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Energy Efficiency Assignment

No. 3

Assignment Title:

ENERGY, ECONOMICAL AND


ENVIRONMENTAL IMPACT OF
IMPLEMENTING FUEL ECONOMY STANDARD
FOR CAR IN MALAYSIA

Edited by:
SAJJAD NAGHAVI
(KGH070032)

Lecturer:
T.M.I. Mahlia
Academic Year-(Semester):
Session 2007/2008-(Sem. 2)

Content

List of Tables 2
List of Figures 3
Abstract 4
Nomenclature 5
1. Introduction 6
1.1. Background 6
1.2. Significance to the study 6
1.3.Scope of the study 6
2. Survey Data 7
2.1. Introduction 7
2.2. Essentialdata 7
2.3. Summery 8
3. Methodology 9
3.1. Introduction 9
3.2. Study Procedure 9
3.3. Summery 12
4. Results and Discussions 13
4.1. Introduction 13
4.2. Results 13
5. Conclusions 18
Reference 19

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List of Tables

Table 1, Total number of car in Malaysia 7


Table 2, Input data for potential fuel saving of cars
8
Table 3, Emission based on petrol 9
Table 4, Necessery values 13
Table 5, The calculation result for Fuel saving
13
Table 6, The calculation result of the cost benefit analysis
15
Table 7, comparition of BAU nd STD 16
Table 8, CO2 reduction by efficiency improvment of cars
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List of Figures

Figure 1, Projected annual Fuel savings 14


Figure 2, Calculation result of cost benefit analysis of efficiency improvement for cars 15
Figure 3, Comparition of BAU and STD 16
Figure 4, Reduction of CO2 generation 17

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Abstract

Implementation of fuel economy standards in the world has become


a compulsory for most f ever country in order to increase the efficiency in
fuel consumption, financial, and the emission reduction. This emission
reduction has become an international issue regarding of the green house
effect of industrial and transportation sector’s emission. This paper
attempts to analyze cost benefit of implementing energy, economical and
environmental impact of implementing fuel economy standard for car in
Malaysia. The calculations were made based on growth of number of car
and decrease of fuel consumption from 1050 liter/year to 780 liter/year in
Malaysia. In this case we are going to survay the Fuel saving, Annual net
saving, Net saving, Cumulative present value and emission reduction by
reducing fuel consumption. The number of cars increase from 1,356,678 in
1987 to 6,473,261 in 2005 it is predictable that it grow up to about
16660638 in 2020. Therefore, efficiency improvement of this appliance
will give a significant impact in the future of fuel consumption in this
country. Furthermore, it has been found that implementing an energy
efficiency standard for cars is economically justified.

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Nomenclature

AEIic Annual efficiency improvement


ANSi Annualized net dollar savings in year i of car produce by
standard (RM)
ASic Applicable stoke
BAU Business as usual
BFCsc Baseline fuel consumption
CRF Capital recovery factor (%)
d Discount rate (%)
FSic Fuel saving(liter)
ICc Increment cost of car produce by standard (RM)
IICIc Initial incremental cost
Lc Life of car (year)
Naic Number of in car produce by standard year i
NSi Net saving in year i (RM)
PV (ANSi) Present value of annualized net savings for car produce
by standard (RM)
SFic Scaling factor in year i
SFCsc Standard fuel consumption
Shic Shipment in year i

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SSFic Shipment survival factor
TEIsc Total efficiency improvement
T Lifetime of standard (year)
UFSsc Unit fuel saving in year of standard enacted
UFSic Unit fuel saving in year i
Yse Year standard enacted
Ydr Year of discount rate base

1. Introduction

1.1. Background

Increasing the rate of development in the all countries grow up


using various type and models of cars rapidly. It causes raise the need of
fuels and in order of that cost and emission make greater. Malaysia is one
of the developing countries that because of grows in economical level of
people, using own car increase too. In this case, we are going to replace
the inefficient cars with efficient ones, and the purpose is determining the
variation Fuel consumption, cost and emission reduction by replacing
process.

1.2. Significance to the study

By car annual efficiency improvement a lot of energy and


investment will be saved. This replacement can be done by replacing cars

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producing without efficient engines with efficient engines.The impact of
fuel economy standards will be analized in the matter of energy savings,
economical savings (bill savings, fuel savings), and the last is the
environmental impact. The environmental impact will be analized
regarding to the reduction of fuel usage, that will decrease the amount of
fuel emissions (CO2, SO2, NOx, and CO). The pollutant are produced by the
engines, are: CO2, SO2, NOx, and CO. By reducing the amount of energy
needed by the industry to produce the goods, will off course reduce the
amount of emission of those dangerous gases.

An energy efficiency standard is the prescribed energy performance


of a manufactured product, sometimes prohibiting the manufacture of
products with less energy efficiency than the minimum standards. Failure
to meet standards is likely to result in substantial embarrassment or
imposition of mandatory standards. In countries with truly optional
voluntary standards (e.g. India), impact has been limited (Nadel, 1997).
Based on the experience of other countries, policymakers in Malaysia
should implement the program as mandatory since it works effectively in
many countries.

1.3. Scope of the study

The scope of this study is the data cars number and characteristics
that is shown in Tables 1, 2 and 3. So we evaluate the reduction of fuel
consumption by annual efficiency improvement and the effect of that in
cost and emission decline.

2. Survey Data

2.1. Introduction

To survey in any specially field we need to some primery data. In


this case these primary data are the number of cars from 1987 to 2005,
potential fuel saving of cars and petrol fuel emission.
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2.2. Essential data

The data required for this study are Number of cars, characteristices
of potential fuel saving of cars and petrol fuel emission in each litre. Table
1,2 and 3 that are shown in below are consist of these data.

(Table 1, Total number of car in Malaysia)


Year Number of Car
1987 1,356,678
1988 1,427,283
1989 1,534,166
1990 1,678,980
1991 1,824,679
1992 1,942,016
1993 2,088,300
1994 2,302,547
1995 2,553,574
1996 2,886,536
1997 3,271,304
1998 3,452,852
1999 3,787,047
2000 4,145,982
2001 4,557,992
2002 5,001,273
2003 5,426,026
2004 5,898,142
2005 6,473,261

(Table 2, Input data for potential fuel saving of cars)


Description Values
Year standard enacted 2010
Discount rate 7%
Incremental cost RM 1100
Life span 10 year
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Baseline Fuel Consumption 1050 litre/year
Current average fuel price RM 2.25 / litre
Fuel economy standards 780 litre/year
Annual efficiency improvement 3%
Shipment survival factor 100%
Petrol CO2 Emission 2.31 kg/litre

(Table 3, Emission based on petrol)


Emiss NO
CO2 SO2 CO
ion x
0.85 0.01 0.00 0.00
Petrol
00 64 25 02

2.3. Summery

In chapter 2 we denote to the perimary data that we need to them


in next calculations. These data are about the characteristics of cars and
fossil fuel emission generation by the them. So we maybe need to any
extra information for some variables that will be add in continue.

3. Methodology

3.1. Introduction

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This section discusses the methodology of the study. The main
purpose of the study is to demonstrate the visual diagrams of the
obtained values. Although the end results might not be an accurate
picture of the process, but can give a better vision about the car annual
efficiency improvment.

3.2. Study Procedure

3.2.1. Method of predicting data

The method used to estimate the rest of the data for calculation is
polynomial curve fitting. The method is attempted to describe the
relationship between variable x as the function of available data and a
response y. It seeks to 77 find a smooth curve that best fits the data, but
does not necessarily pass through any data points. Mathematically, a
polynomial of order k in x is an expression of the form:

y = c0 + c1x + cx2 + ... + ckxk (1)

3.2.2. Method of calculating potential energy savings

3.2.2.1. Baseline fuel consumption

The baseline fuel consumption is based on the survey or test data.


In order to get baseline fuel consumption in the future, prediction must be
made using the annual efficiency improvement. The baseline fuel
consumption in a particular year can be calculated by the following
equation:

BFCsc=BFCYscc×1+AEIicYpd-Ysc (2)

3.2.2.2. Initial unit fuel savings

The initial unit energy savings is the difference between the annual
unit energy consumption of a unit meeting the standards and the unit
energy consumption of the average unit that would have been shipped in
the absence of standards. The actual use for a particular appliance will

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depend on the capacity and usage pattern of the refrigerator-freezers.
Initial unit energy savings can be calculated by the following equations:

UFSsc=BFCsc-SFCsc (3)

3.2.2.3. Shipment

Shipment data comprise the number of car in predicting year minus


the number in the previous year plus number of retired appliances in the
current year. The shipment for cars can be expressed by the following
equation:
Shic=Naic-Nai-1c+Nai-Lc (4)

3.2.2.4. Total efficiency improvement

Total efficiency improvement is a percentage ratio of initial unit


energy savings and baseline energy consumption of refrigerator-freezers
while the standards are enacted. Thus, total efficiency improvement can
be calculated using the following:

TEIsc=UFSscBFCsc×100%
(5)

3.2.2.5. Scaling factor

The scaling factor would linearly scale down the unit fuel savings of
cars and the incremental cost to zero over the effective lifetime of the
standards. The scaling factor can be expressed as the following equation:

SFic=1-(Yshic-Ysesc)×AEIscTEIsc
(6)

3.2.2.6. Unit fual savings

The unit fuel savings were adjusted downward in the years after the
standards is implemented using the efficiency trend scaling factors. This
factor accounts for the natural progress in efficiency expected in the
baseline case. The unit energy savings for cars can be calculated by the
following equation:

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UFSic=SFic×UESsc (7)

3.2.2.7. Shipment survival factor

The shipment survival factor is a function of the annual retirement


rate and the retirement function. The shipment survival factor for cars can
be calculated using following equation:

SSFic=1-[YtcTc-Yshic-23Lc(4/3-2/3)×Lc]
(8)

3.2.2.8. Applicable stock

The applicable stock is the shipments in particular year plus number


of car affected by standards in previous year multiplied by shipment
survival factor. The applicable stock can be calculated using the following
equation:

ASic=Shic×SSFic+ASi-1c (9)

3.2.2.9. Fuel Saving

Fuel savings from improving efficiency is the multiplition of Aplicable


stock and nit fuel saving and survival factor. This can be calculated using
the following equation:

FSic=i=sTASic×UESic×SFic (10)

3.2.3. Economic impact of the standards

The economic impact consists of potential bill savings, net savings


and cumulative present value. The economic impact is actually a function
of fuel savings and investment for more efficient cars due to the
standards. The description of each variable is explained in the following
section.

3.2.3.1. Initial incremental cost

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Initial incremental cost per unit of refrigerator-freezer is a function of
unit energy savings and incremental cost and can be calculated using the
following equation:

IICIc=UESsc×ICc (11)

3.2.3.2. Capital recovery factor

The capital recovery factor is the correlation between the discount


rate and the lifetime of more efficient motor; this correlation is calculated
by the following equation; which include the discount rate (d):

d
CRF =
(1 − (1 + d ) −T )
(12)

3.2.3.3.Bill savings

The bill savings of improving efficiency of cars is a function of fuel


savings and the average price of fuel. The potential bill savings by
improving efficiency of cars is calculated by the following equation:

BSiL=ESiL×PFi
(13)

3.2.3.4.Net savings

There are two methods to calculate economical impact of improving


efficiency of cars i.e. annualized costs and cash flow. In the first method,
the incremental cost spreads over the lifetime of the efficient car so that
the pattern of expenditures matches the flow of bill savings. The method
is smoothens the net savings over time and calculated by the following
equation:

ANSiL=ESiL×PFi-i=lTNRiL×CRF×IClL
(14)

The second method is the cash flow over the lifetime of the more
efficient car, where the working of car is paid for full when it is bought.
The purchasers incur the incremental cost when the efficient car is
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purchased, but the benefit of higher energy efficiency is spreads over the
lifetime of the car. The net savings in term of actual cash flows is
calculated by the following equation:

NSiL=ESiL×PFi-NRiL×IClL
(15)

3.2.3.5.Cumulative present value

The cumulative present value is calculated using the percentage of


discount rate. The cumulative present value of the annualized net savings
for improving efficiency of cars is calculated by the following equation:

PVANSiL=i=lTANSiL(1+d)(1-Ydr)
(16)

3.2.4. Emission reduction

The environmental impact from more efficient cars 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 fuel
savings. The emission reduction can be expressed mathematically by the
following equation:

ERiL=FSiL×(PEi1×EMp1+PEi2×EMp2+…+PEin×EMpn
(17)

3.3. Summery

By these equations we can determine the cost-benefts of improving


efficiency of cars and emission reduction. This chapter illustrate the way
of annalysing, so in continue easily we can obtain the results of improving
efficiency of cars.

4. Results and discussions

4.1. Introduction

In this chapter we try to obtain energy, economical and environmental


impact of implementing fuel economy standard for car by initial data from
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characteristics of cars. Based on the survay data collected in Table 1,2 and 3 the other result
will determined.

4.2. Results
The result of calculation using the listed formulas for fuel savings, bill savings, and
emission reduction, are presented as follows:

(Table 4, Necessery values)


BFC 1050
UFS 270(liter/year)
TEI 0.257
IIC RM 1100
CRF 0.142

The calculation result of implementing of annual efficiency improvement for cars in


Malaysia is tabulated in Table 5. It is necessary to remember that the standards for cars are
only effective for a certain period because annual efficiency of the car is still improving 3%
per year without standards. In other words, even in the absence of standards, the energy
efficiency of appliance tends to improve gradually over time due to technological advances.

(Table 5, The calculation result for Fuel saving )


Scali
ng Unit Fuel
Shipment Applica Fuel
Numbe Facto Saving
Year Shipment Survival ble Saving
r of Car r (liter/year
factor Stock (liter)
(year )
)
2 89580 259319
4,774,315 100% 1.00 270 7001614080
010 88 04
2 96122 311440
5,212,129 100% 0.88 238 6560305783
011 25 33
2 10292 368252
5,681,214 100% 0.77 207 5842189479
012 166 47
2 10997 429570
6,131,771 100% 0.65 175 4897388821
013 911 18
2 11729 495867
6,629,691 100% 0.53 144 3804555620
014 460 09
2 12486 568173
7,230,614 100% 0.42 112 2659168396
015 813 23
2 13269 642000
7,382,737 100% 0.30 81 1556017230
016 970 60
2 14078 721595
7,959,462 100% 0.18 49 651608710
017 931 22
2 14913 807215
8,561,991 100% 0.07 18 95364043
018 696 13

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Fig. 1 shows that, the annual fuel savings from cars standards increase sharply in the
beginning of the analysis period. Over time, the projected technological improvement in the
baseline begins to catch up to standards. Since the savings on each unit are calculated relative
to the baseline unit in the year the unit was purchased, the savings on new units is lower in
later years, since the baseline energy consumption has declined. Referring to Fig. 1, the
standard is only effective for about 8 years from 2010 to 2018.

(Figure 1, Projected annual Fuel savings)

The annual efficiency improvement program starting in 2010 will save about
33068.2 Mil.liter fuel from 2010 to 2018. The calculation result is the minimum amount
which can be saved due to implementing of annual efficiency improvement for cars that
produce in duration of this year. But in actual case there are many inefficient cars that
exceeding the standards sold in the Malaysian market. The calculation result of cost benefit
analysis is tabulated in Table 6 and presented in Fig. 2. The programs will result of bill
savings RM 74403 Mil., annualized net dollar savings is RM 43563 Mil., net savings RM
43058 Mil., and cumulative present value of annualized net savings is about RM 39160 Mil.,
after 8 years of implementation.

(Table 6, The calculation result of the cost benefit analysis)


PV(ANS)(RM
Year BS(RM) ANS(RM) NS(RM)
)
2010 15753631680 11703068275 10501885180 11703068275
2011 14760688011 10463853631 9696607812 9779302459
2012 13144926329 8735726307 8354579738 7630121676
2013 11019124848 6659004235 6636220829 5435731020

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2014 8560250144 4431355901 4672723165 3380660200
2015 5983128891 2288145831 2671676487 1631416354
2016 3501038768 496525922 1067895485 330856187
2017 1466119598 -595171899 -135064003 -370643147
2018 214569096 -619469447 -408424023 -360536858

(Figure 2, Calculation result of cost benefit analysis of efficiency improvement for cars)

(Table 7, comparition of BAU nd STD)


Year BAU STD
2010 26411644224 19410030144
2011 30768591682 24208285899
2012 35289879088 29447689609
2013 39931016133 35033627312
2014 44710883953 40906328333
2015 49693601427 47034433031
2016 54466174470 52910157239
2017 59382273497 58730664787
2018 64435351348 64339987306
2019 69618315792 69556200134
2020 74923610923 74169605008

This study has proved that introducing standard of annual efficiency improvement for
cars offer great benefits for the consumers, governments as well as the environment, which is
not considered in this paper. If we want to have an opinion about how changing policy from
Business as usual to new standard policy give us fuel saving we can compare the fuel
consumption prediction of cars in duration of 8 years from 2010 to 2018 due to implementing
annual efficiency improvement in cars. Fuel consumption by BAU in 2010 to 2018 is
predicted to be about 405089 Mil.liter and By STD is about 372021 Mil.liter that show 33068
Mil.liter reductions in fuel consumption-that is a great value.

(Figure 3, comparition of BAU and STD)


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Each litre of petrol produces 2.31 kg CO2, so by new policy that
cause to reduce the fuel consumption of new cars productions, we can
reduce production of CO2. In the duration of implementing annual
efficiency improvment policy the production of CO2 is 76,387,570 ton less
than business as usual. It shows a great prevention in production of CO2
by new policy.

(Table 8, CO2 reduction by efficiency improvment of cars)


CO2
Year
generation(ton)
2010 16173729
2011 15154306
2012 13495458
2013 11312968
2014 8788523
2015 6142679
2016 3594400
2017 1505216
2018 220291

(Figure 4, Reduction of CO2 generation)

4.3.Summery

Chapter 4, is consist of the result of this survay. The fuel


consumption reduction and economical and environmental impact of that
were the tree section of results. Therfore by these results now we are able
to get a new opinion about policy of implementing annual efficiency
improvement in car productions.

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5. Conclution

This study has clearly highlights the important of the programs to


Mitigate air pollutant emissions in the developing countries like Malaysia.
Introducing minimum standards for cars is proved offer great benefits for
the Environment, consumers and governments. The analysis also found
that there are many advantages for Malaysia by implementing energy
efficiency Standard for cars. The program will encourage manufacturers to
produce energy efficient products, which will increase the competitiveness
in the local and international market.

The standards indirectly also reduce the environmental pollution. The study has
shown that implementation of annual efficiency improvement for car is economically
reliable. The consumers will pay higher purchase prices for appliances, but luckily will pay
less for fuel and have less affect on environment by producing emission. Once the standards
is implemented, inefficient product will be push out from the market. If most of the products
exceed the standards, it will become irrelevant. Therefore, the standards must be periodically
revised to continued progress in improving appliance efficiency.

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Reference

Dr. Indra Mahlia, Energy Efficiency Standard-Energy and environmental


Impact, Lecture Paper of Energy Efficiency, 2008
Dr. Indra Mahlia, energy efficiency standard economical impact, Lecture Paper of
Energy Efficiency, 2008

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