Modelling the effects of transport policy levers on fuel efficiency and national fuel consumption

The paper provides an overview of the main features of a Vehicle Market Mod el (VMM) which estimates changes to vehicle stock/kilometrage, fuel consume d and CO2 emitted. It is disaggregated into four basic vehicle types, The m odel includes: the trends in fuel consumption of new cars. including the ro le of fuel price; a sub-model to estimate the fuel consumption of vehicles on roads characterised by user-defined driving cycle regimes; procedures th at reflect distribution of traffic across different area/road types; and th e ability to vary the speed (or driving cycle) from one year to another, or as a result of traffic growth. The most significant variable influencing f uel consumption of vehicles was consumption in the previous year, followed by dummy variables related to engine size, the time trend (a proxy for tech nological improvements)? and then fuel price. Indeed the effect of fuel pri ce on car fuel efficiency was observed to be insignificant (at the 95% leve l) in two of the three versions of the model, and the size of fuel price te rm was also the smallest. This suggests that the effectiveness of using fue l pr-ices as a direct policy tool to reduce fuel consumption may be limited . Fuel prices may have significant indirect impacts (such as influencing pe ople to purchase more fuel efficient cars and vehicle manufacturers to inve st in developing fuel efficient technology) as may other factors such as th e threat of legislation. (C) 2000 Elsevier Science Ltd. All rights reserved .