IEA: Transportation must reduce its dependence on oil

As oil currently powers 92% of the world’s transportation and with growth in transportation demand rising in developing countries, the International Energy Agency released two reports to show how the right policies and technologies could improve the fuel efficiency of road vehicles.

Unless action is taken now, the agency said, oil demand in transportation will reach unsustainable levels because conventional combustion engine vehicles are set to be around for a long time.

The reports, “Technology Roadmap: Fuel Economy for Road Vehicles” and “Policy Pathway: Improving the Fuel Economy of Road Vehicles,” describe the technologies needed and the policy packages that can help improve fuel economy.

These technologies and policies aim to improve by 50% in fewer than 40 years the fuel efficiency of road vehicles, saving as much as four fifths of current annual global oil consumption.

Transportation currently accounts for one fifth of global energy consumption, and an increase in such demand is expected to make up all future growth in oil use worldwide.

But there is potential for fuel-efficiency improvements to reduce demand for transport fuel, and the two reports show how worldwide oil demand could stabilize even if the number of road vehicles—passenger cars, two-wheelers, and freight trucks—doubled by 2050, the Paris-based agency said.

The technologies needed to reach these goals include high-pressure fuel injection systems, while the policy packages designed to help governments put into place measures to increase vehicle fuel efficiency include fuel-economy labeling, standards, and fiscal policies.

While fuel economy standards are in place in most Organization for Economic Cooperation and Development member countries and China, IEA sees these reports to be used as guides for other countries seeking to improve fuel economy. Most major economies should aim to implement fuel economy standards as part of a comprehensive fuel economy policy package by 2015, with strong fuel economy improvement targets for 2020 and even out to 2030, IEA said. Complementary policies include fuel economy labeling, fuel economy or carbon dioxide-adjusted vehicle tax systems (such as “feebates”), and fuel taxes.

While implementing both fiscal incentives to vehicle buyers and automotive fuel efficiency standards might seem redundant, the authors said that fiscal incentives can be changed or eliminated in the short term, but standards not only are typically long term in nature but also they put into place ambitious targets for efficiency gains.