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Policy Pathways: Improving the Fuel Economy of Road Vehicles — A Policy Package

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Kazunori Kojima, Lisa Ryan
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This installment of the International Energy Agency's (IEA) Policy Pathways series is intended to help policymakers at all levels of government construct successful fuel economy policy packages based on commercially available fuel economy technologies. Recognizing that it would be too costly and inefficient to improve the fuel economy of the existing vehicle stock, this policy package focuses exclusively on new vehicles and how policy can help overcome market failures, information gaps, and higher upfront costs. The authors recommend that special attention be paid to fuel economy labelling to overcome information gaps, fuel economy standards to overcome market failures, and fiscal measures in the form of fuel or vehicle purchase tax to influence vehicle-purchasing decisions. The report follows IEA's four-step policy pathways framework of plan, implement, monitor, and evaluate. The report is useful for policymakers at multiple levels of government who want to formulate a fuel economy strategy rather than implement and ad hoc or individual policy.