International passenger transport and climate change: A sector analysis in car demand and associated ${\mathrm{CO}}_2$ emissions from 2000 to 2050

Abstract

The paper provides global regionalized projections of passenger car demand, use and associated ${\mathrm{CO}}_2$ emissions from 11 world regions. The study is based on empirical data that have been originally collated from international sources for the purpose of modeling region-specific car stock demand. Derived demands serve as indicator of car related fuel consumption and associated ${\mathrm{CO}}_2$ emissions, which are calculated on the basis of behavioral and technological scenarios. The obtained ${\mathrm{CO}}_2$ emission paths are sectoral baseline scenarios that identify region-specific potentials of growth in car induced ${\mathrm{CO}}_2$ emissions assuming that current trends continue to prevail. The study adopts a multi-model approach to car demand by applying two methodologies rooted in the economics of consumption: utility maximization and single equation models. The utility maximization method for modeling car demand is driven by the preferences of the representative consumers of each world region, subject to exogenous price and income trajectories. The latter is adopted from an optimal growth model. This is a novel approach to projecting global regionalized sectoral car demands. The study is complemented by the application of single equation income–consumption models based on logistical Gompertz functions and non-linear regression techniques to compare model results.

Introduction

Passenger car demand and use is one key sector of fossil fuel consumption and as such a contributor to anthropogenic GHG emissions and driver of climate change. Road transportation operates on oil as the fuel of choice but first signs of a diversification of the fuel base have appeared, favoring natural gas, biofuels and synthetic fuels. Global transportation energy use accounts for roughly 23% of global carbon emissions from energy use (21% in 2000). Recent trends in total aggregated GHG emissions of Annex I Parties state an overall decline from 1990 to 2004 in major energy consuming sectors except for the transport $(+24.4\%)$ and energy industry sectors $(+7.6\%)$. The share of emissions is projected to rise to about 25% if business-as-usual patterns of mobility are to prevail (OECD/IEA, 2004). This would constitute a dramatic increase in emissions of more than 85% between 2000 and 2030.

The level and dynamics of transport related GHG emissions challenge international climate policies. Pursuing ambitious climate goals like the $+2{}^{\circ }\mathrm{C}$ target, to which the EU itself has committed, requires a long term reduction of more than 50% by 2050 compared with a 1990 baseline and a reduction of more than 90% until the end of the century (WBGU, 2007). The transport sector has to contribute to emissions abatement because other energy consuming sectors are unable to compensate for transport related emissions.

The persisting problem of increasing emissions from transport is mirrored in multiple studies on decarbonizing and decoupling transport emissions from economic growth, e.g. IEA, 1993, IEA, 2001, OECD (2006) and EEA (2007). However, national or supranational attempts to cut emissions from the transport sector have not been able to reverse the current trends in growing transport emissions.

The present paper presents regionalized car stock demands derived on the basis of partial equilibrium models from 11 world regions until 2050. It is complemented by a second method, the single equation approach of income–consumption curves. Applying different methodologies to model passenger car demands follows the idea of providing scenario ranges in order to quantify the scope of possible outcomes and thus bring to light uncertainty in modeling long term baseline trends. The multi-model approach is commonly applied in integrated assessments of climate change, see, for instance, Nakicenovic and Swart (2000).

Recently, sectoral approaches to emissions reduction have been gaining attention in international/national climate policy, i.e. in the design of a post-Kyoto agreement (Baron, 2006). A sector wide approach to emissions mitigation may—in certain cases—be more successful than national approaches, as competitiveness risks and carbon leakage can be overcome. A sectoral approach is particularly interesting for internationally oriented sectors and their businesses, given a fairly limited number of actors, such as, for example, the car manufacturing industry. An essential step to sectoral abatement targets is to quantify global sectoral and regionalized baseline scenarios of ${\mathrm{CO}}_2$ emissions. The focus of the present study is on the dynamics of passenger transport, i.e. on light-duty vehicles including cars, vans and light trucks. On-road mobility constitutes the majority of transport related emissions, i.e. about 78% of global transport related ${\mathrm{CO}}_2$ emissions are released on roads including both passenger and freight transport (IEA, 2005). And passenger road transport contributes the majority of on-road emissions.

Comprehensive scenarios of region-specific passenger car demand are also required in top-down cost-effectiveness studies that assess paths of least costs in climate protection across economic sectors (Azar et al., 2003) or in energy-systems bottom-up optimization models that analyze technology options of abatement in the passenger car sector (Turton and Barreto, 2004). Cited studies are based on scenarios of passenger transport activity levels developed by Schafer (1998) and Schafer and Victor, 1999, Schafer and Victor, 2000. They consider traffic volume an explanatory variable in modeling car related ${\mathrm{CO}}_2$ emissions. But they do not recur to the number of cars purchased. Cars are, however, the object of consumer choice, and their technological characteristics inter alia determine the specific amount of ${\mathrm{CO}}_2$ emissions assuming inelastic behavior and distances driven. Despite this, only one study projects regionalized global car demand until 2050. The WBCSD (2004) uses extrapolations of growth rates and region-specific starting conditions to derive long term regionalized car stock trajectories on the basis of which emissions paths are derived. But none of these studies considers consumer economics as a modeling device. The application of microeconomic utility maximizing consumer behavior is nevertheless regarded as state-of-the-art in climate economics and integrated assessment, notably in computable general equilibrium models (CGE) (Böhringer and Rutherford, 2002, Kemfert, 2002). Sectoral specifications of CGE models, on the other hand, do not yet represent specific energy demands and associated ${\mathrm{CO}}_2$ emissions of the global passenger vehicle fleet in use. The present study closes this gap by applying traditional consumer demand theory in order to model global regionalized and long term demands for car stocks from where correlated ${\mathrm{CO}}_2$ emissions are derived.

The paper is structured as follows: We discuss historical trends in regional car consumption in Section 2. It will be demonstrated that car consumption follows a typical pattern known as the Engel curve. The two different model approaches are introduced in Section 3. Unknown model parameters are estimated based on the empirical data discussed in Section 2. We apply both models to simulate future car consumption and related ${\mathrm{CO}}_2$ emissions. The corresponding results will be presented in 4 Car stock model results, 5 . The computation of ${\mathrm{CO}}_2$ emissions scenarios! in Section 5 is based on additional behavioral and technological assumptions. Conclusions will be presented in Section 6.