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Cars and Vans

More efforts needed
Robert Ruggiero 3ci1ysp1e7w Unsplash

About this report

Cars and vans accounted for about 8% of global direct CO2 emissions in 2021. Thanks to continuous improvements in engine, powertrain and vehicle technology, the specific fuel consumption of new vehicles has declined. However, a long-term trend of increasing vehicle size and power has slowed progress. Electrification has more recently emerged as the dominant technology driving down the average fuel consumption of new vehicles. To be on track with the pathway in the Net Zero Emissions by 2050 Scenario, much more rapid improvements in the fuel economy of new conventional (internal combustion engine) vehicles is needed, even as the share of electric vehicle sales will need to continue to grow.

CO2 emissions

In 2021 emissions from the light-duty vehicle sector grew by about 8% year-on-year, not quite reaching 2019 levels. To get on track with the Net Zero Scenario, emissions must fall by around 6% per year on average through to 2030. Prioritising fuel economy improvements and rapid electrification will be key to achieving this objective. Although this section focuses on fuel economy evolution and related policy instruments, other policies affecting vehicle ownership and average mileage can also contribute to a reduction in overall CO2 emissions from cars and vans to align with the Net Zero Scenario.

CO2 emissions from cars and vans in the Net Zero Scenario, 2000-2030


The average reduction in specific fuel consumption (measured in litres of gasoline equivalent per 100 km [lge/100 km]) between 2010 and 2015 was 1.5%. This was driven mostly by continuous improvements in engine technology and the introduction of hybrid powertrains. Specific fuel consumption decreased even though average vehicle power and size increased over this period. However, improvements between 2017 and 2019 slowed to a mere 0.9% per year, as rapidly increasing vehicle power and weight counteracted technical improvements in powertrain and vehicle efficiency technology. 

Specific fuel consumption of cars and vans in the Net Zero Scenario, 2000-2030


In 2020 the specific fuel consumption of cars and vans sold in China increased after years of rapid declines, while in the United States it remained essentially unchanged. In Europe, 2020 saw a surge in electric vehicle sales as more stringent CO2 emission limits came into force, driving a decrease of 12% in specific fuel consumption, the largest year-on-year change ever recorded on the continent. In China in 2021, an 8% decrease was observed, again on the back of a doubling of electric vehicle sales. To be in line with the Net Zero Scenario pathway, the average reduction in specific fuel consumption will need to be more than 8% per year globally, largely through rapidly increasing sales of conventional hybrids and zero-emission vehicles. 

The long-term trend of increased vehicle size continued to progress. In 2010, 17% of vehicles sold were SUVs, while in 2021 that value increased to 46%, that is 2 percentage points above 2020 levels. This trend is slowing progress in fuel economy improvements for fossil fuel powered vehicles, which still account for the large majority of vehicles sold. 

SUV sales share as a proportion of overall car and van sales, 2010-2021

Technology deployment

The majority of new light-duty vehicles are equipped with a conventional gasoline powered engine, while others are powered by diesel, as conventional hybrids or with compressed natural gas engines. In 2021 fossil fuelled powertrains accounted for 92% of all light-duty vehicle sales at a global level, with the remaining 6.8 million sales being electric vehicles (including battery electric and plug-in hybrid vehicles). Around 16 000 hydrogen-powered fuel cell electric vehicles were sold globally. To be in line with the Net Zero Scenario pathway, about 60% of new light-duty vehicle sales will need to be electric by the end of the decade.

Car and van sales shares by technology/fuel in the Net Zero Scenario, 2000-2030


Examples of tightening and forthcoming emission standards in major light-duty vehicle markets include the following:

  • In the United States, fuel economy policy is regulated through the Corporate Average Fuel Economy (CAFE) standard. In May 2022 a final rulemaking was enacted, which increases the stringency of fuel economy regulation for the period up to 2026. The latest regulation mandates yearly improvements of 8% until 2025 and 10% in 2026.
  • ASEAN member countries continued to make progress towards the introduction of fuel economy standards, with a series of workshops in 2021, culminating in a report with recommendations on how to ensure that their fuel economy standards contribute to economic, societal and environmental goals.
  • In the European Union, the Fit-for-55 package includes a regulation, recently passed by the European Commission, that requires fleet emission reductions (from a 2021 starting point) of 55% for cars and 50% for vans by 2030, and 100% for both by 2035. This effectively mandates that all new cars and vans sold from 2035 onward would need to emit zero tailpipe emissions. While this does not yet mean that only fully zero-emission powertrains (i.e. battery and fuel-cell electric) can be sold, and leaves the door open in theory for conventional cars running on internal combustion engines, so long as they use electrofuels, in practice it is a strong signal of regulatory support for electric vehicles.
Recommendations for policy makers

Higher fuel prices are correlated with lower fuel consumption. European countries as well as Japan and Korea, where high fuel taxes are levied, have the world’s lowest specific fuel consumption. 

In comparison, low fuel taxes in Canada, Australia and the United States correspond with above-average fuel consumption. Higher fuel taxes could therefore encourage the uptake of fuel-efficient vehicles in these countries and support alignment with the Net Zero Scenario. Importantly, to ensure that fuel taxes are not a form of regressive taxation, targeted measures could be devised to offset impacts on disproportionately affected segments. Furthermore, all governments must move towards eliminating fossil fuel subsidies.

One of the most widespread regulatory instruments to incentivise rapid adoption of efficient technologies is CAFE standards. Although CAFE standards did not successfully drive down fuel consumption in the European Union between 2017 and 2019, once the new EU 2020 target came into force, average CO2 emissions dropped by 12% within a single year (the same amount achieved between 2010 and 2019).

Additionally, “feebate” schemes, such as France’s bonus-malus policy introduced in 2008, impose a fee on the purchase of vehicles for which rated specific CO2 emissions (g CO2/km) exceed a predetermined level, and subsidise the purchase of vehicles with CO2 emissions below a specified level. Although feebates directly target CO2 emissions performance, they indirectly affect vehicle weight and size, as larger, heavier vehicles tend to be less fuel-efficient.

Augmenting taxes applied to the purchase of large, heavy cars can disincentivise the sale of ever-larger and heavier vehicles. Since 1955 Norway has implemented a one-off registration (purchase) tax on internal combustion engine light-duty vehicles based on vehicle kerb weight as well as CO2 and NOx emissions. More recently, France imposed a tax on vehicles weighing over 1 800 kg, while battery electric vehicles and plug-in hybrid electric vehicles remain exempt.

Cities can discourage SUV and large-vehicle uptake by implementing measures that make owning them less appealing. Parking fees can be based on vehicle size, and/or a greater share of parking spaces can be reserved for smaller cars. For example, Berlin is considering charging SUV owners as much as USD 590 for city parking permits (five times the cost for a small car), and in Vancouver, Canada, owners of a 2023 (or newer) large internal combustion engine SUV or pick-up truck may be charged USD 789 annually for a residential parking permit.

To ensure fuel economy and CO2 emission standards are effective, governments must continue regulatory efforts to monitor and reduce the gap between real-world fuel economy and rated performance. Encouragingly, new EU regulations require on-board fuel consumption meters for all new cars from 2021 onwards, with data communicated to the legislator to track real-life evolution of average fuel consumption.

  • Matteo Craglia, International Transport Forum, OECD, Reviewer
  • Francois Cuenot, UNECE, Reviewer