Energy System and Emissions Impacts of an 8-Fold Increase in Liquid Fuels Combustion Efficiency

Motivated by an ancient account of dramatic gains in liquid fuel efficiency, this study uses the Global Change Analysis Model (GCAM) to examine the system-wide effects of an 8-fold increase in refined liquids end-use efficiency by 2050. Absent explicit climate policy, these efficiency improvements sharply reduce liquid fuel use and place global CO₂ emissions on a pathway consistent with limiting warming to below 1.5 °C, despite significant rebound effects that increase demand for energy services, particularly in transportation. We find that under such improvements CO2 emissions could decline by roughly 25 percent by 2030 and nearly 50 percent by mid-century. The resulting contraction in liquid fuel demand propagates to other sectors via price signals, reducing consumption of other fossil fuels and lowering system-wide energy costs, with attendant potential to alleviate recent inflationary pressure. The results provide further support for the central role of end-use efficiency in deep decarbonization strategies and its ability to amplify complementary fuel policies.