**1. Introduction**

The Paris Agreement, adopted in December 2015, attempts to tackle the growing problem of global warming by setting carbon dioxide (CO2) emission reduction targets for each country in order to meet the goal of limiting the rise in the average global temperature to below 2 ◦C relative to the pre-industrial revolution level [1]. To achieve this goal, limiting emissions from the transportation sector, which accounts for 29% of the CO2 emissions of Organization for Economic Co-operation and Development (OECD) countries, is of paramount importance [2]. In Japan, the transportation sector accounts for 20% of total CO2 emissions, and 90% of these emissions are generated by the motor vehicle sector [3]. Accordingly, reducing tailpipe CO2 emissions derived from motor vehicles is essential, especially by means of improving motor vehicle fuel economy.

In the United States, the Corporate Average Fuel Economy (CAFE) standard has been in effect since 1975 [4]. This standard aims at improving the fuel economy of motor vehicles to ensure that the fuel economy of a relevant company does not drop below a fuel economy standard value (CAFE standard), a target which is a motor vehicle sales weighted average [4]. In Japan, on the other hand, the fuel economy values of the most efficient vehicle models in specific vehicle weight categories (i.e., the best performing vehicles) are adopted as targets to drive improvements in the fuel economy of each vehicle model [5]. This could be called the 'Top Runner Approach'. Japan plans to adopt CAFE standards in 2020, to use in addition to its current 'Top Runner Approach', with the dual objectives of reducing transportation sector CO2 emissions and promoting more flexible motor vehicle sales by companies [5].

There are several problems with CAFE standards, however. The first is that even if the aggregated CAFE of a relevant company exceeds the CAFE target, the fuel economy of some of the company's vehicle models may still fall below the fuel economy standard value by vehicle weight category, and vehicle models with poor fuel economy will likely end up on the motor vehicle market. Increasing sales of hybrid vehicles is likely another factor that may drive up the CAFEs of companies. There is also a problem that hybrid vehicles (i.e., electric-petroleum hybrids) impose a heavier environmental burden in manufacturing than conventional gasoline vehicles because they require additional parts and materials (e.g., [6]).

Thus, CAFE standards may not well work toward reducing gasoline consumption and environmental burden through the fuel economy improvements over all the vehicle weight categories and vehicle types. Regarding this problem of CAFE standards, previous studies studied the optimal design of the CAFE standard [7–12] analyzed the welfare effects of tightening the CAFE standard in the U.S. [13–16] compared reductions in fuel consumptions through increasing gasoline taxes and tightening the CAFE standards.

It is important to note that since the demand-side energy policy of a higher gasoline tax has already been imposed in many countries, the supply-side energy policy of improving the CAFE is needed to reduce the environmental burdens associated with the automobile. Studies estimated direct CO2 emissions associated with fuel combustions of the transport sector, e.g., [17,18], whereas an importance of the life cycle analysis has been increased [19]. To the best of our knowledge, there are very few studies evaluating how companies meeting the CAFE standards affects lifecycle CO2 emissions through the automobile lifecycle.

It is essential to consider the lifecycle CO2 emissions of motor vehicles rather than just fuel economy. In this study, CAFEs and CAFE targets of Japan's domestic automobile manufacturers were estimated and it was assessed how well the manufacturers met their targets. The impact that the introduction of the CAFE standards in Japan will have on motor vehicle-derived lifecycle CO2 emissions was also analyzed.

Specifically, the 2015 sales performance figures of seven of Japan's automobile manufacturers (Toyota Motor Corporation, Nissan Motor Co., Ltd., Honda Motor Co., Ltd., Mitsubishi Motors Corporation, Mazda Motor Corporation, Suzuki Co., Ltd., and Subaru Co., Ltd.) and the published fuel economy values of the sold vehicle models were investigated, in order to estimate the CAFE of each company, as well as their CAFE target, and to assess how well the manufacturers met their targets in 2015.

The car sales of a specific company affect not only the CAFE based on the weighted-average fuel economies of the car sales but also the lifecycle CO2 of motor vehicles sold by the company. To estimate the lifecycle CO2 of motor vehicles, it is important to estimate the lifecycle CO2 emission intensity of a specific vehicle model sold by the company expressed in ton-CO2 per vehicle. This is because several studies treated a wide variety of vehicles as a specific homogeneous product and analyzed a life cycle assessment of the specific vehicle (e.g., aggregated conventional gasoline vehicle) with a comparison of the environmental burdens of conventional vehicles with vehicles equipping other engines, electric vehicles, hybrid vehicles, plug-in hybrid vehicles, and hydrogen fuel cell vehicles [20–23].

Using the pooled observations of cars sold by the above seven manufactures in 2015, a statistically specified relationship was created between car prices and car weights as a regression equation. When the car price of an 'average vehicle' described in the Japanese commodity-by-commodity input-output table (Ministry of Internal Affairs and Communications, Japan, 2010) was inserted into the specified relationship between car prices and car weights, a car weight of the average vehicle could be obtained. Using the ratio between the embodied CO2 emission intensity of the 'average vehicle' provided by the Embodied Energy and Emission Intensity Data for Japan using Input-Output Tables [24] and the car weight of the 'average vehicle' estimated in this study, the embodied CO2 emission intensity of the specific vehicle model of the company was proportional to the weight of the car. Using the proposed methodology, a new database of disaggregated lifecycle emissions of motor vehicles sold by the Japanese auto manufactures was compiled.

Estimating the disaggregated lifecycle inventory database of motor vehicles, the impact that the introduction of the CAFE standards in Japan is likely to have on motor vehicle-derived

lifecycle CO2 emissions was evaluated, to assess the validity of the CAFE standards from an environmental perspective.

Companies would maximize profits from car sales under the CAFE standards. This study therefore formulated an optimization problem of maximizing profit, as the objective function, under constraints with respect to both car sales and the CAFE standards and examined how the optimized car sales of each company differed from the actual car sales and what effect achieving the CAFE standards would have toward reducing lifecycle CO2 emissions under the optimized car sales.

The remainder of this paper is organized as follows: Section 2 describes the methodology, Section 3 explains the data used in this study, Section 4 provides the results and discussion, and Section 5 concludes this paper.
