Is the Corporate Average Fuel Economy Scheme Effective at Improving Vehicle Fuel Efficiency in a Small-Scale Market? Evidence from Taiwan

Hwa Lin (), Yun-Hsun Huang and Jung-Hua Wu
Additional contact information
Hwa Lin: Department of Resources Engineering, National Cheng Kung University, Tainan 701, Taiwan
Yun-Hsun Huang: Department of Resources Engineering, National Cheng Kung University, Tainan 701, Taiwan
Jung-Hua Wu: Department of Resources Engineering, National Cheng Kung University, Tainan 701, Taiwan

Energies, 2024, vol. 17, issue 21, 1-17

Abstract: This article discusses how the introduction of corporate average fuel economy (CAFE) standards in Taiwan, whose market and industry size are much smaller than those of Europe, the United States, Japan, and China, can effectively improve vehicle energy efficiency. It examines the changes in passenger car energy efficiency under Taiwan’s CAFE framework and evaluates CAFE compliance performance to summarize its impacts and challenges. Observations indicate that the strategically flexible CAFE scheme is indeed more effective than mandatory minimum energy performance standards (MEPS) in encouraging manufacturers to comply through various methods. This approach has ultimately increased the overall average fuel efficiency of Taiwan’s passenger cars by 23.5% since 2012, while maintaining the diversity of vehicle models in the market. However, there are challenges to implementing CAFE in a small market, such as difficulties in introducing and promoting high-efficiency models, limited activity in the CAFE credit market, and the current overly favorable policy design. The design of the CAFE mechanism is crucial not only for benchmarking with larger economies but also for taking into account local market conditions and industrial capabilities. Taiwan’s next phase of CAFE must incorporate multi-dimensional adjustments to achieve higher, potentially net-zero vehicle efficiency targets.

Keywords: vehicle fuel efficiency; corporate average fuel economy; small-scale market (search for similar items in EconPapers)
JEL-codes: Q Q0 Q4 Q40 Q41 Q42 Q43 Q47 Q48 Q49 (search for similar items in EconPapers)
Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://www.mdpi.com/1996-1073/17/21/5516/pdf (application/pdf)
https://www.mdpi.com/1996-1073/17/21/5516/ (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:gam:jeners:v:17:y:2024:i:21:p:5516-:d:1513893

Access Statistics for this article

Energies is currently edited by Ms. Agatha Cao

More articles in Energies from MDPI
Bibliographic data for series maintained by MDPI Indexing Manager ().