Energy Efficiency Assignment

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Assignment Title:

ENERGY, ECONOMICAL, AND ENVIRONMENTAL

IMPACT OF IMPLEMENTING FUEL ECONOMY LABEL
FOR CARS IN MALAYSIA

Edited by:
Emad Sadeghi ezhad
KGH080002

Lecturer:
T.M.I. Mahlia

Academic Year-(Semester):
Session 2008/2009-(Sem. 2)
Contents

List of Tables………………………………………………………………...2
List of Figures……………………………………………………………….3
Nomenclature………………………………………………………………..4
Summary…………………………………………………………………….5
1. Introduction……………………………………………………………….6
2. Survey Data……………………………………………………………….7
3. Methodology……………………………………………………………...8
3.1. Fuel saving (FS)………………………………………………... 8
3.2. Bill saving (BS)………………………………………………... 8
3.3. Capital recovery factor…………………………………………...8
3.4. Net saving………………………………………………………..8
3.5. Cumulative present value (PV)…………………………………..9
3.6. Emission reduction……………………………………………... 9
4. Results and Discussions………………………………………………....10
6. Conclusions……………………………………………………………...12
References………………………………………………………………….13
Appendix…………………………………………………………………...13

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List of tables:

Table 1: Year and number of cars …………………………………………..7

Table 2: Emission based on fuel type…………..……………………………7
Table3: Aspects of car usage and the values………..…….…………………7
Table 4: Number of cars and economical analysis………….……………...10
Table 5: Percentage of power generation and emission reduction………....11

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List of Figures:

Fig 1: Economical profit………………………………….………………..11

Fig 2: Emission reduction……………….………………………..………..12
Fig 3: Number of cars prediction………...………………………………...14

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omenclature

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Summary
The Environmental Protection Agency (EPA) is finalizing changes to the
methods used to calculate the fuel economy estimates that are posted on window stickers
of all new cars and light trucks sold in the United States. This final rule will greatly
improve the EPA fuel economy estimates to more accurately inform consumers about the
fuel economy they can expect to achieve in the real world. The new test methods take
into account several important factors that affect fuel economy in the real world, but are
missing from the existing fuel economy tests. Key among these factors are high speeds,
aggressive accelerations and decelerations, the use of air conditioning, and operation in
cold temperatures. Under the new methods, the city miles per gallon (mpg) estimates for
the manufacturers of most vehicles will drop by about 12 percent on average relative to
today's estimates, and city mpg estimates for some vehicles will drop by as much as 30
percent. The highway mpg estimates for most vehicles will drop on average by about 8
percent, with some estimates dropping by as much as 25 percent relative to today's
estimates. These changes will take effect starting with 2008 model year vehicles,
available at dealers in 2007. We also are adopting a new fuel economy label design with
a new look and updated information that should be more useful to prospective car buyers.
The new label features more prominent fuel cost information, an easy-to-use graphic for
comparing the fuel economy of different vehicles, clearer text, and a Web site address for
more information. Manufacturers will be phasing in the new design during the 2009
model year. Finally, for the first time we are requiring fuel economy labeling of certain
passenger vehicles between 8,500 and 10,000 lbs gross vehicle weight rating. Because of
the Department of Transportation's recent regulation that brings medium-duty passenger
vehicles into the Corporate Average Fuel Economy program starting in 2017, EPA is now
statutorily obligated to include these vehicles in the fuel economy labeling program.
Medium-duty passenger vehicles are a subset of vehicles between 8,500 and 10,000 lbs
gross vehicle weight that includes large sport utility vehicles and vans, but not pickup
trucks. Vehicle manufacturers are required to post fuel economy labels on medium-duty
passenger vehicles beginning with the 2011 model year. Fuel economy label in Malaysia
is developed to encourage the people to choose the most efficient car, and finally to
dispose the inefficient car out of the market. In energy and environmental point of view,
this method will decrease the usage of energy and off course decrease the rate of

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pollution caused by the car emission. In economical point of view, this will surely
increase the bill savings and annual savings for the customer.

1. Introduction
This final rule has three key elements. First, we are finalizing changes to the
Environmental Protection Agency's (EPA) fuel economy testing and calculation
procedures so that the miles per gallon (mpg) estimates for passenger cars and light-duty
trucks will better reflect what consumers achieve in the real-world. Second, we are
updating the fuel economy window sticker that appears on all new cars and light trucks
sold in the U.S., which will make the window sticker more useful and understandable to
consumers. Third, for the first time we are requiring fuel economy labeling of certain
passenger vehicles between 8,500 and 10,000 lbs gross vehicle weight rating (GVWR),
such as the largest sport-utility vehicles (SUVs) and passenger vans. The application of
fuel economy label will be analyzed during the year 2009 to 2017. The analysis will
include the prediction of number of cars during that period, and economical group
analysis; the amount of fuel savings, bill savings, and annual savings. In the
environmental point of view, will be calculated the rate of emission reduction of; CO2,
NOx, SO2, and CO.

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 2. Survey Data
While the lack of real-world experience makes forecasting response to a vehicle fee
bate speculative, various models have been run to gain insights on the matter. These
analyses typically separate out two distinct aspects of the response: manufacturer
(supply) and consumer (demand) response. Manufacturers are assumed to adopt
efficiency technologies that cost less than the reduction in fee or increase in rebate plus
the discounted value of the fuel savings that they bring about.5 Analysis of their response
involves an assessment of the availability and cost of technologies to improve fuel
economy. Consumer response is modeled by various means on the basis of elasticities
and cross-elasticities of demand for all vehicle types with respect to price, as determined
by historical data on buying behavior. The data available in this study are; year and the
number of cars, emission based on fuel type, and aspect of car usage and the values

Table 1: Year and number of cars Table 3: Aspects of car usage and the values

Year umber of Cars Description Values

1987 1356678 Fuel economy standards 775 litre/year
1988 1427283
Maximum fuel economy 535 litre/year
1989 1534166
1990 1678980 Year standard enacted 2009
1991 1824679 Discount rate 7%
1992 1942016 Incremental cost RM 61.5
1993 2088300 Life span 8 years
1994 2302547 Baseline fuel consumption 1035 litre/year
1995 2553574 Average fuel price RM 1.80/litre
1996 2886536 Annual efficiency 3%
1997 3271304 improvement
1998 3452852 Shipment survival factor 100%
1999 3787047
Petrol CO2 emission 2.31 kg/litre
2000 4145982
2001 4557992
2002 5001273

Table 2: Emission based on fuel type

kg/KWh
CO2 SO2 Ox CO
Coal 1.18 0.0139 0.0052 0.0002
Petrol 0.85 0.0164 0.0025 0.0002
Gas 0.53 0.0005 0.0009 0.0005
Hydro 0 0 0 0

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3. Methodology
This study and data analysis is using the following terms:

3.1. Fuel savings (FS)

Fuel savings from labeling is the multiplication between Applicable stock and
Unit fuel savings. This can be calculated using the following equation:

FS = AS x UFS

3.2. Bill savings (BS)

The bill savings is a function of fuel savings and the average price of fuel (FP).
The potential bill savings is calculated by the following equation:
BS = FS x FP

3.3. Capital recovery factor

The capital recovery factor is the correlation between the discount rate and the
lifetime, this correlation is calculated by the following equation; which include the
discount rate (d):

3.4. et savings
There are two methods to calculate economical impact of motor retrofit i.e.
annualized costs and cash flow. In the first method, the incremental cost (IC) spreads
over the lifetime of the efficient motor so that the pattern of expenditures matches the
flow of bill savings. The Annual Net Savings (ANS) over time and calculated by the
following calculation, which include BS, NR, Incremental Cost (IC), and Capital
Recovery Factor (CRF).

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A S = BS - sum( R x IC) x CRF
IC = PPE - PPUE
IC is the difference between Purchase Price of efficient (PPE) and unefficient (PPUE)
motors.
The second method is the cash flow over the lifetime of the efficient motor, where
the motor is paid for full when it is installed. The purchasers incur the incremental cost
when the motor is purchased, but the benefit of higher energy efficiency is spreads over
the motor efficiency. The Net Savings (NS) in term of actual cash flows is calculated by
the following equation:
S = BS - sum( R x IC)

3.5. Cumulative present value (PV)

The cumulative present value is calculated using the percentage of discount rate.
The cumulative present value of the annualized net savings is calculated by the following
equation:

3.6. Emissions reduction (ER)

The environmental impact from labeling is potential reduction of greenhouse
gasses or other element that caused negative impact to the environment. The common
emission reductions are usually, CO2, SO2, NOx and CO. The emission reduction is a
function of energy savings. The emission reduction can be expressed mathematically by
the following equation:

ERpollutant = sum (Pfuel x m) x ES

Pfuel : percentage of power sourced from this fuel
m : mass of pollutant per kWh

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4. Result and Discussion
The result of calculation using the listed formulas, are presented as follows:

Table 4: Number of cars and economical analysis

Sh AS SF UFS FS (ltr/year) BS (RM) A S (RM) S (RM) PV-A S (RM)

Year umber of ltr/year UFS*AS FS*PF FSxPF-(ASxCRFxSFxIIC) ESxPF-Sh x A S / (1+d)^(i-
Car IIC Ydr)
2000 4145982
2001 4557992
2002 5001273
2003 5053856
2004 5520538
2005 6012316
2006 6529190
2007 7071160
2008 7638226
2009 8230388 5150154 5150154 1 240 1236036960 2224866528 2171971871 1908132057 2049030067
2010 8847646 5618531 10768685 1 240 2584484400 4652071920 4545445785 4306532264 4045430567
2011 9490000 5696210 16464895 1 240 3951574800 7112834640 6949807482 6762517725 5835192375
2012 10157450 6187988 22652883 1 240 5436691920 9786045456 9561747935 9405484194 7573799949
2013 10849996 6704862 29357745 1 240 7045858800 12682545840 12391860128 12270196827 9259918758
2014 11567638 7246832 36604577 1 240 8785098480 15813177264 15450737045 15367497096 10892159937
2015 12310376 7813898 44418475 1 240 10660434000 19188781200 18748971670 18708226473 12469136982
2016 13078210 8406060 52824535 1 240 12677888400 22820199120 22297156987 22303226430 13989512139
2017 13871140 9023318 61847853 1 240 14843484720 26718272496 26105885980 26163338439 15452033800

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Table 5: Percentage of power generation and emision reduction
Coal Petrol Gas Hydro CO2 SO2 Ox CO
Year umber of kton ton ton ton
Car
2000 4145982
2001 4557992
2002 5001273
2003 5053856
2004 5520538
2005 6012316
2006 6529190
2007 7071160
2008 7638226 16.76% 2.44% 53.20% 27.60%
2009 8230388 17.34% 2.21% 51.55% 28.90% 614 3746 1756 367
2010 8847646 18.00% 2.00% 50.00% 30.00% 1278 7960 3711 750
2011 9490000 18.74% 1.81% 48.55% 30.90% 1951 12426 5756 1122
2012 10157450 19.56% 1.64% 47.20% 31.60% 2691 17527 8062 1514
2013 10849996 20.46% 1.49% 45.95% 32.10% 3506 23379 10673 1928
2014 11567638 21.44% 1.36% 44.80% 32.40% 4410 30108 13635 2368
2015 12310376 22.50% 1.25% 43.75% 32.50% 5416 37858 17003 2838
2016 13078210 23.64% 1.16% 42.80% 32.40% 6537 46784 20836 3342
2016 13871140 24.86% 1.09% 41.95% 32.10% 7792 57059 25197 3884

Fig 1: Economical profits

30000000000

25000000000

20000000000
BS
ANS
RM

15000000000
NS
PV-ANS
10000000000

5000000000

0
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
YEAR

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Fig 2:Emission reduction

60000

50000

40000
CO2
CO2 & SO2

NOx & CO
SO2
30000
NOx
CO
20000

10000

0
2009 2010 2011 2012 2013 2014 2015 2016 2017
Year

5. Conclusions
The application fuel economy label had shown an economical and environmental benefit
for the country. Economically, the method increases the Bill Savings up to RM 30 billions
(2017), also increases the Annual Net Savings up to RM 30 billions (2017), and the Fuel
Savings up to 14 Gigalitre a year (2017).
In the environmental point of view, the method increases the emission reduction. In the
year of 2016, CO2 reduction reaches 7,000 kton, SO2 reaches 51 kton, NOx reaches 23 kton,
and CO reaches 4 kton. The labeling method has mathematically proven to greatly save the
financial expenses and reduce the emission to the environment.

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References
Dr. Indra Mahlia, Energy Policy-Energy Label: Economical and Environmental Impact,
Lecture Paper of Energy Efficiency, 2007

Appendix

Fig 3:Number of cars prediction

6000000
y = 12548x 2 + 52598x + 1E+06
R2 = 0.9987
5000000

4000000
No of cars

3000000

2000000

1000000

0
0 2 4 6 8 10 12 14 16
No

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