Vehicle and fuel labelling
Vehicle fuel-efficiency labelling (VFEL) is one of the measures designed to improve the fuel efficiency of transport fleets. VFEL has been introduced by various economies throughout the world since 1978. It may have been introduced as either voluntary (e.g. Brazil, Canada) or mandatory (e.g. China, Germany, United States) measure. The principle behind VFEL is to raise consciousness in the general public about the fuel efficiency of the vehicles on sale, based on the assumption that properly informed consumers will be more likely to purchase vehicles that are more fuel efficient. This, in turn, should encourage manufacturers to increase the fuel efficiency of their vehicles.
VFEL requirements can include labels showing a vehicle’s fuel economy and/or CO2 emission values that need to be attached to new vehicles. They may also refer to showing respective information on posters or displays promoting new cars at the point of sale, or on any guides or promotional literature that advertise new vehicles. The exact label design varies significantly across existing VFEL programs.
A strong compliance-and-enforcement program is essential for earning and maintaining consumers' trust in a VFEL program and creating a level playing field for the vehicle manufacturers. There are two main levels of enforcement related to VFEL programs. One is ensuring manufacturers have followed established procedures in creating the certified value; the other is encouraging and ensuring that labels are displayed as required.
Similar to VFEL programs, fuel labelling programs provide drivers with better information on the suitability of fuels for their vehicles. This helps to inform drivers on the environmental impact of their choice, which, in turn, can support the roll-out of alternative fuels. Besides being visible in all public refuelling stations and vehicle dealerships, fuel labels may be required to be visible in vehicle manuals and/or in electronic handbooks available via a vehicle's infotainment centre.
Evaluating the impact of labelling programs is challenging. This is mainly because the impact of labelling programs on fleet fuel efficiency cannot easily be isolated from related policies, such as vehicle CO2 emission/fuel efficiency standards and vehicle/fuel tax policies that often run in parallel to labelling programs.
An evaluation of the European Union’s car-labelling directive concluded that the directive appears to have the potential to influence consumer choices in a way that eventually reduces overall CO2 to a certain extent. However, the realisation of this potential depends strongly on national implementation, including synergies with relevant fiscal measures and the design of the label and the enforcement of the directive.
Costs for VFEL programs mainly affect industry and public authorities. The main ongoing cost to industry is that of printing the labels to be attached to new cars, estimated at between EUR 500,000 and EUR 1 million per year for the European Union.
For public authorities, costs will vary with the extent of the program, as well as the effort the public authorities make to enforce the program and inform the public. Costs may be associated with monitoring and enforcement, data collection, maintenance of online databases and information websites, and/or printing of guides. A survey of ten economies on the annual costs of implementing their VFEL programs revealed that in six economies the programs had fewer than five full-time-equivalent staff, while four economies reported five to ten full-time-equivalent staff working on VFEL programs. Five economies that disclose their budget range have annual budgets of less than USD 50 000, while four economies report an annual budget between USD 50 000 and USD 500 000.
With regard to the costs of establishing a VFEL program as opposed to operating it, no direct information has been identified. Costs will be related to the development of a regulatory framework. There may also be significant costs associated with understanding the vehicle market to ensure the program is fit for purpose.
With regard to fuel labelling programs, an impact assessment of the implementation of the fuel labelling directive in the UK identified costs of GPB 12.4 million over a ten-year period. These estimates account for the cost of printing labels on fuel caps on new cars, the cost of providing additional information on engine compatibility in user manuals, labour costs for labelling the nozzles and answering customers' fuel pump queries, and “familiarisation costs” – i.e. the time spent by car manufacturers in understanding and disseminating information on legislative changes to identify what actions need to be taken.
Fuel labelling is a means to prevent “misfuelling” (putting the wrong fuel into a vehicle), which can lead to significant damage in the vehicle. An impact assessment of the implementation of the fuel labelling directive in the UK estimated that the benefit of preventing misfuelling can be valued at GBP 145 million over a ten-year period.
Vehicle labelling efforts are ideally combined with policy measures such as vehicle efficiency standards and feebates to maximise their impact.
ITF (2021) Transport Climate Action Directory – Vehicle and fuel labelling
https://www.itf-oecd.org/policy/vehicle-and-fuel-labelling
ICCT (2015) A Review and Evaluation of Vehicle Fuel Efficiency Labeling and Consumer Information Programs. https://theicct.org/sites/default/files/publications/VFEL%20paper%20ICCT_%20for%20APEC%20-%2012%20Nov%202015%20FINAL.pdf
IEA (2013) GFEI Green Global NCAP Labelling/Green Scoring Workshop. Workshop proceedings. https://www.iea.org/events/gfei-green-global-ncap-labellinggreen-scoring-workshop
Ricardo Energy & Environment (2016) Evaluation of Directive 1999/94/EC ("the car labelling Directive") - Final report. https://ec.europa.eu/clima/sites/clima/files/transport/vehicles/labelling/docs/car_labelling_final_report20160728_en.pdf
UK Department for Transport (2019) Alternative Fuel Labelling Regulations - Impact Assessment. https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/781677/alternative-fuel-labelling-impact-assessment.pdf
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