The aim of this report is to track the progress of fuel economy of new light-duty vehicles across the globe to inform policy makers on the effectiveness of relevant policies in place towards the pace of fuel economy improvements to be in line with climate ambitions. The report measures progress against the Global Fuel Economy Initiative (GFEI) target of halving the fuel consumption of new light-duty vehicles by 2030, relative to 2005.

The urgency of policy action is underlined by the fact that fuel economy progress is stalling. The average rated fuel consumption of new light-duty vehicles fell by only 0.9% between 2017 and 2019 (the latest year for which data are available), to 7.1 litres of gasoline equivalent per 100 kilometres (Lge/100 km). This drop is far smaller than the 1.8% annual average reduction between 2010 and 2015.

The three major car markets – the People’s Republic of China (hereafter, “China”), the European Union and the United States – accounted for 60% of global sales of light-duty vehicles in 2019, which totalled 90 million, down 7% from 2017. Between 2017 and 2019, average rated fuel consumption rose in Europe, as the European Union’s CO₂ emission regulations did not require any further improvement until 2020, when rated emissions from new vehicles declined by more than 10% year-on-year. In the United States, the average fuel consumption of new light-duty vehicles remained unchanged between 2017 and 2019, following a relaxation of fuel economy standards. In contrast, average fuel consumption declined in China, driven by fuel economy standards, and in emerging markets and developing economies.

Total improvements are significantly lower than the 2.8% yearly fuel economy improvements needed to meet the Global Fuel Economy Initiative target of halving the fuel consumption of new light-duty vehicles by 2030 relative to 2005. Given slow progress to date, achieving this target will require fuel consumption to decrease by 4.3% per year on average from 2019 to 2030 – a near tripling of the average annual pace of improvement since 2005. Such a transformation in fuel consumption trends can be brought about only by stronger policies that increase the market shares of efficient electric cars as well as global adoption of state-of-the-art efficiency technologies in internal combustion engines.

The importance of electric vehicles is underlined by the fact that CO₂ emissions fell faster than fuel economy between 2017 and 2019 because market penetration of electric vehicles rose. Global average rated CO₂ emissions in 2019 were 167 grammes of CO₂ per km (g CO₂/km), a 1.6% decrease from 2017.

To meet the GFEI 2030 target, countries need to align legislation on fuel economy with their climate pledges. Countries’ current and stated policies are not sufficient to meet the GFEI 2030 target, as shown by the International Energy Agency (IEA) Stated Policies Scenario. If countries align their fuel economy standards and market adoption of zero-emission vehicles with their plans to achieve their nationally determined contributions and/or net zero emissions pledges, however – as shown in the IEA Announced Pledges Scenario – they can meet the 2030 GFEI target.

Only the Net Zero Emissions by 2050 Scenario meets the GFEI 2050 target. The GFEI’s long-term, more ambitious target is to reduce well-to-wheel emissions of light-duty vehicles by 90% by 2050, relative to 2005. In the Announced Pledges Scenario, these emissions decline by only about 40% by 2050. Meeting the GFEI goal for 2050 requires an energy and transport sector transformation of the scale, speed and depth depicted in the IEA Net Zero Emissions by 2050 Scenario. The fact that only the Net Zero Scenario can achieve this ambition highlights the need for rapid, targeted action on many fronts, including improving vehicle efficiency; deploying zero-emission vehicles; decarbonising electricity and hydrogen supply; encouraging shifts to other modes of transport; and managing travel demand.

Improvements in fuel economy have slowed recently for two main reasons: vehicles are becoming ever larger and more powerful, and efficient engines have not been adopted quickly enough to compensate. At the same time, efficiency gains in conventional internal combustion engine vehicles are slowing down as their remaining efficiency potential becomes more expensive and technically difficult to exploit.

Larger and more powerful cars

Between 2010 and 2019, sales-weighted average new light-duty vehicles became 6.2% heavier, 20% more powerful and had a 7% larger footprint, with the most rapid increases in China. A key cause of this trend has been a shift from cars (sedans) to SUVs and light trucks. As SUVs are larger and heavier than conventional cars, they require more power and consume on average nearly one-third more fuel than a medium-sized car. SUVs’ global share of new light-duty vehicle sales rose from 20% in 2010 to 44% in 2019. Even in markets with high SUV sales, such as the United States, SUVs continue to claim a larger share of the market. In Japan, on the other hand, the trend towards larger and heavier vehicles has been far more muted, in part due to longstanding policies promoting very small “kei-cars”. In addition, a high proportion of new cars sold are hybrid electric vehicles – 20% in 2019. As a result of these trends, the rated fuel economy of new light-duty vehicles sold in Japan has continued to improve.

Increasing vehicle size and power has eroded as much as 40% of the fuel consumption improvements that would otherwise have occurred thanks to technical advances in vehicles and engines. Even if vehicles had not grown in size and power, however, the world would still not be on track to meet the GFEI targets, as technical improvements to conventional engines are not sufficient and their progress is slowing.

Alternative powertrains can deliver strong emissions reductions

Hybrid electric vehicles deliver on average about one-third lower fuel consumption than conventional gasoline internal combustion engine vehicles and offer a cost-effective option to considerably improve fuel economy of conventional vehicles. Battery electric vehicles achieve efficiencies two to four times higher than internal combustion engine vehicles, with zero tailpipe CO₂ or pollutant emissions. The energy and fuel efficiency of plug-in hybrids are intermediate, and depend critically on drivers’ charging and driving patterns. In 2019, only small shares of the light-duty vehicle market had been claimed by hybrid (3%), plug-in hybrid (1%) and battery electric vehicles (1%), so they had little impact on overall emissions performance. But this is likely to change over the current decade.

Integrating well-to-wheel greenhouse gas emissions

Comparing the greenhouse gas emissions impacts of vehicles across different fuel-powertrain options requires looking beyond their rated tailpipe CO₂ emissions. A coherent and complete comparison requires analysing the emissions incurred across the entire life cycle, and includes both the “fuel-cycle” or “well-to-wheel” emissions (those incurred in supplying fuels and in vehicle operations), and “vehicle-cycle” emissions – those incurred in manufacturing vehicles and disposing of them at the end of their life (including recycling).

In extending the analytical scope to a well-to-wheel basis, this report is a first step in extending the scope of the GFEI benchmarking analysis to include the emissions associated with producing, transporting and delivering transport fuels to vehicles.1

Key insights from extending the scope to well-to-wheels

The analysis shows that compared with the potential to reduce the carbon intensity of electricity, there is limited scope for reducing the well-to-tank emissions incurred in supplying oil products and natural gas. Moreover, the well-to-tank portion accounts for only 14% to 18% of total well-to-wheel greenhouse gas emissions of conventional internal combustion engine vehicles.

By contrast, for battery electric and fuel cell electric vehicles, emissions incurred in producing and delivering electricity and hydrogen constitute all operational (well-to-wheel) emissions. Rapid deployment of renewables and other low-carbon power generation and hydrogen production technologies are the foundation for decarbonisation across the energy sector (and not only for zero-tailpipe-emission light-duty vehicles). In all regions and in all scenarios, the tank-to-wheel emissions of electricity decrease by 2030. Global tank-to-wheel emissions from supplying electricity decline by 2030 from the 2019 level by more than 25% in the Stated Policies Scenario, 35% in the Announced Pledges Scenario and 75% in the Net Zero Emissions by 2050 Scenario.

Specific well-to-wheel greenhouse gas emissions, estimated in grammes of CO₂ equivalent per kilometre (g CO₂-eq/km) for each fuel-powertrain combination over the fleet average lifetime, vary considerably across vehicle segments and regions, as well as by scenario.

Emissions performance varies most widely in conventional gasoline and diesel internal combustion engine vehicles, reflecting the range of models and sizes sold in different markets.

For vehicles sold in 2019, a clear rank order in terms of global average well-to-wheel greenhouse gas emissions performance is evident in the Stated Policies Scenario. Battery electric vehicles have the lowest emissions, followed by plug-in hybrids and hydrogen fuel cell electric vehicles. Hybrid vehicles have the lowest well-to-wheel emissions among compressed natural gas, diesel and gasoline internal combustion engines. 

This rank order does not hold across all regions and all scenarios. In the Stated Policies Scenario, hybrid vehicles can emit less than battery electric vehicles sold in 2019 in those regions in which the electricity mix relies particularly heavily on coal, although this is set to change as governments continue to adopt additional policies to decarbonise the power sector as a means to meet their long-term decarbonisation targets.

This is reflected by the Announced Pledges Scenario, in which battery electric vehicles offer the deepest carbon reductions on a well-to-wheel basis in every instance, thanks to rapid reductions in the carbon intensity of electricity generation. The clear coupling between power sector decarbonisation and battery electric vehicles provides a strong rationale for promoting battery electric vehicles as a technology for decarbonising light-duty vehicle operations to meet climate ambitions.

The well-to-wheel greenhouse gas emissions of fuel cell electric vehicles vary depending mainly on how hydrogen is produced. Currently, well-to-wheel emissions of fuel cell vehicles driving on hydrogen produced via coal gasification can be as high as those of gasoline internal combustion engine vehicles, while those using hydrogen from natural gas steam methane reformation achieve well-to-wheel greenhouse gas emissions on par with hybrid electric vehicles. By 2030 in the Announced Pledges Scenario, as more and more hydrogen is produced through electrolysers powered at least in part via renewables, fuel cell vehicles in some regions can also offer near-zero well-to-wheel emissions.

Scale up fuel economy standards and electrification targets to support announced net zero emissions ambitions. Market diffusion of vehicle efficiency technologies needs to nearly triple its pace to align operational greenhouse gas emissions of light-duty vehicles with climate pledges. Standards are needed to promote efficiency technologies in conventional internal combustion engine vehicles, and sales share targets for zero-emission vehicles. While separate standards and zero-emission vehicles sales targets can reinforce each other, linking the two in a single regulation carries the risk of creating a regulatory loophole: zero-emission vehicle sales generate compliance credits, relaxing fuel economy standards for a manufacturer’s remaining fleet. This loophole can be closed by phasing out multiple credits for zero-emission vehicles as electric vehicle shares grow.

Phase out fuel subsidies and tax road fuels at levels that reflect their impacts on people’s health and the climate. Fuel taxes provide consumers with incentives to buy fuel-efficient vehicles and improve the market prospects for conventional hybrids and zero-emission vehicles. Subsidies that reduce the costs of supplying oil and gas products to the road sector should be phased out, with careful consideration of social implications in view of the impacts on poorer parts of the population. Road fuels should be taxed at levels reflecting their impacts on people’s health and the climate.

Ensure that regulations are based on and translate to real-world performance. Continued monitoring of the gap between rated and real-world performance is needed to ensure that fuel economy standards have their intended impact. Digital technologies can lower costs and increase effectiveness of compliance monitoring, which should then inform future regulations.

Implement policies to counter the growth in vehicle weight and power. Governments can draw upon existing policies in countries such as France, Japan and Norway, where vehicles sold have consistently been among the lightest and most fuel-efficient worldwide. In addition to high fuel taxes and standards for CO₂ emissions and fuel economy, these countries subsidise and/or tax vehicles according to their weight, size, or greenhouse gas and pollutant emissions, or a combination of these attributes.

Harness the potential of zero-emission vehicles. Zero-emission vehicles, and in particular battery electric vehicles, are the most efficient, cost-effective and sensible technology options for achieving deep reductions in well-to-wheel greenhouse gas emissions in the light-duty vehicles sector. A broad suite of policies targeting vehicle manufacturers can accelerate the market adoption of zero-emission vehicles and ensure that they contribute their full potential to reducing emissions.

Policies promoting plug-in hybrid electric vehicles need to encourage charging and driving patterns that realise these vehicles’ full potential to reduce greenhouse gas and pollutant emissions. Trip-making and charging patterns can have a substantial impact on real-world plug-in hybrid fuel economy and electricity, resulting in wide variability between rated and real-world performance. The key to ensuring that plug-in hybrids are driven on electricity will be to tie regulations and incentives more closely to real-world performance.

Harmonise standards beyond the national level. International co‑operation and harmonisation of standards can lower the costs of implementing and enforcing regulations such as fuel economy standards. They also provide a valuable basis for engagement to achieve broader societal and environmental goals, including climate goals.

Ensure that emerging markets and developing economies don’t become internal combustion engine vehicle dumping grounds. In general, developed countries have put in place the most ambitious fuel economy standards and zero-emission vehicles adoption targets. International co‑operation, monitoring of used vehicle trade flows and regulation are needed to ensure that developing and emerging countries do not become dumping grounds for less-efficient internal combustion engine vehicles.

Design a portfolio of policies to reduce emissions throughout the vehicle life cycle. While well-to-wheel and life-cycle analysis can inform broad strategies for decarbonising the transport sector (including in light-duty vehicles), specific policy instruments can best target improvements specific to each of the many regulated industries involved in the fuels and vehicles supply chains. Designing and enforcing separate but in some cases mutually reinforcing regulatory and fiscal instruments for different stages of the life cycle is the most promising means to achieving the rapid action needed.

Promote the adoption of low-carbon fuels, especially direct electrification. Reducing the emissions from generating electricity and producing hydrogen is the foundation of decarbonising the energy sector, and of ensuring that zero-emission vehicles perform to their full potential. Different policies are appropriate to integrate renewables and decarbonise electricity, depending on the current status and mix of electricity generation and energy storage. Within the scope of fuel supply, policies that promote fuels with lower well-to-tank carbon intensity, such as low-carbon fuel standards, are gaining recognition as a policy instrument of choice