terrano D22 2,5 Look 4x4 Turbo DOHC Cabina Doble 4P. T/M Motor Diesel EUROIV 215 $ 583,379

L200 Dakar CRS 2.5 CRDI 16v DOHC Pick Up D/C 4P. 4x4 T/M Motor Diesel EUROIV 244 $ 844,106

Actyon Sport 2,0 DOHC Pick Up 4P. 4x4 T/M Motor Diesel EUROV 199 $ 18,100

S-10 2.4 Lts., OHC 2WD Pick Up Doble Cabina 4P. T/M, Motor Otto EUROV 381 $ 2,129,682

Terrano D22 2,5 Turbo DOHC Cabina Doble Pick Up 4P. 4x2 T/M Motor Diesel EUROIV 181 $ 207,321

Price corrections at fifth year


Precio [MM$] station

Correccion

Precio

% del va lor

vehículo

-$ 134.262 -4%

Correccion

Precio

% del va lor

vehículo

Correccion

Precio

% del va lor

vehículo

-$ 235.090 -4% -$ 235.967 -4%

Correccion

Precio

% del va lor

vehículo

Correccion

Precio

% del va lor

vehículo

Correccion

Precio

% del va lor

vehículo

Correccion

Precio

% del va lor

vehículo

-$ 312.219 -4% -$ 479.456 -6% -$ 64.376 -1% $ 254.067 3%

Correccion

Precio

% del va lor

vehículo

Correccion

Precio

% del va lor

vehículo

Correccion

Precio

% del va lor

vehículo

Correccion

Precio

% del va lor

vehículo

-$ 434.537 -4% -$ 422.705 -4% $ 340.360 3% $ 55.877 0%

Correccion

Precio

% del va lor

vehículo

Correccion

Precio

% del va lor

vehículo

-$ 321.625 -1% $ 306.324 1%

Sedán hatchback Pick up

3 a 5

5 a 7

7 a 10

10 a 20

20 +

Who pays / who wins


Market segments that receive rebates

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2010 2011 2012 2013 2014

Pick Up 10 a 20 MM$

Pick Up 7 a 10 MM$

Station W 10 a 20 MM$


Hatchback 10 a 20 MM$


Hatchback 5 a 7 MM$

Hatchback 3 a 5 MM$

Sedán ≥ 20 MM$

Sedán 10 a 20 MM$

Sedán 7 a 10 MM$

Sedán 5 a 7 MM$ 0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2010 2011 2012 2013 2014

Pick Up 10 a 20 MM$

Pick Up 7 a 10 MM$

Station W ≥ 20 MM$





Hatchback 5 a 7 MM$

Hatchback 3 a 5 MM$

Sedán ≥ 20 MM$

Market segments that pay fees

Fiscal Balance [US$]


Incomes

Expenses

Designed to be neutral in five years

Impact on total car sales


BAU

With feebate

Benefits


Benefits

• US$ 200 millions annual saves in less petroleum importation at fifth year ,

• 833.000 CO2 tons in annual emission reductions at fifth year,

• At same date, the owner of a medium size sedan/hatchback saves 260 US$ per year due to less consumption of gasoline.


Official Consequence : First Tax for emission and fuel consumption tax Chilean vehicle market

• On last September, the Chilean Congress approved the most important tax reform in the last 30 years, including environmental tax for the first time.

• Tax for LDV [UTM] = [Tax for fuel consumption + Tax for NOx emission] x Vehicle Price factor

Where:

Tax for fuel consumption= 35/fuel economy in urban phase of NEDC [km/lt]

Tax for NOx emission= 120 x NOx emission in NEDC [gr/km]

Vehicle Price Factor= Vehicle price [Chilean $] x 0,00000006

1 UTM = 84 [US$]



-

500

1,000

1,500

2,000

2,500

3,000

Ch

evro

let Sail 1,4

Ch

evro

let Son

ic 1,6

Ch

evro

let Spark 1,0

Ch

evro

let Spark 1,2

Hyu

nd

ai Accen

t 1,4

Jac J3 1,3

Kia R

io 1

,4

Mah

ind

ra 2,2

Die

sel

Mitsu

bish

i L200

2,5 Diesel

Nissan

Terrano

2,5

Diesel

Peu

geo

t 2008

1,2

Peu

geo

t 2008

1,6 Diesel

Peu

geo

t 308 1

,6 D

iesel

R. Sam

sun

g SM3 1

,6

Suzu

ki Alto

1,0

Suzu

ki Ce

lerio 1

,0

Suzu

ki Gran

d N

om

ade 2,4

Toyo

ta Co

rolla 1

,6

Toyo

ta Hilu

x 2,5 D

iese

l

Fuel Consumption and NOx Emission Tax [US$] (non oficial calculation)

Fuel Consumption Tax [US$] NOx Emission tax [US$]


y = -23196x + 338628 R² = 0.6642

-50,000

-

50,000

100,000

150,000

200,000

0 2 4 6 8 10 12 14 16

Fuel Consumption Tax (Chilean Pesos)

Impuesto Consumo

Linear (Impuesto Consumo)

Fuel Economy [km/lt]

Tax Impact

• The tax weight heavily the NOx emission, affecting the diesel vehicles dramatically in comparison with gasoline vehicles.

• The heavy taxation for diesel corresponds to the less restringing NOx limits for diesel vehicles inside the Euro standards in relation with gasoline (Chile now is Euro 5).

• Tax for fuel consumption and Labeling are promoting a strong attention on fuel economy. A national fuel economy standard will be in discussion during next year.



Lessons learned

• All success in the steps to a national policy on fuel economy is based on the existing institutional capacities for the control of emission standards for vehicle market;

• Car manufactures and dealers are the most critical barriel for the introduction of advanced and efficient policies. The position of the big manufactures in developed countries are not reflected on developing countries market.


Next steps and NAMAs options

• Fuel Economy standard for LDV and MDV;

• Incentives for the turn over of specific fleets (taxis)


• Existen 100.926 taxis básicos y colectivos en el país.

• Los modelos presentes en la flota son de tecnología antigua.

• La oferta de vehículos nuevos no es de alto rendimiento.

Program to turn over taxi fleet

-

5.00

10.00

15.00

20.00

25.00

Axi

s Ti

tle

Rendimiento Promedio Flota Taxis Colectivos [km/lt]

Escenario conprograma

Escenario base

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2014 2015 2016 2017 2018 2019 2020 2021 2022

EV

Euro 5 HEV

Convencional avanzado

Convencional

Penetración de tecnologías

Program to turn over taxi fleet

Rentabilidad social del programa Periodo 2014-2022

• El programa permite la renovación de 21.611 taxis colectivos con tecnologías avanzada, el 40% de ellos híbridos o eléctricos.

• El VPN del proyecto es de 138 millones de dólares en los 9 años.

• El beneficio sólo en reducción de consumo de combustibles es de 171 millones de US$.

• El programa se puede ampliar a taxis básicos mediante una NAMA que considere el aporte del Estado chileno como cofinanciamiento.

Thanks

[email protected]

www.cmmolina.cl

www.50by50campaign.org

http://www.cmmolina.cl/

http://www.50by50.org/

Documents

Global Fuel Economy Initiative: Chile Case Studyccap.org/assets/Lopez-Global-Fuel-Economy... · Capacities in Chile • Strong institutions for enforcement of vehicle standards, •