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

Energy Efficiency Assignment o. 3

Assignment Title:

ENERGY, ECONOMICAL, AND ENVIRONMENTAL IMPACT OF IMPLEMENTING FUEL ECONOMY STANDARD 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)……………………………………..………... 10 3.2. Bill saving (BS)………………………………………………... 10 3.3. Emission reduction………………………...…………………... 10 4. Results and Discussions………………………………………..………..11 6. Conclusions……………………………………………………………...15 References………………………………………………………………….16

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List of tables: Table 1: Number of cars……………………………………………………..7 Table 2: Emission based on fuel types………………………………………7 Table 3: Input data for economical analysis…………………………………7 Table 4: Fuel savings and economical analysis……………..……………...11 Table 5: Bill Saving and emission reduction…………………………..…..12

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List of Figures: Fig 1: Fuel savings per year………………………………………………..13 Fig 2: Amount of bill savings per year……………………………………..13 Fig 3: Economical analysis………………………………………………...14 Fig 4: Emission reduction………………………………………………….14

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omenclature

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Summary The growing world economy calls for saving natural resources with sustainable development framework. This paper intends to look at the environment-energy interface (impacts on the environment stemming form the energy sector) and to propose measures for reducing this impact without trying to impede economic development. In addition, this paper estimates the amounts of energy subsidies about 20% of Gross Domestic Product (GDP) in 2019 if the conditions do not change. Meanwhile, environmental damage from air pollution has been assessed by scaling according to GDP per capita measured in purchase power parity (PPP) terms. Using this approach, the total damage from air pollution in 2001 was assessed about $7billion; equivalent to 8.4% of nominal GDP. Lacking price reform and control policies, the authors estimate that damage in Iran will grow to 10.9% of GDP by 2019. In line with difficulties of eliminating subsidies, a list of 25 measures has been analyzed, using the environmental cost-benefit analysis and based on cost-effectiveness of the policies to verify which ones would be implemented. Finally the financial effects of implementing different combinations of price reform and carrying out those policies on the state budget, damage costs and subsidies have been calculated.

Implementation of fuel economy standards in the world has become a

compulsory for most f ever country in order to increase the efficiency in fuel consumption, financial, and the emission reduction. This emission reduction has become an international issue regarding of the green house effect of industrial and transportation sector’s emission. This paper attempts to analyze cost benefit of implementing energy, economical and environmental impact of implementing fuel economy standard for car in Malaysia. The calculations were made based on growth of number of car and decrease of fuel consumption from 1050 liter/year to 780 liter/year in Malaysia. In this case we are going to survay the Fuel saving, Annual net saving, Net saving, Cumulative present value and emission reduction by reducing fuel consumption. The number of cars increase from 1,356,678 in 1987 to 6,473,261 in 2005 it is predictable that it grow up to about 16660638 in 2020. Therefore, efficiency improvement of this appliance will give a significant impact in the future of fuel consumption in this country. Furthermore, it has been found that implementing an energy efficiency standard for cars is economically justified.

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1. Introduction As environmental mitigation justifies any attempts for reconstruction of internal and global institutions based on sustainable development approach, but economic growth is also required for improving the living standards of the population, reducing poverty, and to address the various environmental issues, which are not restricted to the energyenvironment interface (The World Bank, 2000). In this regard, policymaking in the most sensitive cases like energy related subjects has a unique priority. The impact of fuel economy standards will be analyzed in the matter of energy savings, economical savings (bill savings, fuel savings), and the last is the environmental impact. The environmental impact will be analyzed regarding to the reduction of fuel usage that will decrease the amount of fuel emissions (CO2, SO2, NOx, and CO). The mainstreaming tool for integrating environmental concerns into the energy sector is an Energy- Environment Review (EER), which aims to assist the country to better integrate energy sector development and investments with improving the protection of the environment simultaneously without hindering the economic development of the country. The main strategic objectives of EER studies are to: (a) facilitate more efficient use and substitution of traditional fuels; (b) protect the health of urban residents from air pollution due to fuel combustion; (c) promote environmentally sustainable development of energy resources; energy use on global climate change; and (e) develop capacity for environmental regulation, monitoring and enforcement. The strategy sets a course of action using three key instruments: policy assistance, knowledge management and targeted investments. It also emphasizes that local, regional and global problems are excellent opportunities for a developing country to address the environmental problems at all levels. In addition, the emphasis here has been on the link of energy pricing policies to the environment, and of the effects of eliminating subsidies on energy for the reduction of environmental damage costs. The emission reduction is divided into four groups of emission caused by the power generation that are used for the power to drive the motor, that are coal, petroleum, and gas. The pollutant that are produced by the power generations, are CO2, SO2, NOx, and the most dangerous CO. By reducing the amount of energy needed by the industry to produce the goods, will off course reduce the amount of emission of those dangerous gases.

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2. Survey Data The data available in this study are; the numbers of cars, Table 1: Number of cars

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

Table 2: Emission based on fuel types

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

Coal Petroleum Gas Hydro Others

Table 3: Input data for economical analysis

Description Year standard enacted Discount rate Incremental cost Life span Baseline Fuel Consumption Current average fuel price Fuel economy standards Annual efficiency improvement Shipment survival factor Petrol CO2 Emission

Values 2009 7% RM 5.75 10 years 1050 litre/year RM 2.20/litre 780 litre/year 3% 100% 2.31 kg/litre

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CO2 1.1800 0.8500 0.5300 0.0000 0.0000

SO2 0.0139 0.0164 0.0005 0.0000 0.0000

Ox 0.0052 0.0025 0.0009 0.0000 0.0000

CO 0.0002 0.0002 0.0005 0.0000 0.0000

3. Methodology There are several opportunities to assess environmental damages but considering costs and infrastructure of such works, Benefit Transfer (BT) could be a preferable way for a developing country (Pearce, 2000). So the study consisted of the following steps, which were considered essential components to enable a country to "internalize the externalities", in energy sector: (i) Analysis of the current situation concerning energy generation and use For this step, a vast amount of information with emphasis on the oil and gas sector was collected. Also final energy consumption was analyzed by consuming sectors. The importance of subsidies for the development use patterns was clearly identified. (ii) Evaluation of the growth prospects with regards to energy generation and use In this part, forecasts of the probable development of energy consumption under different scenarios was made for 2009, 2014 and 2019. An assessment of the current situation was undertaken in terms of energy usage and expected growth rate. Finally, energy demand forecasts were made for several scenarios: (a) a reference case with no sector policies or measures and constant real prices (broadly representative of present pricing policy, business as usual scenario); (b) inclusion of specific spectral measures; (c) fast, medium or slow price reform, i.e. and (d) a combination of price reform and spectral measures. (iii) Identification of the environmental issues induced by the generation and use of energy and estimation of the costs of the damages The emphasis was on air pollution, and here on the situation in Tehran using a benefit transfer model, so pollutants (PM10, NOx, SO2, CO and NMVOCs, CH4, CO2) estimated damage costs. Forecast of damage costs was also undertaken based on the energy demand scenarios mentioned in step 2 above. (iv) Evaluation of the proposed mitigating measures for the previously identified environmental problems The objective here has been to identify measures in terms of sector policies that can demonstrate significant reductions in environmental impacts at reasonable costs. Where feasible, such measures or policies have been assessed using cost-benefit analysis model, which includes opportunity, and damage costs and allows fair comparisons to be made between and within different sectors. Policies for which such a cost-benefit analysis could be made were categorized into three types: (a) cost effective without the inclusion of any of the damage costs; (b) cost effective if local damage 8

costs are included and; (c) only cost effective if local and global damage costs are included. Environmental problems due to energy sector Six major pollutants with potential health hazard are normally used to describe the impact on the atmosphere from energy (fossil fuel) production and use. These pollutants are carbon monoxide (CO), sulphur dioxide (SO2), oxides of nitrogen (NOx), ozone (O3), particulate matter PM 10), hydrocarbons (HC) or Non-Methane Volatile Organic Compounds (NMVOCs) and lead (Pb) (McGranahan and Murray, 2003). The latter is not longer considered as being a problem in Malaysia, since the use of leaded fuel has been banned. The air quality in Kuala Lumpur is worse than in the other parts of the country and especially the concentrations of CO and PM 10 sometimes exceed the World Health Organization's (WHO) guidelines and maximum allowable limits by more than 300 percent. In Kuala lumpur, schools are occasionally closed and residents are asked to remain indoors due to the health risks of heavy air pollution. In addition to the huge amount of pollutants produced by mobile and stationary sources, A study was conducted in Malaysia on health effects of air pollutants. Admittance of persons with acute situations of respiratory or cardiovascular problems to the emergency wards of five hospitals in Kuala Lumpur have been put in relation to ambient air concentrations of six major air pollutants, namely Sulphur dioxide (SO2), nitrogen dioxide (NO2), carbon monoxide (CO), total hydrocarbons (THC) and suspended particles <10 µm (PM 10). During an observed 140 days period, 1160 patients with pulmonary or cardiovascular problems had been admitted to the five hospitals covered by the investigation. The study revealed significant relations of health problems with SO2 and NO2 concentrations. A study on air quality in Malaysia revealed the mortality risk associated with particulates (PM 10) as being at 4000 deaths per year due to this pollutant. To this, an about equal number of cancer cases caused annually by exposure to NOx has to be added. Solid waste is not directly related to the energy sector, except perhaps through the possibility to obtain methane (CH4) from wellmanaged landfills. However, it is a pressing environmental problem, especially in urban areas with a day This study and data analysis is using the following terms:

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3.1. Fuel savings (FS) Fuel savings from retrofitting is the difference between useful energy of efficient and inefficient (BAU) motor. This can be calculated using the following equation: FS

= AS x UFS

3.2. Bill savings (BS) The bill savings of motor retrofit is a function of energy savings and the average price of electricity (PE). The average price of electricity in KL is RM 0.235. The potential bill savings by motor retrofit is calculated by the following equation: BS

= FS x PE

3.3. Emissions reduction (ER) The envi

ronmental impact from retrofitting 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 for fuel savings, bill savings, and emission reduction, are presented as follows:

Year 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

o. of cars 3787047 4145982 4557992 5001273 5053856 5520538 6012316 6529190 7071160 7638226 8230388 8847646 9490000 10157450 10849996 11567638 12310376 13078210 13871140

Shipment Sh

Applicable Stock AS

1868361 2037915 2236689 2385297 2140883 2769229 3045352 3403410 3813274 4019918 4379209 4763240 5200346 5668723 5746402 6238180 6755054 7297024 7864090

5218638 7256553 9493242 11878539 14019422 16788651 19834003 23237413 27050687 31070605 35449814 40213054 45413400 51082123 56828525 63066705 69821759 77118783 84982873

Scaling Factor SF

1.00 0.88 0.77 0.65 0.54 0.42 0.31 0.19 0.08

Unit Fuel Saving UFS (litre/year)

Fuel Saving FS (litre/year)

Fuel Savings FS (Mlitre/year)

Efficiency Improvement IE

270.00 238.85 207.69 176.54 145.38 114.23 83.08 51.92 20.77

9571449780 9604733282 9432013846 9017959407 8261993250 7204158225 5800576902 4004244502 1765028901

9571.45 9604.73 9432.01 9017.96 8261.99 7204.16 5800.58 4004.24 1765.03

1 0.97 0.94 0.91 0.88 0.85 0.82 0.79 0.76

Table 4: Fuel savings and economical analysis

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BAU (litre/year)

Standard STD (litre/year)

Business as Usual BAU (Mlitre)

Standard STD (Mlitre)

37222304700 40956995499 44823025800 48808968527 52509557100 56287034213 60116534499 63970030499 67816332654

27650854920 31352262217 35391011954 39791009120 44247563850 49082875988 54315957597 59965785997 66051303753

37222.30 40957.00 44823.03 48808.97 52509.56 56287.03 60116.53 63970.03 67816.33

27650.85 31352.26 35391.01 39791.01 44247.56 49082.88 54315.96 59965.79 66051.30

Year 2009 2010 2011 2012 2013 2014 2015 2016 2017

Bill Savings BS BS (RM) (million RM) 21057189516 21057.19 21130413221 21130.41 20750430462 20750.43 19839510694 19839.51 18176385150 18176.39 15849148095 15849.15 12761269183 12761.27 8809337904 8809.34 3883063582 3883.06

Coal 17.34% 18.00% 18.74% 19.56% 20.46% 21.44% 22.50% 23.64% 24.86%

Fuel Type Petrol Gas

Hydro

CO2 kton

2.21% 2.00% 1.81% 1.64% 1.49% 1.36% 1.25% 1.16% 1.09%

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

4753.30 4748.58 4657.83 4463.06 4111.40 3616.43 2946.69 2064.80 926.55

51.55% 50.00% 48.55% 47.20% 45.95% 44.80% 43.75% 42.80% 41.95%

Table 5: Bill Saving and emission reduction

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Emission Reduction SO2 O_x ton ton 29005.80 29582.58 29658.50 29072.10 27413.71 24690.09 20599.30 14776.46 6784.86

13599.88 13792.40 13739.43 13372.91 12514.61 11181.43 9251.92 6580.90 2996.17

CO ton 2841.28 2785.37 2677.28 2510.60 2260.89 1942.24 1544.40 1055.52 461.82

Fig 1: Fuel savings per year

Fuel Savings 12000.00 10000.00

Mlitre

8000.00 6000.00 4000.00 2000.00 0.00 2009

2010

2011

2012

2013

2014

2015

2016

2017

Year

Fig 2: Amount of bill savings per year

Bill Savings 25000.00

Million RM

20000.00 15000.00 10000.00 5000.00 0.00 2009

2010

2011

2012

2013 Year

13

2014

2015

2016

2017

Fig 3: Economical analysis 80000 70000 60000

Mlitre

50000 BAU

40000

STD

30000 20000 10000 0 2009

2010

2011

2012

2013

2014

2015

2016

2017

Year

Fig 4: Emission reduction

Emission Reduction 35000 30000

mass

25000

CO2 (kton)

20000

SO2 (ton)

15000

NOx (ton) CO (ton)

10000 5000 0 2009

2010

2011

2012

2013 Year

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2014

2015

2016

2017

5. Conclusions The fuel savings for fuel economy standards plays a significant figure in the Malaysia. Fuel savings reaches 10000 Mega litre for 2009, and decrease every year because of the efficiencies always approach the value of stability (standards) The amount of bill savings reaches RM 20000 billion, which are very significant for the growth of the national economy. The last is the emission reduction reaches 5000 kiloton for CO2, and so with the other type of emission. The fuel economy standards have been proven to be very important and significant for the financial savings for the country, and also play a vey important role for the emission reduction because of the power generation.

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References [1] Dr. Indra Mahlia, Energy Efficiency Standard-Energy and environmental Impact, Lecture Paper of Energy Efficiency, 2007 [2] Stefano JD. Energy efficiency and the environment: the potential for energy efficient lighting to save energy and reduce carbon dioxide emissions at Melbourne University, Australia. Energy – The Int Journal 2000;25:823-839. [3] Lee AHW. Verification of electrical energy savings for lighting retrofits using shortand long-term monitoring. Energy Convers Mgmt 2000;41:1999-2008. [4] Guan FM, Mills E, Qin Z. Energy efficient lighting in China. Energy Policy 1997;25:77-83. [5] Kazakevicius E, Gadgil E, Vorsatz D. Residential lighting in Lithuania. Energy Policy 1999;27:603-611. [6] Philips. Product Catalogue–Family Detail: Lamps Compact Fluorescent Integrated, www.lighting.philips.com, 2003. [7] Turiel I, Atkinson B, Boghosian S, Chan P, Jennings J, Lutz J, McMahon JE, Pickle S, Rosenquist G. Advanced technologies for residential appliance and lighting market transformation, Energy and Buildings 1997; 26:241-252. [8] Vorsatz D, Shown L, Koomey J, Moezzi M, Denver A, Atkinson B. Lighting market sourcebook for the U.S. Lawrence Berkeley Laboratory, University of California, Berkeley. 1997. [9] McMahon J, Liu X., Turiel I, Hakim SH, Fisher D.Uncertainty and Sensitivity analyses of ballast life-cycle cost and payback period. Lawrence Berkeley Laboratory, University of California, Berkeley. 2000. [10] Mahlia TMI. Emissions from electricity generation in Malaysia, Renewable Energy 2002; 27(2):293-300. [11] Masjuki HH, Mahlia TMI, Choudhury IA. Potential electricity savings by implementing minimum energy efficiency standards for room air conditioners in Malaysia, Energy Convers and Mgmt 2001; 42:439-450.

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