Energy, Economical, And Environmental Impact Of Implementing Fuel Economy Label For Cars In Malaysia

Energy Efficiency Assignment o. 4

Assignment Title:

ENERGY, ECONOMICAL, AND ENVIRONMENTAL IMPACT OF IMPLEMENTING FUEL ECONOMY LABEL FOR CARS IN MALAYSIA

Edited by: Emad Sadeghi ezhad KGH080002

Lecturer: T.M.I. Mahlia

Academic Year-(Semester): Session 2008/2009-(Sem. 2)

Contents List of Tables………………………………………………………………...2 List of Figures……………………………………………………………….3 Nomenclature………………………………………………………………..4 Summary…………………………………………………………………….5 1. Introduction……………………………………………………………….6 2. Survey Data……………………………………………………………….7 3. Methodology……………………………………………………………...8 3.1. Fuel saving (FS)………………………………………………... 8 3.2. Bill saving (BS)………………………………………………... 8 3.3. Capital recovery factor…………………………………………...8 3.4. Net saving………………………………………………………..8 3.5. Cumulative present value (PV)…………………………………..9 3.6. Emission reduction……………………………………………... 9 4. Results and Discussions………………………………………………....10 6. Conclusions……………………………………………………………...12 References………………………………………………………………….13 Appendix…………………………………………………………………...13

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List of tables: Table 1: Year and number of cars …………………………………………..7 Table 2: Emission based on fuel type…………..……………………………7 Table3: Aspects of car usage and the values………..…….…………………7 Table 4: Number of cars and economical analysis………….……………...10 Table 5: Percentage of power generation and emission reduction………....11

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List of Figures: Fig 1: Economical profit………………………………….………………..11 Fig 2: Emission reduction……………….………………………..………..12 Fig 3: Number of cars prediction………...………………………………...14

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omenclature

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Summary The Environmental Protection Agency (EPA) is finalizing changes to the methods used to calculate the fuel economy estimates that are posted on window stickers of all new cars and light trucks sold in the United States. This final rule will greatly improve the EPA fuel economy estimates to more accurately inform consumers about the fuel economy they can expect to achieve in the real world. The new test methods take into account several important factors that affect fuel economy in the real world, but are missing from the existing fuel economy tests. Key among these factors are high speeds, aggressive accelerations and decelerations, the use of air conditioning, and operation in cold temperatures. Under the new methods, the city miles per gallon (mpg) estimates for the manufacturers of most vehicles will drop by about 12 percent on average relative to today's estimates, and city mpg estimates for some vehicles will drop by as much as 30 percent. The highway mpg estimates for most vehicles will drop on average by about 8 percent, with some estimates dropping by as much as 25 percent relative to today's estimates. These changes will take effect starting with 2008 model year vehicles, available at dealers in 2007. We also are adopting a new fuel economy label design with a new look and updated information that should be more useful to prospective car buyers. The new label features more prominent fuel cost information, an easy-to-use graphic for comparing the fuel economy of different vehicles, clearer text, and a Web site address for more information. Manufacturers will be phasing in the new design during the 2009 model year. Finally, for the first time we are requiring fuel economy labeling of certain passenger vehicles between 8,500 and 10,000 lbs gross vehicle weight rating. Because of the Department of Transportation's recent regulation that brings medium-duty passenger vehicles into the Corporate Average Fuel Economy program starting in 2017, EPA is now statutorily obligated to include these vehicles in the fuel economy labeling program. Medium-duty passenger vehicles are a subset of vehicles between 8,500 and 10,000 lbs gross vehicle weight that includes large sport utility vehicles and vans, but not pickup trucks. Vehicle manufacturers are required to post fuel economy labels on medium-duty passenger vehicles beginning with the 2011 model year. Fuel economy label in Malaysia is developed to encourage the people to choose the most efficient car, and finally to dispose the inefficient car out of the market. In energy and environmental point of view, this method will decrease the usage of energy and off course decrease the rate of 5

pollution caused by the car emission. In economical point of view, this will surely increase the bill savings and annual savings for the customer.

1. Introduction This final rule has three key elements. First, we are finalizing changes to the Environmental Protection Agency's (EPA) fuel economy testing and calculation procedures so that the miles per gallon (mpg) estimates for passenger cars and light-duty trucks will better reflect what consumers achieve in the real-world. Second, we are updating the fuel economy window sticker that appears on all new cars and light trucks sold in the U.S., which will make the window sticker more useful and understandable to consumers. Third, for the first time we are requiring fuel economy labeling of certain passenger vehicles between 8,500 and 10,000 lbs gross vehicle weight rating (GVWR), such as the largest sport-utility vehicles (SUVs) and passenger vans. The application of fuel economy label will be analyzed during the year 2009 to 2017. The analysis will include the prediction of number of cars during that period, and economical group analysis; the amount of fuel savings, bill savings, and annual savings. In the environmental point of view, will be calculated the rate of emission reduction of; CO2, NOx, SO2, and CO.

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2. Survey Data While the lack of real-world experience makes forecasting response to a vehicle fee bate speculative, various models have been run to gain insights on the matter. These analyses typically separate out two distinct aspects of the response: manufacturer (supply) and consumer (demand) response. Manufacturers are assumed to adopt efficiency technologies that cost less than the reduction in fee or increase in rebate plus the discounted value of the fuel savings that they bring about.5 Analysis of their response involves an assessment of the availability and cost of technologies to improve fuel economy. Consumer response is modeled by various means on the basis of elasticities and cross-elasticities of demand for all vehicle types with respect to price, as determined by historical data on buying behavior. The data available in this study are; year and the number of cars, emission based on fuel type, and aspect of car usage and the values Table 1: Year and number of cars

Year 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002

Table 3:

umber of Cars 1356678 1427283 1534166 1678980 1824679 1942016 2088300 2302547 2553574 2886536 3271304 3452852 3787047 4145982 4557992 5001273

Description Fuel economy standards Maximum fuel economy Year standard enacted Discount rate Incremental cost Life span Baseline fuel consumption Average fuel price Annual efficiency improvement Shipment survival factor Petrol CO2 emission

Table 2: Emission based on fuel type kg/KWh Coal Petrol Gas Hydro

CO2 1.18 0.85 0.53 0

SO2 0.0139 0.0164 0.0005 0

Ox 0.0052 0.0025 0.0009 0

Aspects of car usage and the values

CO 0.0002 0.0002 0.0005 0

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Values 775 litre/year 535 litre/year 2009 7% RM 61.5 8 years 1035 litre/year RM 1.80/litre 3% 100% 2.31 kg/litre

3. Methodology This study and data analysis is using the following terms:

3.1. Fuel savings (FS) Fuel savings from labeling is the multiplication between Applicable stock and Unit fuel savings. This can be calculated using the following equation: FS = AS x UFS

3.2. Bill savings (BS) The bill savings is a function of fuel savings and the average price of fuel (FP). The potential bill savings is calculated by the following equation: BS = FS x FP

3.3. Capital recovery factor The capital recovery factor is the correlation between the discount rate and the lifetime, this correlation is calculated by the following equation; which include the discount rate (d):

3.4. et savings There are two methods to calculate economical impact of motor retrofit i.e. annualized costs and cash flow. In the first method, the incremental cost (IC) spreads over the lifetime of the efficient motor so that the pattern of expenditures matches the flow of bill savings. The Annual Net Savings (ANS) over time and calculated by the following calculation, which include BS, NR, Incremental Cost (IC), and Capital Recovery Factor (CRF).

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A S

= BS - sum( R x IC) x CRF

IC = PPE - PPUE IC is the difference between Purchase Price of efficient (PPE) and unefficient (PPUE) motors. The second method is the cash flow over the lifetime of the efficient motor, where the motor is paid for full when it is installed. The purchasers incur the incremental cost when the motor is purchased, but the benefit of higher energy efficiency is spreads over the motor efficiency. The Net Savings (NS) in term of actual cash flows is calculated by the following equation: S = BS - sum( R x IC)

3.5. Cumulative present value (PV) The cumulative present value is calculated using the percentage of discount rate. The cumulative present value of the annualized net savings is calculated by the following equation:

3.6. Emissions reduction (ER) The environmental impact from labeling is potential reduction of greenhouse gasses or other element that caused negative impact to the environment. The common emission reductions are usually, CO2, SO2, NOx and CO. The emission reduction is a function of energy savings. The emission reduction can be expressed mathematically by the following equation: ERpollutant

= sum (Pfuel x m) x ES

Pfuel : percentage of power sourced from this fuel m

: mass of pollutant per kWh

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4. Result and Discussion The result of calculation using the listed formulas, are presented as follows: Table 4: Number of cars and economical analysis

Year

Sh

AS

SF

UFS ltr/year

FS (ltr/year) UFS*AS

BS (RM) FS*PF

A S (RM) FSxPF-(ASxCRFxSFxIIC)

S (RM) ESxPF-Sh x IIC

PV-A S (RM) A S / (1+d)^(iYdr)

2000 2001 2002 2003

umber of Car 4145982 4557992 5001273 5053856

2004 2005

5520538 6012316

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

6529190 7071160 7638226 8230388 8847646 9490000 10157450 10849996 11567638 12310376 13078210

5150154 5618531 5696210 6187988 6704862 7246832 7813898 8406060

5150154 10768685 16464895 22652883 29357745 36604577 44418475 52824535

1 1 1 1 1 1 1 1

240 240 240 240 240 240 240 240

1236036960 2584484400 3951574800 5436691920 7045858800 8785098480 10660434000 12677888400

2224866528 4652071920 7112834640 9786045456 12682545840 15813177264 19188781200 22820199120

2171971871 4545445785 6949807482 9561747935 12391860128 15450737045 18748971670 22297156987

1908132057 4306532264 6762517725 9405484194 12270196827 15367497096 18708226473 22303226430

2049030067 4045430567 5835192375 7573799949 9259918758 10892159937 12469136982 13989512139

2017

13871140

9023318

61847853

1

240

14843484720

26718272496

26105885980

26163338439

15452033800

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Table 5: Percentage of power generation and emision reduction Year

Coal

Petrol

Gas

Hydro

CO2 kton

SO2 ton

Ox ton

CO ton

2000 2001 2002 2003

umber of Car 4145982 4557992 5001273 5053856

2004 2005

5520538 6012316

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

6529190 7071160 7638226 8230388 8847646 9490000 10157450 10849996 11567638 12310376 13078210

16.76% 17.34% 18.00% 18.74% 19.56% 20.46% 21.44% 22.50% 23.64%

2.44% 2.21% 2.00% 1.81% 1.64% 1.49% 1.36% 1.25% 1.16%

53.20% 51.55% 50.00% 48.55% 47.20% 45.95% 44.80% 43.75% 42.80%

27.60% 28.90% 30.00% 30.90% 31.60% 32.10% 32.40% 32.50% 32.40%

614 1278 1951 2691 3506 4410 5416 6537

3746 7960 12426 17527 23379 30108 37858 46784

1756 3711 5756 8062 10673 13635 17003 20836

367 750 1122 1514 1928 2368 2838 3342

2016

13871140

24.86%

1.09%

41.95%

32.10%

7792

57059

25197

3884

Fig 1: Economical profits 30000000000 25000000000

RM

20000000000

BS ANS

15000000000

NS PV-ANS

10000000000 5000000000 0 2008

2009

2010

2011

2012

2013 YEAR

11

2014

2015

2016

2017

2018

Fig 2:Emission reduction 60000 50000

30000 20000

NOx & CO

CO2 & SO2

40000

CO2 SO2 NOx CO

10000 0 2009

2010

2011

2012

2013

2014

2015

2016

2017

Year

5. Conclusions The application fuel economy label had shown an economical and environmental benefit for the country. Economically, the method increases the Bill Savings up to RM 30 billions (2017), also increases the Annual Net Savings up to RM 30 billions (2017), and the Fuel Savings up to 14 Gigalitre a year (2017). In the environmental point of view, the method increases the emission reduction. In the year of 2016, CO2 reduction reaches 7,000 kton, SO2 reaches 51 kton, NOx reaches 23 kton, and CO reaches 4 kton. The labeling method has mathematically proven to greatly save the financial expenses and reduce the emission to the environment.

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References Dr. Indra Mahlia, Energy Policy-Energy Label: Economical and Environmental Impact, Lecture Paper of Energy Efficiency, 2007

Appendix Fig 3:Number of cars prediction

6000000 y = 12548x 2 + 52598x + 1E+06 R2 = 0.9987

5000000

No of cars

4000000 3000000 2000000 1000000 0 0

2

4

6

8 No

13

10

12

14

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