Effects of Off-cycle Credits on Passenger Vehicle Efficiency in Brazil

This brief describes Brazil's policy to foster vehicle technology innovation and industrial competitiveness. The author explains off-cycle credits—types of fiscal incentives to automakers that invest in national vehicle manufacturing—to show how they can have technical merit and result in real-world energy savings if well implemented, but how they can also weaken the stringency of vehicle consumption targets. The author suggests Brazil reject proposals to include credits for gear-shift indicators, tire-pressure monitoring systems, and ethanol and flex-fuel engines.