Policies for electrification of the car fleet in the short and long run
Link to article:
Authors:
Hagem, C., S. Kverndokk, E. Nævdal and K. E. Rosendahl
Year:
2023
Reference:
Transportation Research Part D: Transport and Environment
vol 117, 103606Summary
We study the optimal combination of short and long-lived options for reducing greenhouse gas emissions, using electrification of the car fleet as an example. A transition to electric vehicles (EVs) can be incentivized by subsidies on purchases of EVs or on fast chargers. Subsidizing purchases only leads to emissions reductions in the next few years (short-lived static option), whereas investment in fast chargers will reduce abatement costs in several years (long-lived dynamic option). The dynamic option may be socially profitable even if it is more expensive. Numerical simulations confirm the qualitative results of the theory model and point to subsidizing charging stations as the dominate policy. An international permit market affects the combination of static and dynamic abatement. The optimal number of EVs increases with future permit prices, thus making both EV subsides and charging station subsidies more profitable, but it is relatively more cost-efficient to subsidize charging stations.
JEL:
C63, H21, Q54, R42
Keywords:
Emissions permit market; infrastructure investments; electric vehicles
Project:
Oppdragsgiver: NFR via SSBOppdragsgivers prosjektnr.: 5578- ELECTRANS C. Hagem
Frisch prosjekt: 3641 - Electrification of transport: Challenges, mechanisms and solutions
