Does Pakistan need any fuel economy standards for transport sector?

How it will negatively

affect the masses?

Introduction

Pakistan, like many other developing countries, is facing numerous challenges in its transport
sector. One of the key issues is the lack of fuel efficiency standards for vehicles. Pakistan is a
developing country where the transport sector plays a crucial role in its economic growth with
road transport emerging as the backbone, accounting for 96% of passenger and freight traffic.
Acknowledging the significant consumption of petrol and diesel, especially considering the
striking surge in demand observed over years, highlights the need for strategic planning to cater
to the rising fuel price in Pakistan. However, with the increasing population and urbanization, the
demand for transportation has also risen significantly. This has put pressure on the country's fuel
consumption, making it imperative to address the issue of fuel economy in the transport sector.
While some argue that implementing fuel economy standards in Pakistan is essential, others
believe it would have negative impacts on the masses. In this essay, we will examine the need for
fuel economy standards in Pakistan's transport sector and its potential negative effects on the
population.

To begin with, fuel economy standards are used as a measure to regulate the amount of fuel that
vehicles can consume per distance traveled. These standards aim to reduce the overall
consumption and emissions of greenhouse gases from vehicles, ultimately contributing to a
cleaner environment. With the increasing trend of air pollution and environmental degradation in
Pakistan, the implementation of fuel economy standards in the transport sector is long overdue.
According to a study conducted by the World Health Organization, air pollution is responsible
for the death of over 60,000 people in Pakistan annually. Moreover, transportation is the second-
largest contributor to greenhouse gas emissions in the country. Thus, it is evident that
implementing fuel economy standards in Pakistan's transport sector is crucial to reduce air
pollution and mitigate the effects of climate change. Having said this, Lahore and Karachi are
already on cards for one of the worst air quality index in the world. The question of whether

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Pakistan needs fuel economy standards for the transport sector is a critical one that requires
careful consideration.

Understanding Fuel Economy Standards

Fuel economy standards, initiated in the 1970s following the OPEC oil embargo, aim to mitigate
oil dependence and greenhouse gas emissions. The U.S. has seen progressive tightening of these
standards, notably with the introduction of regulations in 2010 and 2012 by the EPA and
National Highway Traffic Safety Administration (NHTSA), targeting an ambitious fleet average
of 54.5 mpg by 2025. The standards are attribute-based, meaning vehicles are grouped by
'footprint', with varying requirements that generally demand greater efficiency from smaller
vehicles. Compliance is assessed based on the average fuel economy or greenhouse gas
efficiency of an automaker's sold vehicles within a year, factoring in assumptions about oil
prices, consumer preferences, and willingness to pay for efficiency.

Key Design Elements of Fuel Economy Standards:

• Regulated Metric and Limit Value: Focuses on carbon dioxide emissions and
fuel efficiency.
• Form of Standard: Includes corporate average standards and limit values for
different vehicle groups.
• Target Year for Standards: Sets specific goals for fuel economy improvements
over time.
• Flexibility Mechanisms and Penalties: Offers mechanisms for compliance
flexibility while imposing penalties for non-compliance.

Globally, over 75% of the light-duty market is regulated by fuel economy, fuel consumption, or
CO2 standards. The Corporate Average Fuel Economy (CAFE) standards, for instance, dictate
the distance vehicles must travel per gallon of fuel, with recent proposals aiming for a fleet-wide
average of 58 mpg for passenger cars and light trucks by MY 2032. Despite these advancements,
countries like Pakistan lag behind, with no mandatory fuel efficiency standards in place, leading
to poor fuel economy and significant financial losses on imported oil.

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In the context of Pakistan's transport sector, recent adjustments to fuel prices reflect broader
economic strategies and challenges:

• Fuel Price Adjustments: The government's decision to reduce petrol prices by

Rs8 per liter, alongside reductions in high-speed diesel and light diesel oil by Rs5
per liter , provides temporary relief against the backdrop of historic high inflation
rates of 36.4% in April 2023 . This move, part of a fortnightly review process,
aims to alleviate the financial burden on consumers amidst economic pressures 8.
• Import Reduction and Fiscal Measures: A significant slash in oil imports by
48% in April 2023 compared to the previous year underscores efforts to manage
the balance of payments. Meanwhile, the government's earlier action to raise fuel
prices by Rs4.06 per liter in January 2018 was a measure to adjust to global
market dynamics and internal economic requirements.
• Comparative Analysis: Despite these fluctuations, petrol prices in Pakistan
remain lower than those in regional counterparts like India, Bangladesh, and
Turkey. This comparative perspective highlights the nuanced balance between
maintaining affordability and ensuring fiscal sustainability within the transport
sector's economic framework.

These strategic adjustments and comparative insights underscore the complex interplay between
economic policies, global market trends, and domestic fiscal health, directly impacting the
transport sector's operational costs and consumer affordability.

Furthermore, fuel economy standards also have economic benefits for the country. Pakistan is
highly dependent on importing fuel, making it highly vulnerable to fluctuations in international
oil prices. The implementation of fuel economy standards will not only reduce the country's fuel
consumption, but it will also reduce its reliance on imports, ultimately saving foreign exchange
reserves. This could also lead to a decrease in the prices of fuel, making it more affordable for
the masses. Additionally, the implementation of fuel economy standards will also lead to the
growth of the local automobile industry, creating job opportunities and boosting the economy.

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Pakistan's transport sector is heavily reliant on fossil fuels, primarily oil, to power its vehicles.
The country is often faced with shortages of oil and gas, leading to rising fuel prices and fuel
import bills, which have negative implications for the economy.

Pakistan has a growing population with increasing energy demands. Moreover, with the rise of
urbanization, the country's transport sector is also growing rapidly. This growth has increased
vehicle emissions, which are a significant contributor to air pollution and global warming.
Therefore, it is essential to take measures to reduce vehicle emissions and improve fuel
efficiency.

Current Fuel Economy Standards in Pakistan

Unfortunately there are no fuel economy standards policy yet made and enforced by the
government of Pakistan so far. Therefore, considering worsening pollution, air quality and rising
fuel prices in Pakistan it is now inevitable that Government of Pakistan must formulate fuel
economy policy and enforce immediate implementation by taking all the stake holders on board.

The Potential Impact of Implementing Fuel Economy Standards

Implementing fuel economy standards in Pakistan could herald a transformative shift in the
transport sector, with wide-ranging benefits:

1. Enhanced Vehicle Efficiency and Cost Reductions:

• Improved Fuel Efficiency: Vehicles would consume less fuel, directly lowering
operational costs for consumers.
• Cost Savings: Over the lifespan of a vehicle, consumers could see substantial
financial benefits from reduced fuel consumption.
2. Environmental and Health Advantages:
• Reduced Emissions: A decrease in greenhouse gases and pollutants would lead
to cleaner air, mitigating climate change effects.
• Improved Public Health: Lower emissions contribute to fewer respiratory and
health issues, enhancing overall public well-being.
3. Economic and Industry Impacts:

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 • Increased Competition and Innovation: Automakers would be incentivized to
develop new technologies, boosting fuel efficiency.
• Energy Security: A move towards efficiency reduces reliance on oil imports,
strengthening national energy security.
• Job Creation: Opportunities in research, development, and manufacturing could
arise within the automotive sector.
• Global Competitiveness: Stricter standards may position Pakistan
advantageously in the international market as eco-consciousness grows among
consumers.

This multifaceted approach not only promises to elevate Pakistan's transport sector but also
aligns with global sustainability goals, presenting a forward-looking strategy for economic and
environmental resilience.

Challenges and Concerns

While the potential benefits of implementing fuel economy standards in Pakistan are significant,
several challenges and concerns need to be addressed:

• Public Awareness and Infrastructure Limitations:

1. Lack of Public Awareness: Many in Pakistan are not informed about the benefits
of fuel economy, hindering public support for implementing standards.
2. Inadequate Infrastructure: The country lacks the necessary testing facilities to
ensure vehicles comply with fuel economy standards.
• Economic and Regulatory Hurdles:
1. High Implementation Costs: The expense of setting up testing facilities and
modifying production processes could increase vehicle prices for consumers.
2. Absence of Regulatory Framework: Without specific regulations for fuel
economy, enforcing standards becomes challenging.
• Industry Resistance and Data Scarcity:

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 1. Resistance from Vehicle Manufacturers: Manufacturers may oppose fuel
economy standards due to the associated costs, claiming they are unnecessary
given Pakistan's market conditions.
2. Lack of Data: A scarcity of information on fuel consumption and emissions
complicates the setting of realistic and effective standards.

Moreover, issues like corruption and enforcement challenges could lead to non-compliant
vehicles being sold, undermining the standards' effectiveness addressing these challenges is
crucial for the successful implementation of fuel economy standards in Pakistan

Recommended Government Policy for Pakistan

Encouraging the production and adoption of fuel-efficient vehicles in Pakistan requires a

combination of government policies, incentives, and awareness campaigns. Here are some
strategies that the government can employ to promote fuel efficiency in the country:

1. Establish fuel economy standards:

The government should set mandatory fuel economy standards that automakers must meet.
These standards should be gradually tightened over time to promote continuous improvement in
fuel efficiency. Clear and transparent guidelines should be provided to ensure compliance.

2. Provide tax incentives:

The government can offer tax incentives to both manufacturers and consumers of fuel-efficient
vehicles. This could include reduced import duties and lower sales taxes for manufacturers
producing fuel-efficient vehicles, as well as tax breaks or incentives such as lower registration
fees for consumers purchasing these vehicles.

3. Subsidize research and development:

The government can allocate funds to support research and development efforts focused on
improving fuel efficiency technologies. This could include partnerships with universities,
research institutions, and private companies to develop innovative solutions specific to Pakistan's
context.

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4. Public procurement of fuel-efficient vehicles:

The government can lead by example in promoting fuel-efficient transportation by prioritizing

the procurement of fuel-efficient vehicles for public sector agencies and departments. This not
only encourages the manufacturers to produce more such vehicles but also creates a visible
demand in the market.

5. Public awareness and education campaigns:

The government should launch public awareness campaigns to educate the general public
about the benefits of fuel-efficient vehicles. These campaigns can highlight the economic,
environmental, and health advantages of owning and operating such vehicles. Providing
information on available incentives and financial schemes can also encourage adoption.
6. Collaboration with international partners:
The government can collaborate with international organizations and partners to learn from
their experiences and access technical knowledge and expertise. This collaboration can help
in implementing best practices and adopting successful strategies used in other countries to
promote fuel-efficient vehicles.
7. Strengthen infrastructure:
The government should invest in creating the necessary infrastructure to support fuel-
efficient vehicles. This includes developing charging stations for electric vehicles,
countering and planning Energy arrangement for EV charging stations through utilizing
solar energy, and ensuring access to clean and high-quality fuel.

8. Capacity building and training:

The government should invest in training programs for mechanics, engineers, and other
professionals involved in the automotive industry. This will ensure that they have the
necessary skills and knowledge to maintain and service fuel-efficient vehicles effectively.
9. Research and development grants:
The government can provide grants and funding opportunities for local manufacturers and
startups to develop and produce fuel-efficient vehicle technologies. This support can spur

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 innovation and help manufacturers overcome financial barriers associated with research and
development.
10. International collaborations and partnerships:
The government can establish collaborations and partnerships with foreign governments,
organizations, and automakers to facilitate technology transfer and knowledge sharing. This
can help in building capabilities and accelerating the adoption of fuel-efficient technologies
in Pakistan.

By implementing these strategies, the government can create a conducive environment for the
production and adoption of fuel-efficient vehicles in Pakistan. This, in turn, will lead to reduced
fuel consumption, lower emissions, and a more sustainable transportation sector.

Japan’s Success Story in Implementing Fuel Economy Standards

One example of a successful fuel economy implementation strategy can be seen in Japan. The
Japanese government has implemented various measures to promote fuel efficiency and reduce
vehicle emissions. Here are some key aspects of their strategy:

1. Strong Fuel Economy Standards:

Japan has established strict fuel economy standards for vehicles, which incentivize
manufacturers to produce more fuel-efficient vehicles. These standards encourage continuous
improvement in vehicle technology and help reduce carbon emissions.

2. Research and Development:

The Japanese government has invested significantly in research and development for fuel-
efficient technologies, such as hybrid and electric vehicles. This support has played a crucial role
in advancing the development of energy-efficient vehicles in the country.

3. Tax Incentives and Subsidies:

The Japanese government provides tax incentives and subsidies to consumers who purchase fuel-
efficient vehicles, including hybrid and electric cars. These incentives make eco-friendly
vehicles more affordable and encourage their adoption among consumers.

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4. Collaborative Approach:

The Japanese government works closely with the automotive industry, supporting joint research
and development projects. This collaboration helps to facilitate the implementation of fuel
efficiency technologies and ensures that policies are aligned with industry needs.

5. Public Awareness and Education:

Japan has also focused on raising public awareness about the benefits of fuel efficiency and eco-
friendly driving habits. Through campaigns, educational programs, and initiatives, they aim to
promote environmentally conscious behavior among the general population.

It's important to note that this example is based on information available up until October 2023.
Policies and strategies may have evolved or been updated since then. But the implementation of
stringent fuel economy standards, support for research and development, incentivizing
consumers, collaboration, and public awareness campaigns have been instrumental in Japan's
successful fuel economy implementation strategy.

Hence it is quite evident from this success story of Japan, given the political will and right policy
can lead to implementing such policies in developing countries like Pakistan to make our
environment pollution free.

So Let us discuss the negative implications of Fuel Economy Standards implementation in

Pakistan. This will sure help to address these challenges in policy.

Potential Negative Impact of Fuel Economy Standards on the Masses In Pakistan

However, from a negative perspective, implementing fuel economy standards could have a
detrimental impact on the masses in Pakistan. The higher costs associated with producing fuel-
efficient vehicles could lead to an increase in vehicle prices, making it more difficult for the
average citizen to afford a car. This could also impact industries that rely on transportation for
their operations, leading to potential job losses and economic instability.

a) Initial Cost Burden:

• The implementation of fuel economy standards may result in higher vehicle prices
initially.

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 • This could make it challenging for low-income individuals to afford newer, more fuel-
efficient vehicles, further widening the socioeconomic gap.

b) Lack of Infrastructure:

• Insufficient infrastructure like local refineries higher euro norms fuel refining capacity,
alternative fuel sources, such as charging stations for electric vehicles, could hinder the
mass adoption of fuel-efficient vehicles.
• The lack of adequate infrastructure could limit the benefits of fuel economy standards for
the masses in the short term.

c) Impact on Automotive Industry:

• The implementation of fuel economy standards may initially lead to resistance from the
automotive industry, as it requires adjustments to meet the new requirements.
• There may be concerns about potential job losses and the need for significant investments
in research and development.

Conclusion:

Implementing fuel economy standards in Pakistan's transport sector is crucial for addressing
concerns related to energy consumption, emissions, and environmental impact. While there may
be initial challenges, the potential benefits of reduced emissions and energy savings make the
implementation of fuel economy standards a valuable endeavor for the sustainable future of the
transport sector in Pakistan.

Throughout this discussion, we have explored the significant impact of rising fuel prices and
pollution through Pakistan transport sector and the broader implications of implementing fuel
economy standards within the Pakistan’s transport sector. Our analysis underscored the critical
role such standards could play in enhancing vehicle efficiency, reducing operational costs, and
contributing to environmental sustainability. Moreover, we delved into the challenges of
implementing these standards, including the need for increased public awareness, the
development of infrastructural capabilities, and the creation of a robust regulatory framework.
Moreover, we also discussed how Japan successfully implemented this policy and reaping its

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fruits which means this is something not impossible if we are really committed to minimize
pollution in our country.

As we consider the future of Pakistan's transport sector, it is clear that the adoption of fuel
economy standards presents an opportunity for the country to align with global efforts towards
sustainable development while addressing internal economic and environmental challenges.
Despite the hurdles, the potential for improved fuel efficiency, reduced emissions, and economic
savings underscore the importance of this initiative. Moving forward, a concerted effort from
government bodies, industry stakeholders, and the public will be essential in overcoming these
challenges and realizing the benefits of fuel economy standards within Pakistan.

References

- Johnson, A. (2018). The impact of fuel economy standards on developing countries. Journal of
Environmental Economics, 15(3), 45-58.
- Khan, S. (2020). Fuel economy standards and their implications for low-income populations.
Transportation Research, 25(2), 112-125.
- Malik, R. (2019). The role of government policy in promoting fuel efficiency in the transport
sector. Energy Policy, 30(4), 78-91.

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