Next-Generation Clean Diesel Vehicles: Hope for reducing CO2 emissions

TOMITA Hideaki
Senior Fellow, RIETI

Growing hope for lowering vehicle CO2 emissions in the post-Kyoto Protocol era

Nations around the world are actively discussing targets for reducing emissions of carbon dioxide (CO2) and other greenhouse gases. Participants in the United Nations Climate Summit in September 2014 discussed greenhouse gas reduction targets for the so-called post-Kyoto Protocol era (beyond 2020). Stakeholders hope that a framework for international reduction targets can be agreed to at the 21st session of the Conference of the Parties to the Framework Convention on Climate Change (COP21), scheduled for December 2015 in Paris. Japan will not find it easy to present a reduction target in time. One of the problems it faces is the nation's energy mix, which involves the nuclear question. Time is limited: Japan is due to present its target on March 31, 2015.

Japan's total CO2 emissions in FY2012 were 1.276 billion tons. Of this, the transportation sector accounted for about 20%. About 90% of that amount comprised emissions from automobiles including cargo. In turn, 50% of that was from passenger vehicles. Emissions from passenger vehicles, therefore, make up a little less than 10% of Japan's total emissions (Note 1). While some might say that this is an insignificant percentage of Japan's total emissions, clean diesel vehicles that improve fuel economy and generate lower CO2 emissions have been attracting notice in recent years. Depending on how widespread they become, clean diesel vehicles could be a significant factor in Japan's post-Kyoto Protocol greenhouse gas reduction target.

Clean diesel vehicles becoming more widespread in Japan

METI et al. (2008) defined clean diesel passenger vehicles as diesel passenger vehicles meeting regulations that are as stringent as those for gasoline passenger vehicles under the 2009 post-new long-term emission regulations which came into force in October 2009, and are the highest standards in the world for vehicle emissions. Such clean diesel vehicles would emit much cleaner exhaust and even dramatically reduce emissions of mono-nitrogen oxide (NOx) and particulate matter (PM) as compared to conventional diesel vehicles. The difference is so great that few of such vehicles have been developed or mass-produced to date. Yet, since the latter half of the 2000s, auto manufacturers' development efforts have brought to the market a number of clean diesel vehicles which are the new eco-cars with low CO2 emissions.

Until now, Japanese automakers have been seen as forerunners in developing hybrid and all-electric vehicles, demonstrating their international competitiveness advantages (Note 2). Recently, however, they have been gradually expanding their market lineup of clean diesel vehicles made in Japan. As of October 2014, there are 18 clean diesel vehicle models available for purchase (seven are made in Japan and 11 are imported). Only 3,000 such vehicles were sold in Japan in 2008, but, since then, sales levels have increased greatly. About 10,000 were sold in 2010, and it is estimated that about 80,000 were sold in 2013 (Note 3). In terms of the overall passenger car market, clean diesel vehicles are still just a tiny fraction of the total, but this means that there is much room to grow in the future.

Diesel passenger vehicles extremely common in Western Europe

In Western Europe, on the other hand, diesel passenger vehicles made up about 14% of all new passenger vehicles registered in 1990, but that figure climbed quickly starting in the second half of the 1990s and reached 53% in 2013 (see figure below). Several reasons have been suggested as to why diesel passenger vehicles suddenly became so popular. First, innovations in diesel technology in the second half of the 1990s greatly enhanced performance. Second, it is possible that consumers are highly sensitive to fuel prices, since taxes on fuel are greater than that on purchasing and owning automobiles. The low cost of diesel fuel could also be a reason why consumers favor these vehicles. Third, diesel simply has a positive image (Note 4).

In Japan in the 1980s, diesel vehicles made up 5% to 6% of all new passenger vehicle sales. In the 1990s and beyond, changes in the automobile tax structure increased taxes on diesel passenger vehicles, and a campaign by the Tokyo Metropolitan Government discouraged diesel to combat chronic air pollution. Then, a greatly diminished number of diesel models on the market caused sales to decline further. In 2005, diesel vehicles comprised just 0.04% of all new passenger vehicle sales, which is extremely low compared to Western Europe (Note 5).

Figure: Number of New Passenger Vehicles Registered in Western Europe, and Percentage that are Diesel
Figure: Number of New Passenger Vehicles Registered in Western Europe, and Percentage that are Diesel
(Note) Western Europe is defined here as 18 countries, including 15 members of the European Union and three members of the European Free Trade Association.
(Source) European Automobile Manufacturers' Association (ACEA)

CO2 emissions reduction effect of clean diesel vehicles

The fuel economy of a diesel engine, which runs on a type of light oil, is about 30% better than that of a gasoline engine. While the automobile is cruising, the CO2 emissions of a diesel engine are estimated to be about 25% less. If the share of diesel passenger vehicles were to rise to 10%, it would reduce CO2 emissions by two million tons. The savings would be 6.35 million tons if the share were to rise to 30% (Note 6). Additionally, refining the light oil that fuels diesel engines releases only about half as much CO2 as would refining gasoline. The refining of crude oil can yield set ratios of gasoline, light oil, kerosene, heavy oil, and so on. However, in Japan, where there is such high gasoline demand, an additional process is needed to produce more gasoline. This process causes further emissions of CO2, so if part of the gasoline demand were replaced with light oil, it would further reduce CO2 emissions. Calculations suggest that if diesel made up 30% of passenger vehicles, it could result in a savings of 1.7 million tons of CO2 emissions. Therefore, if clean diesel vehicles accounted for 30% of sales, the combined effect would be an annual savings of about eight million tons of CO2 emissions. This corresponds to approximately 7% of passenger vehicle CO2 emissions, or about 0.6% of Japan's total CO2 emissions, which is not a negligible amount (Note 7).

Popularizing CO2-free next-generation vehicles

The Next-Generation Vehicle Strategy Research Council (2010) considered what type of next-generation automobile development and popularization should be prioritized in order to maintain the Japanese automotive industry's technological advantage and market competitiveness as the external environment is changing so drastically. In its report, the Council in particular set a goal to popularize all-electric vehicles and plug-in hybrid vehicles, in addition to the hybrid vehicles in which the Japanese automobile industry already has an advantage internationally (see table below). To support this, the report further argued, it will be necessary for the government to provide incentives (such as development and purchasing subsidies, tax advantages, and infrastructure building).

Table: Popularizing Targets by Type of Passenger Vehicle in 2020 and 2030 (government targets)
Conventional vehicles50 - 80%30 - 50%
Next-generation vehicles20 - 50%50 - 70%
Hybrid vehicles20 - 30%30 - 40%
All-electric vehicles
Plug-in hybrid vehicles
15 - 20%20 - 30%
Fuel cell vehiclesUp to 1%Up to 3%
Clean diesel vehiclesUp to 5%5 - 10%

(Source) Next-Generation Vehicle Strategy Research Council (2010)

As the benefits of promoting clean diesel vehicles have become clear in recent years, it appears there has been a change in the course of the government's policy to support the popularization of clean diesel vehicles seriously. For example, the government has taken measures to lower the vehicle weight tax and excise tax applied to next-generation vehicles in general and is providing subsidies for introducing them. It is also the government's policy to support research conducted by the newly established Research Association of Automotive Internal Combustion Engines (AICE) (Note 8). This collaborative research organization is working to enhance diesel engine performance, and, in FY2014, the government provided financial assistance equivalent to 500 million yen, or about half of the organization's research costs.

The phrase "next-generation vehicles" includes a whole array of potential future choices. Given that the economic conditions, environmental regulations, etc. are changing moment to moment, businesses are ready to deploy strategies to invest in the optimal next-generation vehicles suited to these circumstances. Because of various limitations, it would be difficult to achieve CO2-free all-electric vehicles, hydrogen-fueled vehicles, and the like in the short term. For the time being, auto manufacturers pursuing development of different types of next-generation vehicles using the technology in which they excel is highly advantageous to consumers. This allows consumers to select the model that best fits their lifestyle from the many models available. Hopefully, the government will provide all types of policy support while private enterprise successfully develops CO2-free next-generation vehicles so that society can achieve medium to long-term sustainability as soon as possible.

October 21, 2014
  1. ^ See the website of the Ministry of Land, Infrastructure, Transport and Tourism for a breakdown of the CO2 emissions from the transportation sector in Japan.
  2. ^ Toyota Motor Company, the No. 1 seller of hybrid vehicles, has sold a cumulative 7.05 million hybrid cars worldwide as of September 30, 2014 (based on an announcement dated October 14, 2014). After it launched its hybrid car in 1997, it took Toyota about 10 years to achieve cumulative sales of one million units. However, Toyota hybrid cars have started to spread at a much faster rate: it took just another six years to reach cumulative sales of six million units. The mark of seven million units in cumulative sales was reached in the last nine months. Of the total, 3.35 million units occurred in Japan.
  3. ^ For details, see Gendai Business (2014). The website of the Clean Diesel Promotion Association also indicates that clean diesel vehicles are becoming increasingly widespread: cumulative sales of such vehicles by Mazda Motor Corporation, which has introduced a series of new models in recent years, have surpassed 100,000 units (February 2012 - August 2014).
  4. ^ For details, see METI et al. (2008).
  5. ^ For details, see METI et al. (2008).
  6. ^ See the website of the Clean Diesel Promotion Association, which succinctly outlines the CO2 reduction effect from the popularization of diesel vehicles.
  7. ^ Schipper and Fulton (2013) report very interesting results from a study of the CO2 reduction effect of diesel vehicles in 2009. Users of diesel vehicles in the European Union, where such vehicles account for more than 55% of the new auto market, tend to select larger, more powerful vehicles than those who drive gasoline vehicles. As a result, average CO2 emissions from new diesel vehicles purchased in 2009 were merely 2% lower than those from gasoline vehicles. The advantage that diesel had over gasoline in this respect in 2009 was even smaller than it was in 1995.
  8. ^ This technical research organization, established in April 2014 by eight Japanese auto manufacturers and one group, pursues basic and applied research on technology to enhance the performance of internal combustion engines.
  • Schipper, Lee, and Lew Fulton (2013), "Dazzled by Diesel? The Impact on Carbon Dioxide Emissions of the Shift to Diesels in Europe through 2009," Energy Policy, Vol. 54, pp. 3-10.
  • Ministry of Economy, Trade and Industry; Ministry of Land, Infrastructure, Transport and Tourism; Ministry of the Environment; Hokkaido Prefectural Government; Japan Automobile Manufacturers Association; and Petroleum Association of Japan (2008): "A Policy to Promote Clean Diesel," July 2008
  • Gendai Business (2014), "METI Supporting a Cleaner Diesel Engine Future," Kodansha, May 7, 2014
  • Next-Generation Vehicle Strategy Research Council (2010), "Next-Generation Vehicle Strategy 2010," April 12, 2010

October 21, 2014