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Middle East and North Africa
tax rate than to equivalent gasoline price changes stemming from market price fluctuations.
In another case, Germany’s 1 percent fuel-price hike decreased the number of kilometers driven by 0.4 percent, thus contributing to lower vehicle emissions and higher air quality (Frondel and Vance 2018).
Improving Vehicle Technology, Emissions Control, and Inspection
Increasing vehicle fuel efficiency requirements and setting vehicle emission limits can decrease air pollution. Continuous renewal of the vehicle fleet with vehicles adhering to emission standards, such as those set by the EU (see box 3.6 on the Euro emissions standards and their adoption in the Middle East and North Africa), have led to a decrease in average emissions per driven kilometer in Middle East and North Africa cities (Abdallah et al. 2020). The effects of the penetration of Euro standards in global markets—following from the fact that vehicles exported from Japan, the EU, and the US must fulfill these standards regardless of the domestic regulation in the destination country—are referred to as the “Euro effect” in some scientific studies. PM2.5 emissions were more than
BOX 3.6
Mandating increased efficiency for newly produced cars and trucks and setting standards for their maximum emissions are ways to reduce their environmental impact and decrease the air pollution they cause. The European Union (EU) puts forward directives for various types of vehicles—the so-called Euro standards—that regulate maximum emissions and introduce a set of approval tests that these vehicles must pass before being eligible for sale.
New-Vehicle Technology Regulations Starting in 1992 with the Euro 1 standard, these regulations became mandatory in all EU member states, and new vehicles had to be equipped with a closed-loop, three-way catalyst. Subsequent adaptions of the regulations took place in the following decades and required reductions of pollutant emissions from newly introduced cars, with Euro 6 being in effect since September 2014. Exported vehicles from the EU also must meet these standards.
Some countries outside the EU followed suit, adopting the same or similar regulations. Not all economies in the Middle East and North Africa have adopted measures to restrict imported cars to fulfill the newest Euro emissions standards, but in
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BOX 3.6
most of them, certain minimum standards that correspond to earlier stages of the regulation must be met.
Many of the region’s economies have lower standards or do not set any vehicle emissions at all. Morocco is one of the few that has adopted the Euro 4 standard for light-duty vehicles, while Algeria and Jordan have adopted the Euro 3 standard.a In other countries, either lower standards for lightduty vehicles apply (for example, in the Islamic Republic of Iran and Saudi Arabia) or no policy has been set (for example, in Lebanon, Oman, and the Republic of Yemen).
Some countries have introduced vehicle emissions standards for heavyduty vehicles, such as the Islamic Republic of Iran (Euro IV), but the fleet of such vehicles in Tehran largely meets Euro III or lower standards (Heger and Sarraf 2018). However, more and more cities in the region are mandating minimum limits for buses in their public transportation fleets. For example, the Euro III emission standard is obligatory for buses in Ajman, Cairo, Jeddah, Madinah, Makkah, Riyadh, and Tunis, while Abu Dhabi and Dubai mandate at least Euro IV standards for buses. Amman in Jordan is prescribing the Euro V standard and Bahrain the Euro VI standard. Fuel Content Regulations For emissions technology to work efficiently, the fuel used must fulfill certain criteria, such as specific sulfur limits. As the EPA notes, high sulfur content in gasolines significantly impairs the effectiveness of emission control systems because of increased sulfur compounds in the exhaust.b Taking diesel particulate filters (DPFs) as an example, higher sulfur content in the fuel leads to higher production of sulfate particulate in the combustion process, in turn leading to quicker saturation of the DPFs. This increases the back pressure in the exhaust system, which impairs the life cycles of DPFs, implying that they have to be regenerated or replaced more often. Studies have shown that when fuel has a sulfur content of 50 parts per million (ppm) instead of 10 ppm, the regeneration temperature needed rises by around 50 degrees Celsius, implying that in the case of vehicles in city traffic, reliable regeneration can no longer be ensured. Furthermore, the increased back pressure increases the combustion system’s fuel consumption, undermining efforts to lower emissions caused by DPFs. For the emission-decreasing technology prescribed in emissions standards to work efficiently, it is necessary to regulate the quality of the fuel used to run the vehicles, as the subsection on “Upgrading Fuel Quality” discusses.
a. Euro standards for light-duty vehicles are denoted with Arabic numerals (for example, Euro 6), while standards for heavy-duty vehicles are denoted with Roman numerals (for example, Euro VI). b. “Gasoline Sulfur,” Gasoline Standards, EPA: https://www.epa.gov/gasoline-standards/gasoline -sulfur.
60 percent lower in 2010 than they would have been in a world where no such regulations had been put in place (Crippa et al. 2016).
New-vehicle technology. Most economies in the Middle East and North Africa already have restrictions on the age of imported used cars. Mandating higher technology levels for new cars would decrease emissions from the region’s car fleet and could incentivize car-producing markets to adopt these regulations or stricter ones.
Several international empirical studies have examined the effect of exhaust emissions standards on air pollution. For example, the introduction of tougher emissions standards (from pre-Euro regulations to Euro 4) significantly reduced exhaust emissions from gasoline-powered cars in London’s vehicle fleet. For diesel cars, the evidence was less clear; in general, emissions from diesel-fueled cars were found to be substantially higher than those from gasoline-fueled cars (Rhys-Tyler, Legassick, and Bell 2011). Air pollution regulations in India requiring catalytic converters for new vehicles have had considerable positive effects on air quality. PM concentrations were reduced by 19 percent five years after the implementation of the regulation. Its adoption is also associated with a decline in infant mortality—though only modestly, with the statistical relationship not being significant (Greenstone and Hanna 2014).
Emission controls. Tackling air pollution from vehicles by raising emissions standards carries economic benefits for vehicle owners. Improved vehicle emissions standards and the accompanying technology upgrades increase cars’ fuel efficiency and are highly viable from an economic perspective. Cost-benefit assessments for several already implemented or planned emissions standard improvements in various countries have shown that the annual benefit-cost ratio of such measures ranges from a minimum of 1.4:1 up to 16:1 when considering fuel costs and decreased health costs stemming from reduced air pollution.
Relating this to costs per vehicle, the additional costs for equipping vehicles with technologies to fulfill higher emissions standards are amortized within an estimated time period of 1.5 to 5 years, depending on the emissions standard considered (Kodjak 2015). This also applies to measures such as the introduction of diesel particulate filters that can lead to lower fuel consumption, carrying economic benefits for vehicle owners.
Inspections. Regular checks are necessary to ensure vehicles’ compliance with emissions standards. Highlighting the importance of such checks, 25 percent of cars in Tehran failed to comply with maximum emission levels or had other deficiencies in their mandatory yearly checks (Tehran Times 2019). The introduction of mandatory vehicle inspections has led to a 44 percent decrease in black carbon emissions and mitigated air pollution significantly, according to Tehrani officials.
From a regulatory viewpoint, mandating regular checks (using fines or banning use of the vehicle as the consequence of noncompliance) is a
simple but effective policy instrument, but it has to be enforced effectively. For example, practices such as removing catalytic converters or adjusting engine parameters are still widespread in Lebanon, highlighting the need for stricter regulations on regular inspections (Abdallah et al. 2020). In addition, achieving comprehensive, regular vehicle checks involves setting up vehicle inspection garages and training staff to perform the checks.
To incentivize regular inspections, monetary as well as nonmonetary benefits can be employed. Monetary incentives include tax breaks for upgrades and repairs, while nonmonetary benefits can be granted in the form of allowing only inspected vehicles to enter LEZs, as is the case in Tehran. To lower the perceived costs to vehicle owners, the city of Tehran provides mobile vehicle inspection units to reduce waiting times and ease access to official inspections (Financial Tribune 2018).
Introducing mandatory vehicle inspections has the dual advantage of job creation in this sector while alleviating air pollution from outdated vehicles. From an economic point of view, the jobs created from setting up the necessary garages would add employment opportunities for the population and an accompanying rise in living standard. Furthermore, the government tax revenues stemming from these additional jobs and services could be considerable. The additional costs of inspections for vehicle owners could be subsidized to reduce the refusal rates, perhaps by lowering the tax rates applicable to these inspections and any repair services needed to fix car deficiencies.
Upgrading Fuel Quality and Supporting Vehicle Fuel Switching
Fuel quality standards. The quality and content of fuel for motorized vehicles play significant roles in the emission of hazardous pollutants. Upgrading fuel quality by establishing maximum limits for lead and sulfur contents in fuels—two ingredients that emit as particularly harmful pollutants in the combustion process—should therefore be the primary concern of regulators worldwide. With the Euro directives on fuel quality, the EU has set standards for automotive fuels and lately also marine ones. The Middle East and North Africa generally lags other regions in setting comprehensive and appropriate fuel quality standards (box 3.7).
The adoption of Euro IV standards in Tehran’s transportation sector, with an emphasis on taxis, has considerably reduced air pollutants and raised air quality (Ghadiri, Rashidi, and Broomandi 2017). The effectiveness of such policies has also been shown in a host of studies of Chinese provinces, which between 2013 and 2017 adopted regulations that mimic those in Europe, Japan, and the United States. The adoption of these standards significantly improved air quality, particularly in reductions of PM and ozone (Li, Lu, and Wang 2020; Wei 2019; Yang, Jiang, and Pan 2020).
