Reinventing the Internal Combustion Engine

While much of the buzz in transportation policy lately has been focused on electrification, the vast majority of the U.S. vehicle fleet is powered by internal combustion engines (ICEs). According to an estimate by the Department of Energy, in 2009 there were only 57,185 electric vehicles in use in the U.S.  After the Obama Administration’s July 2011 mandate of higher fuel economy standards, players in the automobile industry are concentrating even harder on making ICEs more efficient.

Refuting pessimists in the industry who suggest that current standards are already forcing engines to their limits, Christian Berggren and Thomas Magnusson argue that ICE manufacturers are accelerating fuel efficiency improvements due to increased competition in the market. In their paper “Reducing Automotive Emissions – The Potentials of Combustion Engine Technologies and the Power of Policy,” Berggren and Magnusson explore the extent to which regulation inspires innovation and decreases emissions.

Berggren and Magnusson note the tendency of forecasters to use S-curves, which are models of industrial technology development. The S-curve model implies that slow progress within an industry indicates the end of the curve, thereby making additional progress even more difficult and costly to achieve. However, given additional competition – from new market entrants, new technologies, or a new regulatory environment – the S-curve can twist upward once again. These new twists imply that rapid, cheap improvements remain possible into the foreseeable future.

For example, the authors use EU emissions reduction goals to show how engines have surpassed efficiency levels that were earlier considered to be beyond technological limitations. Between 1998 and 2007, European cars reduced emissions by 22 grams per kilometer. In three years between 2007 and 2010, emissions were further reduced by an additional 19 grams per kilometer.

The regulatory climate compelling reduced emissions has led some automobile manufacturers to shift away from characteristics such as spaciousness and sportiness to enhanced fuel efficiency. This switch was apparent in Volvo’s competitive repositioning between 2007 and 2010, a period during which the automotive company did not adopt cutting-edge technology but instead placed more emphasis on performance parameters to improve emissions output and increase fuel efficiency.

Berggren and Magnusson identify several components or features that will be improved in next-generation ICE vehicles: auxiliary engine systems, air-conditioning, transmissions, and micro-hybridization. The mandate-driven modifications of existing ICEs, and the inevitability of further improvements in the future, prove the importance of the regulatory framework in reducing vehicle emissions.

While higher penetration of electric vehicles into the U.S. passenger fleet would drastically curb emissions, significant economic obstacles exist to widespread adoption. In particular, infrastructure challenges in metropolitan and rural areas may hinder the adoption of electric passenger vehicles.

Berggren and Magnusson demonstrate that developing frameworks that encourage automobile manufacturers to be innovative in their designs is the key to inducing competition and reducing vehicle emissions. Focusing on past performance to indicate future possibilities is a way to ensure that progress is not achieved.