The Theme
This map shows, for the populated area of each census division, the likely effect of an unexpectedly large increase in the period 1990 to 2010 in retail fuel price on the
average fuel efficiency of light-duty vehicles. The years, 1990 and 2010, are the base year and the target year, respectively, for greenhouse gas reductions for the
Kyoto Protocol. The fuel efficiency effect is measured in terms of the net improvement of the average fuel efficiency of light-duty vehicles from the model year 1990 to
2010 due to this unusual increase. An alternative layer is provided in this map to show the improvement of average light-duty vehicle fuel efficiency under a
business-as-usual scenario. The business-as-usual case assumes that there will be no unexpected changes in vehicle factors and no additional policy intervention
from 1990 to 2010.
The average fuel efficiency of light-duty vehicles, which measures
miles travelled per gallon, was calculated for each census division,
by averaging the tested fuel efficiency rating for each vehicle's
class, weighted by that class' market share in the census division.
The values of net improvement of the average fuel efficiency in
response to an unexpected fuel price increase were derived by comparing
the projection of average fuel efficiency under a fuel-price increase
scenario, and the projection under a business-as-usual scenario.
The fuel-price increase scenario assumes, for the 1990 to 2010 period,
a retail fuel price increase of $0.50 per litre in addition to its
changes provided by the business-as-usual case, while other assumptions
are the same as for the business-as-usual case.
Light-duty vehicles include all cars and light trucks. The light-duty vehicle size classes, defined by the US Environment Protection Agency, were adopted for the
vehicle classification. This classification has 15 classes: six classes for automobiles, six classes for light trucks, and three classes for station wagons. Among these
15 classes, seven prominent classes account for the large majority of new light-duty vehicle sales in each census division. The prominent classes are subcompact
cars, compact cars, midsize cars, large cars, small vans, small utility vehicles and large pickups. The remaining classes include two seater cars, minicompacts,
small pickups, large vans, large utility vehicles, and three size classes of wagons.
Relation to Climate Change
Because vehicles consume a substantial part of energy in Canada, average vehicle fuel efficiency is an important indicator for greenhouse gas emission and climate
change policy making. The lower the fuel efficiency, the higher the emission per vehicle, and, consequently, the greater its contribution to greenhouse gas production.
Vehicle market share is one of the two major factors determining average vehicle fuel efficiency (the other being the fuel efficiency of a vehicle, per se). The map of
average fuel efficiency, therefore, suggests the mix of vehicle classes in a particular area.
Gasoline cost is the major vehicle operating cost. Economic logic predicts that an increase in gasoline price would, to some extent, cause users to choose more
fuel-efficient vehicles in order to reduce vehicle-operating cost. The mix of vehicle market shares would therefore shift in favour of smaller and more fuel-efficient
vehicles, resulting in improvements in average vehicle fuel efficiency.
Sensitivity of Average New Light-duty Vehicle Fuel Efficiency
to Fuel Price
Four scenarios of gasoline price increase were assessed in the supporting
study, with increases ranging from $0.05 to $0.50 per litre. Under
the $0.05 price increase scenario, the potential net improvement
of average light vehicle fuel efficiency by census division would
range from 0.1% to 0.7%. This net improvement would increase with
the amount of increase in gasoline price. Under the scenario of
a $0.50 gasoline price increase, which is represented in this map,
the potential improvement would range from 1.6% to 3.7%.
Overall, the scenario testing suggests that a significant improvement of average light-duty vehicle fuel efficiency would occur only when fuel prices rise drastically. The
scenarios also exhibit significant spatial variations. As shown in this map, for example, the Prairie Provinces would have the most sensitive response in fuel efficiency
improvement to retail fuel price. Quebec would be the least responsive, likely due to its highest standing in the average fuel efficiency.
Data Source
A case study was conducted at the GeoAccess Division of Earth Sciences
Sector, Natural Resources Canada, in collaboration with Transportation
Energy Use Division of Energy Sector, Natural Resources Canada,
in order to showcase a spatial econometric approach to modelling
in support of policy making. The scenario projection for average
light vehicle fuel efficiency was produced during this study. Some
details on the scenario projection are provided in Methodology
for Vehicle Fuel Efficiency Scenario Projection.
The verification of the projection of light-duty vehicle market share, which served as a basis for the fuel efficiency scenario testing, has shown its likely validity for
forecasting shifts in the mix of light-duty vehicle sales for a given model year in a short to medium term. This projection, however, is based on a series of
macroeconomic assumptions in Canada's Energy Outlook 1997, which represent a best guess for the possible future if there will be no additional policy interventions.
Generally, it is suggested that an econometric projection should serve as a trend forecast rather than a numerical forecast.
Also note that, while conducted within Natural Resources Canada,
this projection does not represent an official Natural Resources
Canada projection. An official projection for vehicle fuel efficiency
and market shares at provincial and national levels can be found
in Canada's Emissions Outlook: An Update 1999.
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