The Top 5 Issues in LCFVs This Week: Is Diesel Cheating Industrywide?

09.15.16 | Blog | By:

Happy Thursday friends! Here’s my weekly take on the five most interesting developments in low carbon fuels and vehicles (LCFVs) trends over the last week:

  1. Is diesel cheating industrywide? A new paper asserts the answer is yes. It measured real fuel consumption of vehicles using the Dutch fuel card service Travelcard and found gaps (major in some cases) between official and on-road fuel consumption. Meantime, the European Commission is about to take legal action against member states for failing to make car manufacturers follow EU regulations. You really didn’t think we hit bottom on the fallout from Dieselgate, did you? It seems we have not.
  2. Vox is telling us to get over our EV range anxiety already because it doesn’t make much sense. Maybe. But what does make a whole lot of sense to the average driver out there right now is $2/gallon gasoline. Nevertheless, the perception of EVs may quickly change in the next few years as they enter more into the mainstream lead by government and industry public education efforts coupled with the fast evolution of technology.
  3. IEA said this week that the global energy system is undergoing a broad reorientation toward low-carbon energy and efficiency but investment in key clean energy technologies needs to be further ramped up to put the world economy on track for climate stabilization.
  4. There’s a lot of hype around electric vehicles, but there’s major activity brewing on the hydrogen side as well with one consultancy estimating this week that over 20 million hydrogen fuel cell vehicles will be sold cumulatively by 2032.
  5. The World Bank in a study released this week notes that air pollution has emerged as the deadliest form of pollution and the fourth leading risk factor for premature deaths worldwide. And it’s not just low-income countries.

1. Toulouse School of Economics (TSE): New TSE Research Suggests Cheating On Car Emission Tests Is Industry-Wide

TSE and UC Berkeley released a paper this week showing that it wasn’t just Volkswagen that cheated on car emissions tests. In fact, the authors say it was all major car companies in the European market and for a prolonged number of years in some cases. Using data from the Dutch fuel card service Travelcard, the academics measured real fuel consumption of vehicles on the road and compared it to car manufacturers’ claims.

Using panel data on 27 million fuel station visits from tens of thousands of drivers, they estimated that the difference between on-road fuel consumption and social laboratory tests increased from 5% before the regulation to more than 40% by 2014. This implies that 75% of the improvement in fuel economy attributed to the policy interventions is in fact due to gaming, the authors say. And it impacts most automakers, as the following figure shows, going back as far as 1998.


The figure shows that the “gaming” really amped up in the 2007-2009 period. According to TSE’s Matthias Reynaert, this increase is clearly correlated to regulatory pressure which pushed firms to exploit loopholes in the test process: “In 2007, as the EU announced that the emissions of new car models would have to decrease to 130 grams of CO2 per km, manufacturers had to adapt to this daunting target. However, the procedure used to establish official emission ratings, the New European Driving Cycle, leaves firms a lot of leeway to game on the test results.” National environmental taxes introduced after 2007 also added to the pressure to perform, he said.

Just as the source of the problem appears to lie with legislators and regulators, Mathias Reynaert believes the solution lies with them too: “You could say that the regulators are to blame because they’re responsible for setting up regulation that lets car makers report their own emissions. To put an end to the gaming, the authorities need to introduce more realistic, randomized testing enforced by third parties.”

Meantime, EU industry commissioner Elzbieta Bienkowska is preparing to take legal action against some member states for failing to make car manufacturers follow EU rules on emissions, according to EUObserver. Bienkowska told a somewhat skeptical-sounding Parliament committee that while the commission now has the reports, it has also asked for additional details because it does not want to take the national authorities’ conclusions at face value. “I am not at all satisfied with the reactions I got so far. We are on and on repeating our questions and they are not being fully responded to,” she said. That response certainly points to the weaknesses in the regulatory regime.

2. Vox: Electric Vehicles Can Go Far Enough. People Just Don’t Know It Yet.

“Range anxiety makes little objective sense” according to the author of this piece, noting that it’s mostly psychological and “not rooted in the reality of technology and daily needs.”  The only problem is that most car drivers in the U.S. (and globally) do not appear to agree with this assessment. At least, not yet. That might quickly change though in the next few years as EVs enter more into the mainstream lead by government and industry public education efforts coupled with the fast evolution of technology. California is a case in point, and more on that below.

As a matter of fact, this week a former Toyota executive in an interview about how hybrid has not reached parity with diesel technology, estimated that between the next 10-20 years “more than 50% or 60% of the cars should be hybrid or fuel cell, with 30% of the volume going to battery electric.” The battery electric percentage could be higher were it not for range which above 186 miles (300 km) will be cost-prohibitive to build. Consider the following that also happened, just this past week alone:

  • BMW, VW and ChargePoint this week announced the completion of EV charging corridors on both East and West Coasts with 95 new DC Fast charging stations installed. The chargers are strategically positioned both within and between relevant metropolitan areas, spaced approximately 50 miles (80 km) apart.
  • The new GM Chevy Bolt will have a range of 238 miles, more than Tesla’s current models, with a base price of less than $37,500.
  • Proterra unveiled an electric bus with a range of 350 miles.
  • Shell plans to offer charging points at its gas stations beginning next year at some of its UK locations.

ChargePoint’s chief executive officer, Pasquale Romano, told Bloomberg the proliferation of plugs will help electric vehicles go mainstream, mitigating drivers’ fears of getting stranded with a dead battery. “It won’t be long before drivers start suffering from ‘gas anxiety’, not range anxiety,” he said in a statement.  With $2 gasoline and U.S. consumers driving more than ever, that might take awhile.

Still, he’s not wrong about building the charging infrastructure to support EV uptake. This week the ICCT released a study about EV market development in California finding, among other things, that the 30 California cities with the highest electric vehicle uptake have, on average, 5 times the public charging infrastructure per capita than the U.S. average. Moreover, in those cities there are implemented “abundant, wide-ranging electric vehicle promotion programs involving parking, permitting, fleets, utilities, education, and workplace charging.”

And the state’s Zero Emission Vehicle (ZEV) program has made a difference as well. “The Zero-Emission Vehicle program has increased model availability and provided relative certainty about vehicle deployment that local stakeholders can bank on. The major metropolitan areas in California had 3 to 13 times the average U.S. electric vehicle uptake in 2015.”

3. IEA: World Energy Investment 2016

In a first-ever detailed analysis of investment across the global energy system, the International Energy Agency (IEA) released World Energy Investment 2016, noting that global energy investment fell by 8% in 2015, with a drop in oil and gas upstream spending outweighing continued robust investment in renewables, electricity networks and energy efficiency. Total investment in the energy sector reached US$1.8 trillion in 2015, down from US$2.0 trillion in 2014, as shown in the figure below.


The report provides a detailed picture of the current investment landscape across fuels, technologies and countries. It shows that the energy system is undergoing a broad reorientation toward low-carbon energy and efficiency but investment in key clean energy technologies needs to be further ramped up to put the world economy on track for climate stabilization, IEA says. Other findings include the following:

  • Energy investment in the global economy totaled US$183 billion in 2015, down 8% from the previous year, mostly because of cuts in upstream oil and gas spending as well as declining costs across the energy sector. Energy supply spending was at its lowest level since 2010.
  • Fossil fuels (including supply and power generation) still account for 55% of 2015 global energy investment, but the share declined from 61 % in 2014. The share of renewables increased from 16% to 17%, networks from 12% to 14% and efficiency investments met 12% of the total in 2015, up from 10% in 2014 .
  • Spending on all renewable energy sources , including biofuels for transport and solar thermal heat installations, totaled US$313 billion, as part of a broad reorientation in investment toward low-carbon energy sources.
  • Between 2011 and 2015, renewable power capacity spending was relatively flat, but investment yielded 40% greater capacity additions and generates a third more power thanks to better and cheaper wind and solar technology and deployment in markets with better resources.
  • China was the largest destination of renewables-based power capacity investment, reaching more than USD 90 billion or over 60 % of its total investment in generation in 2015.

4. GreenCar Congress (GCC): DOE Seeking Input on H2@Scale: Hydrogen as Centerpiece of Future Energy System; 50% Reduction in Energy GHGs By 2050

The U.S. Department of Energy (DOE) released this week a Request for Information seeking input on priority RD&D areas under its “H2@Scale” program to enable deep decarbonization of industrial, transportation, and power generation sectors through wide-scale deployment of hydrogen. Read more about it here.

5. The World Bank: The Cost of Air Pollution: Strengthening the Economic Case for Action

The World Bank in this report notes that air pollution has emerged as the deadliest form of pollution and the fourth leading risk factor for premature deaths worldwide. Those deaths cost the global economy about US$225 billion in lost labor income in 2013, and costs the global economy more than $5 trillion annually in welfare costs. An estimated 5.5 million lives were lost in 2013 to diseases associated with outdoor and household air pollution, with the most devastating damage is occurring in the developing world.

However, TIME notes that the problem is not limited exclusively to the developing world. Thousands die prematurely in the U.S. as a result of related ailments. In many European countries, where diesel vehicles have become more common in recent years, that number reaches in the tens of thousands. And it’s not just the young and the elderly who are impacted, it’s also working-age men and women.

The report finds that annual labor income losses cost the equivalent of 0.83 percent of GDP in South Asia. In East Asia and the Pacific, where the population is ageing, labor income losses represent 0.25 percent of GDP, while in Sub-Saharan Africa, where air pollution impairs the earning potential of younger populations, annual labor income losses represent the equivalent of 0.61 percent of GDP, according to the World Bank.

Among other recommendations, the World Bank supports “encouraging a modal shift toward cleaner transport or promoting cleaner sources of energy, [as] such projects can also help reduce pollution.” It also recommends that air pollution-related economic impacts, especially health impacts, need to be incorporated into project cost-benefit analysis, which is done in the U.S. but not necessarily in other countries.