CO2 reduction potentials through the market expansion and lifetime extension of used cars
© The Author(s) 2017
Received: 8 May 2017
Accepted: 22 August 2017
Published: 31 August 2017
This study develops an automobile life-cycle analysis framework considering lifetimes of new and used passenger cars. Using the analysis framework based on the Weibull survival distributions of new and used cars, I addressed the question of how the market expansion and lifetime extension of used cars affect life-cycle CO2 emissions through the entire economy. The results show the following. Under the benchmark lifetime function, a 10% increase in the market share of used cars under benchmark average new vehicle lifetime of 11.50 years yields 16.9 million tons of CO2 reduction in the cumulated life-cycle CO2 emissions during 1993–2014. I further found that a combined policy of vehicle lifetime extension and market expansion of “used” cars can contribute toward a low-carbon transition society. I conclude that modifying the demand policy with a focus on “used” cars with higher fuel efficiency, as well as setting a target car age of used cars, would be environmentally beneficial.
Global warming has been getting more serious and made many countries consider measures for reducing CO2 emissions (IPCC 2015). For this reason, global warming is an urgent issue to address through effective CO2 emission reduction policies. Considering global CO2 emissions in 2013 by sector, the second largest volume comes from the transportation sector, which accounts for 23% of the global CO2 emissions. Because of a continued large contribution by the transportation sector, Melaina and Webster (2011) performed an analysis on the light vehicle sector in the USA and proposed practical measures for achieving CO2 reduction targets. In Japan, the transportation sector generated 17% of the total amount of CO2 emissions in 2012 (Ministry of Land, Infrastructure, Transport and Tourism; MLIT 2013), which marks an 4% increase during 1990–2012, due to the increase in the transportation volume of passenger cars (Ministry of the Environment 2014).
The market expansion of new and used passenger cars also affects the environment, because expanding the market of new passenger cars with relatively high fuel efficiencies (km/l) contributes to reducing CO2 emissions during the driving phase, whereas it increases CO2 emissions in the car manufacturing phase (Kagawa et al. 2011). An important point is that expanding the market of used cars with relatively low fuel efficiencies conversely contributes to increasing CO2 emissions in the driving phase, whereas zero emission is achieved the car manufacturing phase. Regarding the use of used products, Curran (2010) showed that extending product life spans through the reuse of furniture and appliances in the UK has an effect on reducing waste and raw materials. There are two relevant previous studies on life-cycle emissions in the driving phase that include the impact of the fuel efficiencies of motor vehicles and their annual travel distance: Ou et al. (2010) and Pauliuk et al. (2012).
In Japan, the number of used car registrations in 2014 was 3.28 million, whereas new car registrations in the same year were 4.70 million (JADA: Japan Automobile Dealers Association 2015). This shows that the used car market has a strong influence on the current Japanese car market (JADA 2015). The number of used car registrations increased at an annual growth rate of 3% during 1990–2014 (Japan Light Motor Vehicle and Motorcycle Association 2015), and the market share of used cars increased 1.2-fold during the same period (JADA 2015). According to MLIT (2014), the average price of a used car in Japan is approximately ¥1 million, which is almost the same as in the USA and UK. However, the sizes of the used car market in the USA and UK are ¥33 trillion and ¥7 trillion, respectively, whereas the size of the market in Japan is ¥2.2 trillion. The numbers of used cars sold annually in the USA and UK in 2014 were 40.5 million and 7.1 million, respectively (National Independent Automobile Dealers Association 2014; British Car Auctions 2013), whereas 2.15 million used cars were sold in Japan, again being lower. The main reason for such differences in the used car markets between Japan, the USA, and UK is that consumers in the West can obtain more trustworthy information about vehicles, such as their maintenance and repair histories. Japan plans to adopt a traceability system by 2020 (MLIT 2014). However, it is not clear how much influence the expansion of the market share of used cars has had on the life-cycle CO2 emissions from the passenger car sector.
In 2009, the Japanese government introduced a vehicle replacement scheme for the replacement of older cars with lower fuel efficiencies by new cars with higher fuel efficiencies in an attempt to reduce CO2 emissions from the transportation sector (Ministry of Economy, Trade and Industry, Japan 2016). With this background, Kagawa et al. (2013) proposed an environmental impact assessment method for assessing the effectiveness of scrappage schemes for reducing CO2 emissions through the entire life cycle of passenger cars. Lenski et al. (2010) had previously estimated the environmental benefits of introducing the “cash-for-clunkers” policy in the USA in 2009. However, since the assessment frameworks at that time (Lenski et al. 2010; Kagawa et al. 2011, 2013) did not consider vehicle lifetimes and the market for “used cars,” they ignored the environmental impacts of re-registering older cars as used cars. Before I analyze CO2 emissions in the automobile sector, I considered vehicle lifetimes in line with Kagawa et al. (2006), Müller (2006), Murakami et al. (2010), and Oguchi et al. (2010). The lifetime distributions also play an important role in material stock and flow analysis (Nakamura et al. 2014; Pauliuk et al. 2017). In this context, the lifetime distribution analysis has been applied in a wide range of durable goods or material such as personal computers (Babbitt et al. 2009), air conditioner (Rapson 2014), and buildings (Nomura and Momose 2008).
This study considers the vehicle lifetimes and markets of both new and used cars and develops an automobile life-cycle input–output framework that considers the lifetimes and market shares of used cars. I used the car sales data during 1993–2014 (JADA 2015), a 2005 environmental input–output table (National Institute for Environmental Studies 2010), and the vehicle lifetime density function estimated by Kagawa et al. (2011). By applying the data sets to a life-cycle assessment framework proposed in this study, I address the question of how market expansion and lifetime extension of used cars affect life-cycle CO2 emissions through the entire economy. From the results, this study examines whether introducing a demand policy with a focus on used cars would increase environmental benefits.
The remainder of this paper is organized as follows: Sect. 2 explains the methodology, Sect. 3 describes the data, Sect. 4 presents the results and discussion, and finally Sect. 5 gives conclusions, including further policy implications.
2.1 Lifetime function for new and used cars
Here, m represents a shape parameter and η represents a scale parameter. μ in Eq. (2) represents average vehicle lifetime derived from the Weibull distribution function, and Γ in Eq. (2) is the gamma function. The cumulative survival rate at year t for new cars purchased at year 0 is also easily obtainable as φ n(t) = 1 − F(t). It should be noted that we have φ n(0) = 1; in other words, all new cars purchased in year 0 survive in year 0.
2.2 Life-cycle CO2 emissions of new and used cars
Parameter settings used in this analysis
Variable and parameter settings
m = 12.86
Kagawa et al. (2011)
η = 3.07
Kagawa et al. (2011)
f g (s)
2.387 (t CO2-eq./car)
Ministry of Land, Infrastructure, Transport and Tourism, Japan (Japan 2015)
2.363 (t CO2-eq./car)
2.397 (t CO2-eq./car)
2.370 (t CO2-eq./car)
2.406 (t CO2-eq./car)
2.331 (t CO2-eq./car)
2.287 (t CO2-eq./car)
2.217 (t CO2-eq./car)
2.216 (t CO2-eq./car)
2.111 (t CO2-eq./car)
1.996 (t CO2-eq./car)
1.934 (t CO2-eq./car)
1.844 (t CO2-eq./car)
1.798 (t CO2-eq./car)
1.755 (t CO2-eq./car)
1.690 (t CO2-eq./car)
1.626 (t CO2-eq./car)
1.352 (t CO2-eq./car)
1.349 (t CO2-eq./car)
1.327 (t CO2-eq./car)
1.247 (t CO2-eq./car)
1.287 (t CO2-eq./car)
r g = 0.00231 (t CO2-eq./l)
National Institute for Environmental Studies, Japan (2010)
r c = 0.00063 (t CO2-eq./l)
National Institute for Environmental Studies, Japan (2010)
f m = 6.426 (t CO2-eq./car)
National Institute for Environmental Studies, Japan (2010)
f w = 0.057 (t CO2-eq./car)
National Institute for Environmental Studies, Japan (2010)
4 Results and discussion
4.1 Survival distributions of new and used cars
4.2 Passenger car stock associated with vehicle lifetime changes
As Fig. 3 shows, holding the total number of vehicles owned (stock) fixed, changes in the average lifetime affect the proportions of new cars, older cars, and used cars. When the lifetime of passenger cars is reduced by 5 years, many older cars of relatively recent model years remain, and few cars that were manufactured and sold during 1993–2006 remain. This indicates that shortening the lifetime of passenger cars shortens the time that car owners own their cars, which they replace within a short period. This encourages the disposal of cars of relatively early model years, with many people purchasing new cars more recently.
Meanwhile, we can see that when the lifetime of passenger cars is extended, many older cars of relatively early model years remain (Fig. 3). When the lifetime is extended by 5 years, older cars manufactured and sold during 1993–2006 account for more than one-third of the total number of vehicles owned. Extending the lifetime reduces the demand for new cars and older cars of relatively recent model years.
Figure 3 shows that extending or shortening the lifetime of cars has almost no effect on the number of used cars owned that were re-registered during 1993–2013 and exist in 2014. This is because new cars account for a high proportion of the total number of vehicles owned, in addition to the short lifetime of used cars compared with new cars. For the baseline (change in average lifetime: 0 years), few used cars that were re-registered during 1993–2006 remain by 2014, accounting for less than 1% of the total number of vehicles owned.
4.3 Scenario analysis
On the other hand, market expansion of used cars increases the number of old and less fuel-efficient used vehicles still in service and consequently increases the CO2 emissions from the vehicle fleet on the road. A crucial observation here is that total induced CO2 emissions, i.e., the combined emissions from motor vehicle production, gasoline refining and combustion, and other services (see Fig. 4), decrease significantly due to a market expansion of used cars. Specifically, a 10% increase in the revival rate of used cars contributes to reducing CO2 by approximately 0.54%. This finding implies that this market expansion policy would clearly contribute to a reduction in carbon emissions. We find that market expansion of used cars (i.e., a car reuse policy) can play a crucial role in mitigating climate change through a reduction in life-cycle greenhouse gas emissions attributable to the transport sector.
When a vehicle lifetime reduction policy, such as the vehicle replacement scheme of Japan, is introduced (see the report by the Japan Automobile Manufacturers Association; JAMA (2009) for the Japanese scheme) and the market share for vehicles targeted in the replacement scheme is expanded, significant attention should be paid to the additional materials and parts that are required for producing the target vehicles (e.g., hybrid vehicles with greater fuel efficiency) and how their additional inputs will affect the environment through their productions.
Extending the lifetime of passenger vehicles and expanding the market share of used cars can bring about considerable environmental benefits (i.e., reduction in CO2 emissions) as viewed in terms of the entire economy (Fig. 5). In contrast to the vehicle lifetime reduction policy, I rather propose a more effective combined policy of vehicle lifetime extension and market expansion of used cars to combat climate change. Specifically, governments can offer incentives to owners of older “greener” vehicles that have better fuel economies to retain and use these vehicles longer. This measure can maximize the environmental benefit as compared to previously introduced vehicle replacement schemes that focus on “new” vehicles. Finally, I conclude that the previous vehicle replacement schemes introduced by many developed countries such as Japan and the USA were not following an environmentally wise policy in the sense that the CO2 reduction potential through the policy was very marginal.
In the Paris Agreement, adopted at COP21, held in Paris from November 30 to December 11, 2015, Japan set a target to reduce its territorial greenhouse gas emissions by 26% from 2013 levels by 2030 (Ministry of the Environment 2016). For the transportation sector, the target in the drafted agreement is to reduce emissions to 163 million tons by 2030, equal to 72% of the 225 million tons emitted in 2013 (JAMA 2016). Given that approximately 80% of emissions in the Japanese transportation sector are vehicle emissions in both the passenger and freight sectors, the key to achieving the reduction target lies in the choice of how to reduce vehicle emissions (Ministry of the Environment 2014).
In the interest of further reducing transportation sector emissions, the Japanese government has set forth as their technical and demand policies to improve fuel efficiency in new vehicles and increase the percentage of next-generation vehicles (through new vehicle sales), respectively (MLIT 2015). The present study has made clear that, together with these policies, further popularizing “used” vehicles in Japanese society could greatly contribute to achieving the reduction targets. Looking to revitalize the used vehicle market, MLIT is working to build a traceability system by 2020, which will compile a database of accident records, service records, fuel efficiency, number of owners, and other pertinent details for used vehicles (MLIT 2015). I propose that, using this traceability system to account for used vehicle safety and environmental performance, the government introduce a subsidy system to promote the purchase of used vehicles and further popularize used vehicles. The proposed demand policy should greatly contribute to building a low-carbon society.
5 Conclusion and policy implications
In this study, I proposed a comprehensive method for estimating how changes in passenger vehicle lifetimes of new and used cars and the car markets of new and used cars affect life-cycle CO2 emissions. While demand-side policies such as vehicle replacement schemes are important for reducing CO2 through the energy efficiency improvement, the emission reductions can be easily lost by the increase in the emissions in the production phase for new passenger cars. Without this perspective, a policy designed to reduce GHG emissions may result in increased emissions and further exacerbate global climate change. The results of this study suggest that the introduction of a subsidy policy for used vehicles and traceability systems could invigorate the used car market, to significantly contribute to reducing CO2 emissions from transportation. In conclusion, using data from Japan, I have shown the critical importance of the fact that a combined policy of vehicle lifetime extension and market expansion of “used” cars can contribute toward a low-carbon transition society.
An early version of this paper was prepared for The International Input–Output Association: The 24th International Input–Output Conference, Seoul, Korea, July 4–8, 2016. Author would like to thank Shigemi Kagawa (Kyushu University) and Keisuke Nansai (National Institute for Environmental Studies in Japan) for helpful comments. I also appreciate several helpful comments from Masahiro Oguchi (National Institute for Environmental Studies in Japan).
The author declares that he has no competing interests.
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