Fuel Economy in Chile

Context of Transport Climate Action

Annual sales of passenger vehicles in Chile have almost doubled reaching 338,000 in 2014. However, sales of SUV and light duty trucks (LDT) increased by 244% in the period 2004 -2010, reaching more than 30% of total sales. Average CO2 emissions for the national fleet are relatively high at around 204 g/km (2010).

Air pollution has been a significant issue in cities such as Santiago. Diesel vehicles are increasing their market share, especially in SUV and LDT segment. NOx average emissions from diesel commercial vehicles can be over 20 times higher than those from new gasoline sedan cars.

A study for this project[1] showed average NOx emissions from petrol light duty vehicles sold in 2010 were 0.022 grams per kilometer, while diesel light duty vehicles corresponded to 0.18 grams per kilometer, eight times higher. In the case of commercial vehicles emissions were 22 times higher.

Chile has strong institutions for enforcing vehicle standards, good quality fuel and has good information about sales.

[1] http://www.unep.org/transport/gfei/autotool/Pdf’s/Chile_Feebate_Proposal%20Dec%202011.pdf

Description

With support from the Global Fuel Economy Initiative[2] and Centro Mario Molina Chile, the Ministries of Transport, and Energy and Environment, introduced a fuel economy label (FE label) to improve vehicle fuel economy in February of 2013. Chile has also subsequently introduced a fiscal policy in a tax reform which has both fuel economy and air quality objectives.

[2] An international partnership between FIA Foundation, UNEP, International Energy Agency, ICCT, International Transport Forum and UC Davis

*Funding is provided by the GEF and the EC.

Implementation

GFEI together with the Chilean Ministry of Transport first published a baseline study of CO2/Fuel Economy for the Chilean Car Market in September 2010

This information was key for negotiating an agreement about a labelling scheme between the Ministries of Transport, Environment and Energy and the Association of car manufactures/importers. The Fuel economy label started on February of 2013 was the first mandatory scheme in Latin America.

GFEI/ Centro Mario Molina developed a proposal in 2011 for a feebate system to promote more clean and efficient vehicles to reduce air pollution problems in big cities and to reduce national energy risk.

In 2014 the Chilean Congress approved the most important tax reform in the last 30 years, which included a fee for fuel consumption and the levels of NOx emission produced by the vehicle based on the FE label information. The tax was developed from the feebate proposal (but is based on a tax incentive/disincentive) and has been in force from December of 2014.

The tax must be paid at the moment of the purchase, and applies to every new light-duty (LDV) and medium-duty vehicle (MDV). The NEDC test and approval process is performed for each model in an independent national emissions laboratory called Center of Vehicle Control and Certification (3CV), related to the Ministry of Transport.

Benefits

The Ministry of Transport and Centro Mario Molina Chile are monitoring of average fuel economy and CO2 emission. During 2016 a first evaluation of the tax impact will be published.

The impact of the tax is greater on diesel vehicles in comparison to the gasoline vehicles due to their higher levels of NOx emissions, and preliminary figures show an important reduction in diesel vehicles sales.

Potential for scaling up

GFEI and Centro Mario Molina Chile are providing advice and support about developing similar fuel economy policies to other governments in the region, including Uruguay, Peru and Costa Rica. The Global Fuel Economy Initiative provides support to countries around the world who would like to take steps to improve fuel economy. GFEI has a ‘toolkit’ which illustrates steps countries can take.

Selected references

Centro Mario Molina (2010). Environmental monitoring of the Chilean automotive market

http://www.unep.org/transport/gfei/autotool/Pdf’s/ENVIRONMENTAL_MONITORING_OF_THE_CHILEAN_AUTOMOTIVE_MARKET_Version_Dic_2010.pdf

GFEI pic.jpg

PROJECT INFORMATION

Location:

Chile. South America

Start:

2009

Finish:

2014

Tags:

Chile, Mitigation, Passenger, Policy, Technology

Organizer/s:

Global Fuel Economy Initiative (UNEP, ICCT, Centro Mario Molina Chile)

Contact/s:

Gianni Lopez, glopez@cmmolina.cl, Centro Mario Molina Chile

“Car manufacturers and dealers are the most critical barrier for the introduction of advanced and efficient policies. The position of the big manufactures in developed countries are not the same in developing countries market”
-Gianni Lopez