‹ Analysis & Projections

International Energy Outlook 2014

Release Date: September 9, 2014   |  Next Release Date: September 2015   (See release cycle changes)    |  Report Number: DOE/EIA-0484(2014)

Transportation sector energy consumption

Overview

Energy use in the transportation sector includes energy consumed in moving people and goods by road, rail, air, water, and pipeline. Transportation systems are essential for trade and economic competitiveness in an increasingly globalized world, as well as for enhancing standards of living. Trade and economic activity are the most significant factors determining demand for freight transportation. A more complex set of determinants—including travel behavior, land use patterns, and urbanization—affect demand for passenger transportation, along with macroeconomic and fuel market impacts.

Figure 129. World liquids consumption by end-use sector, 2010-2040
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In the IEO2013 Reference case, world energy consumption in the transportation sector increases by an average of 1.1 percent per year (Table 19). Petroleum and other liquid fuels are the most important component of transportation sector energy use throughout the projection. The transportation sector accounts for the largest share (63 percent) of the total growth in world consumption of petroleum and other liquid fuels from 2010 to 2040 (Figure 129), increasing by 36 quadrillion Btu as compared with an increase of 25 quadrillion Btu in the industrial sector and declines in all other end-use sectors.

Most of the growth in transportation energy use occurs in the non-OECD nations, where high projected economic and population growth, combined with relatively immature transportation sectors, leads to strong growth in demand for transportrelated energy use. Non-OECD transportation sector energy consumption increases by an average of 2.2 percent per year from 2010 to 2040 (Table 19). In contrast, OECD transportation sector energy use declines over the projection period, as a result of relatively slow economic growth, improvements in energy efficiency, and stable or declining population levels. Total OECD energy consumption for transportation decreases by an average of 0.1 percent per year, from 58 quadrillion Btu in 2010 to 56 quadrillion Btu in 2040.

In the IEO2013 Reference case, non-OECD demand for transportation energy use nearly doubles, from 43.1 quadrillion Btu in 2010 to 83.9 quadrillion Btu in 2040. The fast-paced growth in non-OECD transportation energy demand is a result of strong economic growth that leads to rising standards of living and corresponding increases in demand for personal and commercial travel. There is, however, a great deal of uncertainty associated with long-term projections for transportation sector energy consumption, particularly among the developing non-OECD regions. Because of the rapid economic growth in non-OECD regions, there is greater flexibility in future capital investment, infrastructure development, and other elements of transportation systems than in the OECD regions. Consequently, there is a wider range of potential outcomes for transportation energy consumption in the non-OECD regions.

In the IEO2013 Reference case, the fastest growth in transportation sector energy consumption per capita from 2010 to 2040 occurs in China and India, with average annual increases of 4.1 and 4.6 percent, respectively, while transportation energy use per capita in the United States and OECD Europe declines (Figure 130). In both China and India, however, total transportation energy use per capita remains much lower than in the OECD regions. If transportation energy use per capita in China and India were to evolve as it has in the United States and OECD Europe, the world outlook for transportation energy use would be considerably different from the IEO2013 Reference case projections.

Figure 130. Transportation sector energy consumption per person in selected regions, 2010 and 2040
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Liquid fuels account for most of the transportation energy consumption in the non-OECD countries throughout the projection. From 92 percent of total non-OECD transportation energy use in 2010, the liquid fuels share increases to 94 percent in 2040, growing from 40 quadrillion Btu in 2010 to 79 quadrillion Btu in 2040 while consumption of all other transportation energy sources increases from 3.5 quadrillion Btu in 2010 to 5.0 quadrillion Btu in 2040. Accordingly, the non-OECD share of world demand for transportation liquids grows to 60 percent in 2040 (Figure 131). China, the largest transportation energy consumer among the non-OECD regions, leads the growth in world demand for transportation fuels, with its transportation energy use increasing from 9.0 quadrillion Btu in 2010 to 26.6 quadrillion Btu in 2040. In 2010, China's transportation energy use was only one-third of that in the United States; by 2040, it consumes nearly as much energy for transportation as the United States.

Figure 131. World transportation sector liquids consumption, 2010-2040
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Leading factors in the projected increase in transportation energy demand include steadily increasing motorization levels in the non-OECD countries and strong growth in freight transport resulting from increasing economic activity in both the developing and mature economies. In the non-OECD countries, income growth and demand for personal mobility, combined with rapid urbanization, have the greatest impact on growth in passenger transport. For freight transportation, trucking is expected to lead the growth in non-OECD demand for transportation fuels. In addition, as international trade increases, the volumes of freight transported by air and marine modes are expected to increase over the projection period.

Improvement in energy efficiency is the key factor affecting projected transportation demand in the OECD economies. With adaptation of more stringent fuel economy standards in the United States and the harmonization of standards with Canada and Mexico, the OECD Americas experience virtually no growth in transportation energy use. Declines in consumption in the United States and Canada are offset by increases in Mexico and Chile. Energy efficiency improvements also lead to declining transportation energy use in OECD Europe and in Japan, where new technologies and improved energy efficiencies reduce demand for liquids across all transportation modes in the long term.

A key uncertainty is the effectiveness of the government policies in shaping transportation demand in the coming decades. Governments are likely to address environmental, mobility, and other geopolitical concerns through the promotion of new energyefficient technologies, alternative-fuel vehicles and nonpetroleum fuels, land use planning, and viable alternatives to light-duty
vehicle travel.

OECD countries

Figure 132. OECD transportation sector delivered energy consumption by region, 2010-2040
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In 2010, OECD countries accounted for 57 percent of the world's total demand for transportation fuels, but their share declines to 40 percent in 2040 in the IEO2013 Reference case. Demand for transportation fuels in the OECD economies declines by 0.1 percent per year in the projection, from 57.9 quadrillion Btu in 2010 to 55.5 quadrillion Btu in 2040 (Figure 132).

OECD Americas

Figure 133. OECD Americas transportation sector delivered energy consumption by country, 2010 and 2040
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Demand for transportation fuels in the OECD Americas is essentially flat throughout the projection, due to the combination of declining demand in the United States and Canada and only moderate demand growth in Mexico and Chile (Figure 133). From about 32 percent of the world's total demand for transport fuels in 2010, the OECD Americas share declines to about 24 percent in 2040, primarily as a result of more stringent environmental regulations and progress toward the harmonization of vehicle fuel economy standards in the United States, Canada, and Mexico.

United States

The United States is the largest consumer of transportation energy in the world. From about 27 percent of the world total in 2010, its share declines to 19 percent in 2040 in the Reference case. Projected U.S. energy consumption for transportation is 27.1 quadrillion Btu in 2040, slightly lower than the 2010 total of 27.5 quadrillion Btu. In comparison, U.S. demand for transportation energy increased at an average rate of 1.1 percent from 1975 to 2010 [381].

U.S. light-duty vehicle energy demand declines from 16.5 quadrillion Btu in 2010 to 14.9 quadrillion Btu in 2020 and 13.0 quadrillion Btu in 2040, higher fuel economy offsets modest growth in vehicle miles traveled. The IEO2013 Reference case assumes the adoption of greenhouse gas emission and corporate average fuel economy (CAFE) standards proposed by the U.S. Environmental Protection Agency (EPA) and the National Highway Traffic Safety Administration (NHTSA) for model years 2012 through 2025 [382]. The average fuel economy of new light-duty vehicles in the United States (including credits for alternative-fuel vehicles and banked credits) rises from 31.8 miles per gallon in 2010 to 47.3 miles per gallon in 2025 and 49.0 miles per gallon in 2040 as additional fuel-saving technologies are adopted. Vehicle-miles traveled per licensed driver increase from 12,600 miles in 2010 to 13,300 miles in 2040, however, somewhat offsetting the impact of higher vehicle fuel economy. Growth in light-duty vehicle travel, primarily as a result of rising real disposable incomes and lower costs of driving per mile, is tempered by slow recovery of employment rates and lower vehicle ownership rates relative to historic averages.

U.S. energy demand for heavy-duty vehicles (including tractor trailers, buses, vocational vehicles, and heavy-duty pickups and vans) increases the fastest among transportation modes, from 5.1 quadrillion Btu in 2010 to 6.3 quadrillion Btu in 2020 and 7.6 quadrillion Btu in 2040. The increase in energy demand for heavy-duty vehicles results from higher industrial output and
more high-value goods being carried by freight trucks, offset partially by increased heavy-duty vehicle fuel economy. The IEO2013 Reference case includes the heavy-duty engine and vehicle fuel efficiency and greenhouse gas emissions standards for heavy-duty vehicles issued jointly by the EPA and NHTSA starting in model year 2014 [383].

Aircraft energy demand increases from 2.5 quadrillion Btu in 2010 to 2.9 quadrillion Btu in 2040. Increases in personal air travel are offset by gains in aircraft fuel efficiency, while air freight movement grows as exports increase. Energy consumption for marine and rail travel increases as industrial output rises. Pipeline energy use also rises moderately, as robust increases in natural gas production more than offset the fact that production is closer to end-use markets.

Canada

As in the United States, the transportation sector in Canada is characterized by well-developed infrastructure and high per capita motor vehicle ownership rates. Historically, the transportation sector has been the major source of liquids demand growth in Canada. However, in recent years the Canadian government has been tightening greenhouse gas emissions standards for road vehicles and aligning them with the national fuel economy standards of the United States, which are expected to curb the growth in demand for petroleum fuels in the long term. In the IEO2013 Reference case, total transportation energy use in Canada declines by an average of 0.8 percent annually, from 2.5 quadrillion Btu in 2010 to 2.3 quadrillion Btu in 2020 and 2.0 quadrillion Btu in 2040.

The transportation sector in Canada is the largest source of that nation's greenhouse gas emissions, currently accounting for approximately 27 percent of the total [384]. Canada is taking action to reduce the transportation sector’s environmental impact. In 2012, the government proposed new, more stringent greenhouse gas emissions regulations for passenger vehicles and light trucks in model years 2017 to 2025, extending regulations already in place for model years 2011 to 2016 that require fuel efficiency of 6.6 liters per 100 kilometers (35.5 miles per gallon) for vehicles manufactured in 2016 [385]. The new standards are expected to reduce greenhouse gas emissions from 2025 model year vehicles by 50 percent relative to 2008 levels.

In addition to the new emissions regulations for passenger vehicles, the Canadian government has proposed regulations for heavyduty vehicles in model years 2014-2018 that would reduce greenhouse gas emissions by up to 23 percent compared with 2010 model year vehicles [386]. Final regulations for heavy-duty vehicles will be published before the end of 2013.

As part of its Renewable Fuels Strategy, Canada has adopted regulations that require renewable energy contents of at least 5 percent in gasoline starting in December 2010 and 2 percent in diesel fuel and distillate heating oil starting in July 2011 [387]. The initiatives are part of Canada's commitment to reducing total greenhouse gas emissions in 2020 by 17 percent from 2005 levels.

Mexico/Chile

In Mexico and Chile, strong economic growth averaging 3.7 percent per year results in a robust increase in transportation energy demand, from 2.7 quadrillion Btu in 2010 to 3.8 quadrillion Btu in 2040. The combined transportation energy use of Mexico and Chile grows by an average of 1.2 percent annually, as compared with an average decline in transportation energy consumption of 0.1 percent per year for the OECD region as a whole. The growth in Mexico and Chile's transportation demand is primarily in the road sector, which currently has relatively low ownership rates per capita as compared with other OECD markets and considerable potential for growth as per capita incomes rise, trade with North American and Latin American countries increase, and standards of living improve.

Although the IEO2013 Reference case projects relatively strong growth in transportation energy demand in Mexico and Chile, both countries are promoting policies that encourage energy efficiency and the use of cleaner fuels. For instance, Mexico has been tightening vehicle emissions standards in recent years. In July 2012, the Mexican government proposed carbon dioxide emissions standards for passenger vehicles (including cars, pickup trucks, and sport utility vehicles), mandating an average fuel economy of 35 miles per gallon for new vehicles in 2016 [388]. The proposed regulations, which were altered after legal challenges from automakers, are intended to be the final step in harmonizing passenger vehicle fuel economy and greenhouse gas emissions standards throughout North America. In the near term, however, the benefit of more stringent emissions regulations for new vehicles may be offset by imports of used vehicles (more than 10 years old) from the United States. Since liberalization of trade between Mexico and the United States as a result of the 1994 North American Free Trade Agreement, an estimated 11 million used vehicles have been imported into Mexico [389]. Some import restrictions on used vehicles have been introduced recently, but more expensive fuel-efficient vehicles are likely to take a back seat to cheaper and more widely available used vehicles.

Chile relies on petroleum imports for more than 95 percent of its transportation demand and has some of the highest fuel prices in Central and South American countries, which should encourage penetration of alternative-fuel vehicles [390]. The Chilean government is working on a series of initiatives to promote the adoption of alternative-fuel vehicles for personal and public uses. In 2008, the General Treasury of Chile adopted a hybrid vehicle law, which allows a refund of the annual vehicle registration costs for hybrid vehicles for 4 years. Sales of hybrid vehicles have been slow, however, with only 400 hybrid vehicles registered between 2008 and 2010 [391]. Some municipalities have changed their administrative fleets to hybrid and battery-operated electric vehicles, and in 2011 the first charging station in Latin America was established in Santiago. Growth in the use of alternative-fuel vehicles is likely to be gradual and will require continued commitment on the part of the government.

The Chilean government continues efforts to repair and rebuild infrastructure damaged during a massive 2010 earthquake. Through public-private partnerships, Chile plans to invest $14 billion in infrastructure projects through 2014, including $568 million by 2020 to rehabilitate 81 bridges, up to $1 billion for upgrades to ports, an estimated $5 billion for road and highway projects, $500 million for expansion of the Santiago international airport, $2.7 billion for expansion of the Santiago metro, and $3 billion for a freight rail tunnel through the Andes at the Los Libertadores Pass to link Chile and Argentina [392]. Two other rail projects include the Arica-La Paz rail line and the Empresa de Ferrocarriles del Estado.

OECD Europe

Demand for transportation fuels in OECD Europe declines in the Reference case at an average annual rate of 0.5 percent. The decrease in the region's transportation energy use results from increases in fuel efficiency that outweigh increases in highway travel. These projections contrast with those in EIA's International Energy Outlook 2011, which showed no change in OECD Europe's consumption of transportation fuels from 2008 to 2035 in the Reference case. The difference between the current and previous IEO projections stem from lower economic growth, a lower correlation between economic activity and highway travel, and higher projected fuel efficiency increases, as mandated by the latest European Union directive published in 2012 [393]. The 2012 directive requires that new cars emit no more than an average of 130 grams of carbon dioxide per kilometer by 2015 and that vans emit no more than 175 grams of carbon dioxide by 2017. By 2020, the limit on carbon emissions reduces to 95 grams per kilometer for cars and 147 grams per kilometer for vans.44 These mandates compare with an estimated average of 136 grams per kilometer for new cars in 2011. The directive, which is one of several policies designed to improve vehicle efficiency and increase the use of clean transportation fuels, leads to higher projected fuel economy (see "Legislating fuel efficiency in OECD Europe").

In addition to the European policy measures aimed at curbing emissions, many OECD European countries have levied both energy and emissions taxes on motor vehicles to encourage fuel conservation, resulting in retail prices that are substantially higher than those in the United States. Taxes on fuel consumption vary widely among the countries of OECD Europe, but they have traditionally favored diesel fuel, which has contributed to an increasing share for diesel fuel in the light-duty vehicle market (50 percent in 2009 in Btu terms) and an increase in aggregate fuel efficiency. Diesel generally is 20 to 30 percent more efficient than motor gasoline in an equivalent vehicle.

Highway travel in OECD Europe grows slowly in the Reference case, despite continued economic growth, largely as a result of demographics. The region's total population grows by only 0.3 percent per year from 2010 to 2040, and as the average age increases, the number of licensed drivers and the average amount of highway travel per capita decline. The demographic shift contributes to the weakening of the link between aggregate income and fuel consumption. In its promotion of fuel efficiency increases and more stringent greenhouse gas emissions standards, the European Union has called for a decoupling of fuel consumption from underlying economic activity as a means of promoting economic growth. In addition, the promotion of alternative transportation options, such as bicycle rental schemes in major cities, contributes to the decline in highway travel.

OECD Asia

In the OECD Asia region, with a fully established transportation infrastructure, high motorization levels, expected population declines, and continuous improvements in transportation energy efficiency, transportation energy demand remains essentially flat at around 7 quadrillion Btu from 2010 to 2040 in the IEO2013 Reference case (Figure 134).

Figure 134. OECD Asia transportation sector delivered energy consumption by country, 2010 and 2040
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Transportation energy use in Japan declines by an average of 0.8 percent per year in the Reference case, from 3.7 quadrillion Btu in 2010 to 3.4 quadrillion Btu in 2020 and 2.9 quadrillion Btu in 2040. The main factor contributing to the decline is Japan's changing demographics, with population decreases averaging 0.4 percent per year from 2010 to 2040 and the number of people in the main vehicle-buying group, 20-60 years old, also declining. In addition, high motorization levels, a mature and fully established transportation infrastructure, high fuel costs, high urbanization levels with wide availability of mass transit, environmental concerns, and further efficiency improvements in all transportation sectors also contribute to the decrease in future transportation energy use.

Although vehicle sales in Japan declined sharply after the devastating earthquake and tsunami in March 2011, they rebounded in 2012—particularly sales of fuel-efficient vehicles, aided by government subsidies (about $770 dollars for small vehicles with engine displacement of 660 cubic centimeters or less and about $1,100 dollars for others) that ran through September 2012, when subsidy funds were depleted [394]. Sales of hybrid vehicles were particularly strong in recent years, due to government incentives and declining prices. Toyota Prius has been the best-selling vehicle in Japan for four consecutive years since 2009, with 2012 sales of 317,675 cars nearly 26 percent higher than in 2011 [395].

As part of the Green Growth Strategy launched in 2012, the Japanese government has set 2020 targets for 50 percent of new car sales to be environmentally friendly vehicles (including zero-emission electric, fuel cell, and highly fuelefficient hybrids), and for mass public transportation to be available to 70 percent of the population [[396], [397]]. For the transportation industry, the strategy is focused on promoting next-generation green vehicles and storage batteries [398]. The government plans to support the development of battery storage technologies, with a goal of doubling the maximum driving range of electric vehicles to 200 kilometers (124 miles) on a single charge by 2020 [399]. To promote the use of electric vehicles, the government plans to build 2 million regular charging stations across Japan for electric and plug-in hybrid vehicles and to install 5,000 rapid-charging stations along major routes [405]. To promote the use of fuel cell vehicles, targeted for launch in 2015, 13 Japanese automakers and energy companies plan to build around 100 hydrogen refueling stations in four major metropolitan areas (Tokyo, Nagoya, Osaka and Fukuoka) by 2015 [406].

Legislating fuel efficiency in OECD Europe

Over the past few years, several measures adopted by the European Union (EU) and by individual countries have contributed to higher fleetwide fuel efficiencies. The measures generally focus on taxation and emissions regulations as means of increasing fuel efficiencies and reducing greenhouse gas emissions.

The 20-20-20 initiative [400], adopted by the European Commission in 2009 and codified in the 2012 Directive, calls for a 20-percent improvement in total primary energy efficiency and a 20-percent reduction in total greenhouse gas emissions from 1990 to 2020, as well as an increase in the renewables share of energy consumption to 20 percent. Although the targets pertain to total energy usage, they affect the transportation sector as evidenced by recent regulations calling for lower greenhouse gas emissions. In addition, in March 2011 the EU adopted a European 2050 Roadmap framework that would reduce total greenhouse gas emissions from 1990 levels by 40 percent in 2030, 60 percent in 2040, and 80 percent in 2050 [401]. According to the Roadmap, most of the reduction in greenhouse gas emissions in the transportation sector would occur after 2030 with increased use of fuel cell and electric vehicles.

The adoption of emissions standards for road-related vehicles is a cornerstone of EU road transportation policy. The tightening of carbon dioxide emissions standards is a means by which increases in the fuel economy of new vehicles and other environmental goals would be achieved in accordance with the 20-20-20 initiative goals. In 2007, new passenger cars in the EU emitted an estimated 160 grams of carbon dioxide per kilometer (comparable to 34.0 miles per gallon for motor gasoline and 38.9 miles per gallon for diesel). The corresponding estimate for 2011 was 135.7 grams per kilometer (39.7 miles per gallon for motor gasoline cars and 45.4 miles per gallon for diesel cars). The EU is in the process of adopting new, more stringent standards that are likely to be ratified in 2013. The proposed 2015 standard is 130 grams per kilometer (42.0 miles per gallon for gasoline-powered cars and 48.0 miles per gallon for diesel-fueled cars) [402]. For 2020, the EU has proposed an average carbon dioxide emissions limit of 95 grams per kilometer that also is likely to be approved in 2013. As a result, new cars would, on average, be required to achieve CAFE standards of 57.4 miles per gallon for motor-gasoline-fueled cars and 65.3 miles per gallon for diesel-fueled cars. The EU also has proposed standards for other light-duty vehicles that would result in substantial increases in fuel efficiency for new vehicles. In 2011, new vehicles emitted an average of 181 grams of carbon dioxide. In 2017, the proposed carbon dioxide limit would be 175 grams per kilometer (31.4 miles per gallon for motor-gasoline-powered vehicles and 35.6 miles per gallon for diesel-powered vehicles). In 2020, the proposed carbon dioxide limit would be 147 grams per kilometer (37.4 miles per gallon for motor-gasolinefueled vehicles and 42.8 miles per gallon for diesel-fueled vehicles).

In addition, the EU since 2009 has required the use of diesel particulate filters (DPFs) on the exhaust systems of all new light-duty vehicles and will require them on heavy-duty vehicles in 2013 now that ultra-low-sulfur diesel (defined as 10 parts per million by weight in the EU) is widely available in Europe. Several major cities, including London, already have mandated DPFs for heavy-duty vehicles. The implementation of phases 3 and 4 of London's Low Emissions Zone in 2012 has led to thousands of trucks, coaches, and smaller commercial vehicles being retrofitted with DPFs, as well as older vehicles being replaced by new ones. Moreover, the limit on diesel emissions from new vehicles is scheduled to be lowered in September 2014 in accordance with EU regulations. For example, permissible nitrogen oxide emissions for passenger cars and most light commercial vehicles were 500 milligrams per liter in 2000 before being reduced to 250 milligrams in 2005 and 180 milligrams in 2009. The September 2014 standard is 80 milligrams [403].

Excise taxes on motor fuel, on the other hand, are primarily the purview of individual countries and vary widely. Most countries tax motor gasoline more heavily than diesel to encourage the consumption of diesel fuel as a means of achieving higher aggregate fuel efficiencies. (The United Kingdom is a notable exception, with tax rates for gasoline and diesel fuel being the same.) Most European countries adopted tax rates favorable to diesel in the wake of the 1979 Iranian Revolution, which led to a tripling of crude oil prices. However, several countries as well as the EU currently are considering schemes to increase emissions-related taxes on diesel (either at the pump or on purchased vehicles in the form of a registration tax) in light of findings by the World Health Organization in 2012 that diesel fumes contain carcinogens. If adopted, the measures would constitute a reversal of policies designed to encourage diesel fuel consumption. In April 2011, the EU Commission put forward a proposal to change fuel taxation policies, with member states required to tax transportation fuels on the basis of both energy content and carbon and particulate emissions, starting in 2023 [404]. However, the European Parliament's rejection of that measure in 2012 suggests that such changes in the motor fuel tax regime would have to take place at the national level, at least in the short run.

South Korea's transportation energy use grows by an average of 0.6 percent per year in the IEO2013 Reference case, from 1.8 quadrillion Btu in 2010 to 2.1 quadrillion Btu in 2040, due to relatively strong GDP growth (3.3 percent per year) and continuous focus on energy efficiency improvements in transportation. As part of South Korea's efforts to reduce greenhouse gas emissions, the government enacted fuel economy standards in 2006 for domestic cars and in 2009 for imported cars. The fuel economy standards, which apply to vehicles with engine displacement of less than 1,600 cubic centimeters, required a 16.5-percent improvement in fuel efficiency, from 26 miles per gallon in 2008 to 34 miles per gallon by 2012 [407]. In 2012, the Ministry of the Environment announced that it would start regulating greenhouse gas emissions from new vehicles to meet an emissions standard of 140 grams per kilometer (39.5 miles per gallon) by 2015. The new standards will be implemented in stages, with 30 percent of new domestically manufactured or imported vehicles required to meet the standards in 2012, followed by 60 percent of new vehicles in 2013, 80 percent in 2014, and all new vehicles by 2015.

To promote the use of electric vehicles, in 2011 South Korea's government announced a tax subsidy of up to 4.2 million won, or about $3,850, for purchases of electric vehicles and allocated about $25.3 million for purchases of 1,000 electric vehicles by public organizations in 2013 [408]. Currently, there are around 600 charging stations in South Korea, which is low in comparison with Japan and the European Union countries, where charging stations number in the tens of thousands. More charging infrastructure and greater government involvement will be required in order to scale up usage of electric and plug-in hybrid vehicles in South Korea in the future.

Transportation energy use in Australia and New Zealand grows by an average 0.6 percent per year in the IEO2013 Reference case, based on relatively moderate population growth and average annual GDP growth of 2.2 percent from 2010 to 2040. In the past, transportation demand growth in Australia has been led by road freight, which doubled from 1,031 million metric tons in 1985 to 2,092 million metric tons in 2010, when it accounted for 71 percent of all goods moved, followed by rail transportation at 28 percent of all goods moved [409].

Non-OECD Countries

Figure 135. Non-OECD transportation sector delivered energy consumption by region, 2010-2040
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In the IEO2013 Reference case, the annual average growth rate for transportation energy consumption in the non-OECD countries is 2.2 percent from 2010 through 2040, led by strong growth in non-OECD Asia at 3.1 percent annually. The use of liquids in the non-OECD transportation sector nearly doubles from 40 quadrillion Btu in 2010 to 79 quadrillion Btu in 2040 (Figure 135). In 2010, non-OECD countries accounted for 43 percent of the world's transportation energy use. In 2040 their share is projected to be 60 percent in the Reference case.

Non-OECD Asia

Non-OECD Asia's share of world transportation liquids consumption increases from 20 percent in 2010 to 36 percent in 2040, exceeding transportation energy demand in the OECD Americas by 2025. Robust demand growth in the region is led by rising per-capita incomes and increasing motorization and urbanization of the large and growing populations. In the long term, major uncertainties in the projection center around the expected rate of motorization, vehicle fuel efficiencies, government policies, fuel subsidies, penetration of alternative vehicle technologies, and the pace of urbanization, including the availability of public transport and mass transit systems.

China

Figure 136. Non-OECD Asia transportation sector delivered energy consumption by country, 2010-2040
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China is the major source of transportation liquids demand growth worldwide, and it remains so in the IEO2013 Reference case (Figure 136). From 2010 to 2040, China's GDP grows by an average of 5.7 percent per year, while energy demand in the transportation sector grows by 3.7 percent annually, from 9.0 quadrillion Btu in 2010 to 14.9 quadrillion Btu in 2020 and 26.6 quadrillion Btu in 2040. China's transportation liquids consumption currently accounts for about 9 percent of total world liquids consumed for transportation, but its share increases to 20 percent in 2040. China becomes the world's second-largest consumer of transportation fuels, overtaking OECD Europe by 2025 and trailing slightly behind the United States at 26.6 quadrillion Btu in 2040. The strong growth in transportation liquids demand in China is a result primarily of growing personal mobility, as per capita incomes rise and there is an abundance of relatively affordable personal vehicle choices. In the long term, however, a wide variety of factors plays into the overall demand for transportation energy in China, leading to substantial uncertainty about the ultimate growth rates and levels of consumption.

Since 2009, China has been the world's largest automotive market, aided by government subsidies introduced to stimulate demand during the 2008-2009 global financial crisis. Economic stimulus measures are estimated to have increased vehicle sales by 46 percent in 2009 and 32 percent in 2010 [410]. The number of light-duty vehicles grew by an average of 24 percent per year from 2000 to 2008, with the total number of vehicles almost quadrupling from 22.3 million vehicles in 2000 to 86 million vehicles in 2008 [411].

China's 2011 motorization level is estimated at 58 motor vehicles per 1,000 people, which is low in comparison with the estimated averages of 135 vehicles per 1,000 people worldwide, 797 vehicles per 1,000 people in the United States, and 363 vehicles per 1,000 people in South Korea [412]. Although China's passenger transportation energy use per capita triples in the IEO2013 Reference case, it is only about one-half the level of South Korea, and below the levels of many other OECD countries, in 2040.

Road infrastructure in China has undergone major expansion since the 1990s, contributing to China's economic growth. From 1998 to 2008, growth in the combined length of China's highways averaged 11.3 percent per year, while growth in expressways averaged 21.4 percent per year [413]. The national highway mileage reached 2.5 million miles in 2011, of which 1.6 million miles were paved, an increase of 1.7 percent over 2010 [414]. Some 249,000 miles of local and township roads were also improved. The expansion of roadways was funded by an investment of more than $40 billion annually, one-third of which was allocated to the National Expressway Network (NEN). The current NEN expansion plan includes 7 corridors radiating from Beijing, 9 north-south corridors, and 18 east-west corridors, designed to maximize transportation interconnectivity among cities.

China is also pursuing large-scale plans for expansion of high-speed rail and mass transit networks. The Chinese government has stated that expansion of the rail infrastructure is intended to address the challenges posed by rapid urbanization and motorization, while integrating and modernizing underdeveloped rural provinces in the central and western parts of the country. At the end of 2012, China had about 61,000 miles of railways in operation, the second-longest network in the world, and almost 6,000 miles of high-speed rail lines, the world's longest [415]. According to the 12th Five-Year Plan (2011-2015) for the Railway Industry, eight high-speed railway networks will be completed in China by 2015, with planned investment of more than $79 billion annually in 2013, 2014, and 2015 to reach the target [416]. In 2013 alone, China's Railway Ministry plans to invest about $103 billion in new rail construction, build 3,231 miles of new railways, and begin service on more than 10 major new lines, including the Tianjin-Baoding railway, the Ningbo-Hangzhou high-speed railway, the Xiamen-Shenzhen railway, and the Chongqing-Lizhou railway. By 2015, high speed rail is set to increase to about 11,000 miles and railways to nearly 75,000 miles.

In addition to expanding rail networks, China is expanding urban railways, subways, and light rail in response to the rapid urbanization taking place across the country. In September 2012, the National Development and Reform Commission approved 25 urban rail projects worth $127 billion, in cities including Shijiazhuang, Taiyuan, Lanzhou, Guangzhou, and Xiamen [417]. In addition, 60 subway projects already are underway in more than 20 cities [418]. In 2012, the Beijing metro system opened a new 44-mile line, bringing the total mileage of the metro tracks to 275 miles and making it the world's largest metro system [419]. Also in 2012, three Chinese cities—Hangzhou, Suzhou, and Kunming—opened metro lines, bringing the total number of Chinese cities with a metro system to 18. As of 2012, more than 30 Chinese cities had urban rail systems under construction, and China plans to add 1,553 miles of metro lines during the 12th Five-Year Plan. Forty Chinese cities will have subway systems by 2020, bringing the total track length to 4,350 miles, or 4.3 times the current length [420]. In the IEO2013 Reference case, China's passenger rail system tempers the growth in demand for personal motor vehicles.

Demand for passenger vehicles in China grows in response to increasing per-capita incomes and modernization of lifestyles, which are associated with greater mobility. For four consecutive years since 2009, China has overtaken the United States as the world's largest vehicle market, with total vehicle sales (including buses and trucks) of 18.1 million units in 2010, 18.5 million units in 2011, and an estimated 19 million units in December 2012 [421] despite withdrawal of government stimulus measures, which ended in 2010. China's demand for personal vehicles continues to expand rapidly through the medium term, although it is tempered somewhat by various government policies focused on constraining further explosive growth in personal vehicle ownership.

In its 12th Five-Year Plan, the Chinese Government committed to reducing energy intensity by 16 percent between 2011 and 2015, building on the previous target of 20 percent between 2006 and 2010 [422]. To curb greenhouse gas emissions from the transportation sector, the Chinese government has been tightening greenhouse gas emissions standards. China applied the Euro 3 standard to new cars sold nationwide, the Euro 4 standard in Shanghai and Guangzhou, and the Euro 5 standard in Beijing, starting in February 2013 [423]. The government imposed a new vehicle tax based on engine size in 2012 and also plans to liberalize petroleum prices and bring them into better alignment with world oil prices. Also, government policies are in place to expand the use of alternative fuel or new energy vehicles in China to help reduce the impact of increased motorization on the environment (see "Prospects for new energy vehicles in China").

In response to serious air pollution and traffic congestion, several Chinese cities began capping the number of new vehicles allowed to register and obtain license plates. In Beijing, one of the most polluted cities in the world, municipal authorities have capped the number of new vehicle registrations at 240,000 per year since 2010. The city administers a lottery that gives new car buyers an opportunity to win a car license free of charge, and only about 2 percent of participants are granted licenses. The number of participants in the January 2013 lottery exceeded 1.4 million, with only 20,000 license permits issued to the city's residents [424].

Prospects for new energy vehicles in China

In addition to vehicle control policies in China's largest cities, the government is actively promoting the use of alternative vehicles. Support for the development of new energy vehicles (NEVs)45 and the capabilities of China's domestic automobile industry to mass produce such vehicles are the key components of China's 12th five-year plan, which identifies the alternative vehicle industry as one of seven strategic emerging industries. The government plans to invest an estimated $15 billion in alternative-energy vehicles over the next 10 years [425]. The national target for cumulative production and sales of pure electric and plug-in hybrid vehicles is 500,000 units by 2015, and the target for NEVs is 5 million units by 2020 [426]. Under the new energy vehicle industrial plan for 2012 to 2020, released in 2012, average passenger car fuel economy is targeted to increase to 34 miles per gallon by 2015 and 47 miles per gallon by 2020, while the fuel economy of energy-efficient vehicles is targeted to increase to 40 miles per gallon or more by 2015 and 52.3 miles per gallon by 2020 [427].

To meet NEV growth targets, boost consumer demand, and make alternative vehicles more affordable, the Chinese government has been offering numerous financial incentives, including some $4 billion allocated for energy-saving products, primarily NEVs and household appliances [428]. In addition, an annual subsidy of about $313.5 million has been allocated to support the manufacturing of NEVs starting in 2012. For electric vehicles, subsidies from the central government often are matched by local subsidies. For example, in Beijing, the central government subsidy of approximately $9,400 is matched by a subsidy of the same amount from the city of Beijing [429]. Many other cities also offer considerable subsidies. The Shenzhen government offers one of the highest subsidies for electric vehicles in the country—about $18,812 per passenger vehicle [430], reducing the price of such vehicles by more than one-half. In addition to financial incentives, some cities offer other incentives, including free license plates for NEVs. For example, Shanghai offers free license plates for 20,000 electric vehicles starting in 2013 [431], Guangzhou offers 12,000 free plates allocated by lottery [432], and Beijing offers electric vehicles an exemption from the vehicle license lottery [433].

Any large-scale transition to electrification of the Chinese vehicle fleet will take time, as well as a concerted effort by the Chinese government, before mass adoption of alternative-fuel vehicle technologies becomes a reality. Sales of alternative-fuel vehicles to date have been minimal. Only 8,159 NEVs and hybrid vehicles were sold in 2011, and 6,019 NEVs, including 2,661 electric and 3,358 hybrid vehicles, were sold in the first 8 months of 2012 [434]. Development of charging infrastructure also has been lagging behind government targets: of the 400,000 charging stations planned for completion by 2015, only 16,000 had been constructed through 2011 [435].

Some of the reasons for low sales of NEVs are high vehicle costs despite government subsidies, inadequate charging infrastructure, limited driving range in comparison with conventional vehicles, supply constraints and fragmentation (at present only one vehicle, Roewe E50, is mass produced domestically), lack of a national industry standard for EV charging connectors, consumer education and acceptance of the new technology, and vehicle safety issues, among others.

Shanghai started implementing restrictions on vehicle registrations in 1994, using a monthly vehicle license auction to grant car registration rights to the highest bidders. The price of a vehicle license plate can be as high as $12,000, equivalent to the price of a family economy car [436].

Along with Beijing and Shanghai, Guiyang and Guangzhou have implemented vehicle registration restrictions, and other cities may soon follow suit [437]. In addition to controlling the number of new vehicle registrations, many cities limit the number of vehicles driving on the roads through travel restrictions based on vehicle license plate numbers. Such restrictions currently are in place in seven cities—Beijing, Changchun, Chengdu, Guiyang, Hangzhou, Lanzhou, and Nanchang—and other cities may soon join. Restrictions on vehicle registrations and travel, if adopted nationwide, could affect the pace and extent of growth in personal vehicle ownership in China over the long term.

India

India's transportation energy use grows at the fastest rate in the world in the IEO2013 Reference case, averaging 5.1 percent per year, compared with the world average of 1.1 percent per year. Transportation energy use more than quadruples, from 2.4 quadrillion Btu in 2010 to 10.9 quadrillion Btu in 2040, as India's economy and population continue to grow and develop and demand for passenger and freight transportation increases. The road sector leads the expansion of transportation energy use, with passenger energy use per capita and demand for personal transportation growing rapidly. While two-and three-wheel vehicles currently make up most of India's vehicle fleet (72 percent of the total), demand for larger four-wheel passenger vehicles increases considerably as per capita incomes rise [438]. In the next decades, robust GDP growth, urbanizing population, and rising per capita income are expected to continue to drive strong sales growth in the Indian automotive market. The country's demographics, with 600 million people younger than 25 years old, offer some of the best prospects for automobile market expansion in the world.

In the IEO2013 Reference case, India's demand for personal transportation is expected to continue expanding rapidly from 2010 to 2040. The number of registered motor vehicles in India increased more than fivefold from 21 million in 1991 to 115 million in 2009 [439]. Currently, the transportation sector accounts for almost 10 percent of India's carbon dioxide equivalent emissions from all energy sources, with the largest share coming from road transport. Under current policies and market conditions, transportation emissions will also increase dramatically from 2010 to 2040.

Although India's 11th five-year plan (2007-2012) did not explicitly provide development goals for the transportation sector beyond improving road access in rural areas, An Approach to the Twelfth Five Year Plan [440] released by the Government of India Planning Commission in October 2011 extensively addresses mode shifting from road to rail and inland waterways for freight traffic, as well as greater development of public transport. According to the document, transportation sector development will continue to focus on expanding and modernizing roadways between cities and in rural areas, modernizing and improving railway infrastructure and service, expanding minor port development for international trade, and modernizing air traffic monitoring. In addition, the National Action Plan on Climate Change sets a number of transportation development goals focused on curbing the growth of carbon dioxide emissions from the transportation sector through the National Urban Transport Policy (NUTP) [441].

The NUTP, launched in 2006, emphasizes development of extensive public transport systems and nonmotorized transport modes as an alternative to rapid expansion of personal vehicle usage. Public transit currently accounts for less than 25 percent of urban transport in India [442]. India's rapid urbanization has increased demand for urban transport systems. It is expected that more than 50 percent of the population of India may reside in urban areas by 2025, a substantial increase from 34 percent in 2011 [443]. The NUTP has implemented the expansion of several urban mass transit systems, such as the Metro Rail Transportation System in Delhi, Bangalore's Metro Bus project, and bus rapid transit systems in 10 other cities. The Maharashtra state government recently announced that it will impose a congestion tax to discourage use of private vehicles in cities where it has created sufficient public transport capacity [444].

Petroleum fuels continue to dominate India's transportation energy mix over the long term, accounting for 85 percent of the total transportation fuels mix; however, the government continues to focus on increasing the share of alternative fuels. In 2010, India established a 5-percent mandatory ethanol blending standard in 20 states and started selling blended fuel in 14 of the program's states while increasing the regulated prices for ethanol [445]. Supply variability in sugar production and availability of sugarcane remain key challenges to the policy's success. It is doubtful that India can meet its 20-percent blending target by 2017, given current ethanol production levels and the need for additional government incentives to stimulate continued growth. At present, commercial production of biodiesel in India is insignificant [446]. The government's plan to reach a 20-percent share of biodiesel in diesel fuel by fiscal year 2011-2012 (April-March) was complicated by the lack of availability of high-yield drought-tolerant jatropha seeds, which are favored for producing biodiesel in India.

The Indian government has been establishing progressively more stringent emissions standards for the transportation sector. Since 2010, gasoline sold in India's 13 largest cities has been required to meet Euro 4 emissions standards, while Euro 3 standards are applied in all other areas of the country [447]. India's emissions reduction policies also are focused on consumer incentives, such as vehicle registration fees based on engine size, regulation of carbon dioxide emissions, and sales incentives for more fuel efficient vehicles [448].

India currently has the third-largest rail network in the world, carrying 23 million passengers and 2.65 million metric tons of freight daily on about 19,000 trains [449]. However, the rail shares of freight and passenger transportation have declined as the road transport shares have increased. At present, road transportation accounts for 90 percent of India's passenger movement and 65 percent of its freight transport [450]. Indian railways have added only 1,087 miles of new lines since 2006, as compared with 2,486 miles of railways and 6,214 miles of high-speed rail network added by China over the same period [451]. To achieve India's low-carbon growth strategy, greater use of railroads will be essential in combating greenhouse gas emissions and meeting the goals of sustainable transport. To that end, the Indian government has proposed a five-pronged strategy to modernize the railways, with a total required investment of $67 billion [452].

A particular focus is placed on raising funds through public private partnerships (PPPs), with a targeted investment of about $42 billion over the next 5 years [453]. India's 12th five-year plan (2013-2017) emphasizes the importance of PPPs in the development of transportation infrastructure. Currently there are 1,017 active PPP projects in the country, which is the world's second-largest number of active PPP projects (after China) and the second-largest total investment in PPP projects (after Brazil) [454]. Success in securing the needed investments will be crucial for improving the operation of India's railways and achieving the government's sustainable transportation goals.

India's road sector, which has accounted for around 90 percent of its total transportation energy use over the past 10 years, is the second-largest road network in the world after the United States [[455], [456]]. The 12th five-year plan targets an investment of $1 trillion for infrastructure projects, including $42 billion for roads, with a goal of raising at least $300 billion from private funds [[457], [458]]. India plans to double its 43,496 miles of national interstate highway roads in the next 5 years and increase the overall road network to 3.1 million miles in the next decade. Specifically, the Indian government's planning commission intends to use the funds to upgrade and expand state highway networks; upgrade roads in Delhi and other large cities; execute national highway projects connecting the freight corridors that run from north to south and from east to west to the interiors; and set up related highway infrastructure, such as toll booths, warehousing facilities, and connector and feeder lanes [459]. Development of the country's infrastructure is one of the key priorities for India's government, as the country's rapidly growing economy has been placing significant demand on its transportation system, and existing bottlenecks in both urban and rural infrastructure have been impeding the country's competitiveness. Expansion of transportation infrastructure will be essential for India's future economic growth.

Other non-OECD Asia

In the other countries of non-OECD Asia (excluding China and India), transportation energy use grows from 8.5 quadrillion Btu in 2010 to 11.7 quadrillion Btu in 2040 in the IEO2013 Reference case. As in the case of India and China, the key reason for robust growth in transportation energy demand is increasing motorization supported by major investments in infrastructure to accommodate growth.

Transportation infrastructure in many non-OECD Asia countries is underdeveloped and will require major investment to support economic growth, provide greater internal integration between regions, and increase international competitiveness. Governments in many non-OECD Asia countries have been actively promoting participation of the private sector and foreign investors in infrastructure projects through PPPs, which in many countries are vital for successful implementation of infrastructure programs.

Indonesia's government has developed several plans to address transportation infrastructure shortages in the country. In 2010, the government launched a medium-term development plan, which allocated $140 billion for infrastructure projects between 2010 and 2014, including plans to build 14 new airports, in addition to modest expansion of rail (53 miles) and improvement of existing road capacity (1,625 miles) [460]. The plan was complemented in 2011 by a master plan for acceleration and economic development, which targets an investment of $1 trillion in infrastructure projects over a 15-year period, with several PPP tenders designed to raise $700 billion in private financing [461]. Under the plan, 17 new projects were launched in 2011, including a $1.5 billion railway project connecting coal mines and plantations at Bangkuang to ports at Puruk Cahu in Umbulan, East Java [462]. Several more tenders for transportation project will be launched in 2013, using PPP investments, including $870 million to revitalize the Malioboro rail station in Yogyakarta; $435 million for monorail in Makassar; a $177 million Jakarta Integrated Urban Transport Club; and a $196 million toll road to connect Benoa Harbor, Ngurah Rai International Airport, and the Nusa Dua tourist area with a water supply in Maros, among others [463]. In the long term, investment and expansion of the transportation infrastructure, a large growing population with a relatively young demographic profile, increasing per capita incomes, and improving living standards will lead to rapidly growing motorization levels.

Malaysia has one of the most developed transportation infrastructures in non-OECD Asia. Over the years, Malaysia has made considerable investments in expanding and maintaining its transportation networks to accommodate economic expansion and the growing mobility needs of its population. Government policies, including the New Economic Model are focused on transforming the country into a high-income economy by 2020 [464]. Malaysia's expected increases in per capita incomes will lead to further increases in motorization levels, even though the country already has one of the highest levels of automobile ownership among the non-OECD nations, at 361 vehicles per 1,000 people, compared with 40 vehicles per 1,000 people in Indonesia and 157 vehicles per 1,000 people in Thailand [465].

Malaysia is becoming a hub for energy-efficient vehicles, aided by government incentives that include excise duty exemptions on the vehicles and a wide range and availability of alternative vehicle choices. A recent trend in sales of energy-efficient vehicles indicates the country's potential for becoming one of the leading consumers of alternative vehicles: in the first half of 2012, sales of hybrid vehicles reached record highs, with 6,209 vehicles sold, after already strong sales of 8,334 hybrid vehicles in 2011, up from 328 vehicles sold in 2010 [466]. Nevertheless, penetration of hybrid vehicles in the country's total fleet remains comparatively modest. Malaysia is one of Asia's most highly-motorized countries, with more than 21 million registered vehicles on the road by the end of 2010 [467].

Non-OECD Europe and Eurasia

Figure 137. Non-OECD Europe and Eurasia transportation sector delivered energy consumption by country, 2010-2040
figure data

In the IEO2013 Reference case, transportation sector energy use in non-OECD Europe and Eurasia grows at an annual average rate of 1.5 percent, from 6.7 quadrillion Btu in 2010 to 8.5 quadrillion Btu in 2020 and 10.6 quadrillion Btu in 2040 (Figure 137). Growth in the transportation sector is led by increases in private vehicle ownership, particularly in the countries of the Former Soviet Union, where rising per capita incomes, higher levels of economic activity, and improvement in standards of living lead to higher demand for personal motorized vehicles. Strong regional GDP growth and virtually flat population growth (less than 0.1 percent per year) lead to more demand for personal transportation, with increases in transportation energy consumption per capita averaging 1.6 percent per year from 2010 to 2040 in the Reference case.

In the region's largest economy, Russia, transportation energy consumption increases by 1.1 percent per year on average, from 4.5 quadrillion Btu in 2010 to 6.2 quadrillion Btu in 2040, despite a population decline averaging 0.2 percent per year.

The growth in transportation energy consumption is a result primarily of expanding ownership of private vehicles and growth in freight transportation.

From 2003 through 2008, sales of light-duty vehicles in Russia registered strong growth; however, during the 2008-2009 global recession and a severe economic downturn in Russia, vehicle sales fell sharply, by 49 percent in 2009 [468]. To promote vehicle sales and aid the ailing domestic auto sector, in 2010 the Russia's government implemented a scrappage program that offered discount certificates of around $1,665 per vehicle to consumers replacing a vehicle more than 10 years old with a new vehicle. The government allocated $1 billion for the program and issued 500,000 discount certificates, before ending it early due to the depletion of funds [469]. The scrappage program acted as a highly effective stimulus for the passenger car market, contributing to a robust recovery in light-duty vehicle sales, which posted a 30-percent increase to 1.9 million units in 2010. Through November 2012, sales of passenger cars and light commercial vehicles were up by 12 percent from their 2011 levels [470]. With personal incomes growing and economic conditions and living standards improving, passenger car sales in Russia are likely to continue robust growth over the long term, from comparatively low vehicle ownership rates in the past (271 vehicles per 1,000 people in 2007) [471].

Middle East

Transportation energy consumption in the Middle East grows by an average of 1.5 percent per year in the IEO2013 Reference case, to 9.5 quadrillion Btu in 2040 (Figure 138). Although the Middle East has a relatively small population, population growth and continued urbanization are expected to result in increased demand for transportation. Sustained economic expansion and continuous end-user subsidies, which are unlikely to be completely eliminated in some countries in the region, will support strong growth in transportation fuel demand through the medium term. Investments in the road sector in the Middle East are expected to be significant, matching the increase in motorization levels and demand for road transport in the long term.

Figure 138. Non-OECD Middle East and Africa transportation sector delivered energy consumption by region, 2010-2040
figure data

Strong growth in transportation fuels consumption in the Middle East is based on expansionary fiscal policies and considerable fuel subsidies for end users across the region, which have discouraged conservation and improvements in energy efficiency. Even a gradual removal of such subsidies has proven to be difficult, particularly in light of the 2011 Arab Spring uprisings. Before 2011, several countries in the region, which already have some of the highest retail prices among the Gulf Cooperation Council (GCC) countries46 were considering a partial removal of fuel subsidies, but they have since decided to keep them in place.

Iran's attempt to remove fuel subsidies provides an insight into the challenges faced by Middle Eastern governments in addressing the problem of fuel subsidies. Iran was the first Middle Eastern country to implement a partial removal of fuel subsidies, beginning in 2010. Even before the Arab Spring, Iran had sought to reform its extremely costly subsidy system for some time, but concerns remained that significant subsidy reform could trigger civil unrest, as happened briefly in 2007 when fuel rationing was initially enacted. In 2010, the Iranian government in its fifth development plan (2010-2015) enacted a subsidy reform law, which called for an increase in the price of petroleum products of up to 95 percent of freight-on-board prices in the Persian Gulf [472]. The subsidy cut had an immediate impact on fuel consumption, with demand for gasoline falling by about 6 percent from 2010 to 2011. However, gasoline demand rebounded in 2012 to pre-Reform levels despite higher end-use prices. In November 2012, the Iranian Parliament rejected implementation of the second phase of the subsidy reform.

High world oil prices have increased revenues in many of the oil-exporting countries of the Middle East, and as a result several transportation infrastructure projects, including mass transit projects, have been launched. In the GCC countries, railways have been identified as a preferred mode of transportation for the future, capable of meeting the challenges of rapid urbanization and growth in freight transport. Some $106 billion has been allocated for railway and metro construction projects in GCC countries through 2014 [473]. One of the most ambitious projects is to develop a 1,200-mile rail network from Kuwait to Oman, linking all six GCC countries. The GCC rail network is part of a wider GCC economic strategy to build a closely integrated regional community that will stimulate trade and provide efficiencies in transport. Moreover, rail networks will allow Bahrain, Kuwait, and Qatar, which lack direct access to markets outside the Gulf region, to transport goods to international markets without passing though the Straits of Hormuz [474].

Africa

Transportation energy consumption in Africa grows by 0.8 percent per year, from 3.8 quadrillion Btu in 2010 to 4.8 quadrillion Btu in 2040 in the IEO2013 Reference case (Figure 138). Transportation infrastructure in most of the African countries is underdeveloped and will require major investmentto bring it to the levels necessary to support economic growth. The African road network includes 1.1 million miles, with low density relative to the population and low average traffic levels [475]. There is only limited investment in road maintenance, and road freight transport remains expensive and fragmented. Most of Africa's 260 airports have sufficient runway capacity, but some of the larger airports have terminal capacity shortages. In general, railroads are underutilized and poorly maintained. Most ports are small, and only a few highly specialized ports meet international standards.

African transportation infrastructure needs significant additional investment to address shortages and maintenance problems and to effectively integrate Africa with the global economy. Transportation infrastructure projects in Africa are typically financed through some form of assistance from international lending agencies. Private investment has been limited, in part due to a lack of enabling legislative frameworks [476]. In recent years, the number of projects financed by the World Bank has declined [477], with total investment in Africa's transportation sector totaling $851 million in 2011, including $716 million for three new projects and the remainder for existing projects. The three new projects include building seaports in Nigeria and Togo, and a cross-border highway project linking Zimbabwe and South Africa at the Beitbridge Border Post, the major cross border point between South Africa and Zimbabwe.

Central and South America

Transportation energy consumption in Central and South America grows by an average of 1.3 percent per year in the Reference case, from 6.6 quadrillion Btu in 2010 to 9.8 quadrillion Btu in 2040 (Figure 139), based on relatively strong regional GDP growth (3.3 percent per year) and population growth (0.7 percent per year) from 2010 to 2040. The region's demographics (28 percent of the population was younger than age 14 in 2011) and increasing intra- and interregional trade support growth in the transportation sector in the long term [478]. The region is highly urbanized (79 percent in 2011), and continues to develop mass transit and urban highway and rail networks. Currently, the region spends about 2 percent of aggregate GDP annually on transportation infrastructure; however, some estimates indicate that 4 to 6 percent would be required to support sustained growth in the long term [479].

Figure 138. Non-OECD Central and South America transportation sector delivered energy consumption, 2010-2040
figure data

Brazil's consumption of transportation fuels grows by 1.2 percent per year on average, from 2.9 quadrillion Btu in 2010 to 4.2 quadrillion Btu in 2040, in the Reference case. In recent years, after achieving economic stability, Brazil has had strong growth in its transportation sector. The country experienced only mild effects from the 2008-2009 global economic recession, and demand for transportation fuels continued to grow with the expanding road and air travel sectors and increasing demand for transportation of freight and agricultural commodities. From 2002 to 2011, Brazil's automotive market grew by 145 percent and became the fifth-largest market in the world, with 3.63 million vehicles (including cars, vans, trucks, and buses) sold in 2011 [480]. In May 2012, the government initiated a stimulus program that led to an all-time record of 405,000 cars and light commercial vehicles sold in August 2012 [481]. The key element of the stimulus program was a cut in the industrial product tax, which contributed to an average 10-percent reduction in vehicle prices to consumers.

Brazilian transportation infrastructure suffers from underinvestment, with only 14 percent of the roads paved. However, some improvements were made in ports and railways as a result of privatization in the 1990s [[482], [483]]. Infrastructure spending in Brazil as a share of GDP has been declining over the past 40 years, averaging 5.4 percent of GDP during the 1970s, 3.6 percent in the 1980s, 2.3 percent in the 1990s, and 2.1 percent in the 2000s [484]. Factors that could support infrastructure growth in Brazil in the coming decade include the Growth Acceleration Program (launched in 2007), the development of pre-salt oil reserves, and the hosting of two major international sporting events—the World Cup in 2014 and the Summer Olympics in 2016.

The Growth Acceleration Program envisions thousands of infrastructure projects across the country. The Brazilian National Development Bank estimates investments of $37 billion on railways and sanitation, as well as $25 billion on ports, highways, and airports in the 2010-2013 period and a further $2.47 billion after 2014 [485]. The program allocated funds for the construction of new railway lines and the expansion of the current network (Transnordestina, Norte-Sul, and Ferronorte-Rondonopolis), as well as plans to build a highspeed rail line between Sao Paulo and Rio de Janeiro [486]. For ports, the program allocated funds to build new facilities and implement upgrades to existing ones. For highways, funding was provided for maintenance of the current network and the grant of new concessions to the private sector. And for airports, funds were allocated for the implementation of upgrades to alleviate congestion at heavily used passenger terminals. In preparation for the 2014 World Cup games, Brazil is planning nearly 300 miles of rapid transit bus corridors serving the 12 World Cup cities. Federal, state, and local governments already have committed nearly $6.5 billion in urban transit investments, with additional investments to come from the private sector [487].