EV adoption and subsidies
Muehlegger and Rapsona analyze the impact on carbon emissions from a California electric vehicle (EV) subsidy policy called the Enhanced Fleet Modernization Program (EFMP). The pilot program began in July 2015, and over the first two years allocated roughly $72 million in state funding. The eligibility rules of this program expose some households to thousands of dollars of subsidies for EV purchases, while withholding those subsidies from others in a way that allows for a “treatment versus control” comparison. This allowed the authors to compare the distribution of vehicles purchased in locations in which the EFMP was available to the distribution in locations where consumers were ineligible for the program. They derived an interesting conclusion:
The program increases the average fuel efficiency of the set of vehicles purchased in a zip code, but subsidy participants would have purchased relatively fuel-efficient vehicles in the absence of the program. In particular, in the absence of the program, households would have purchased vehicles with an average fuel economy of approximately 35 miles per gallon (MPG). In view of this finding the question is:
Do subsidies for EV purchases reduce carbon emissions? It depends on the composition of the marginal source of electricity powering the EV: if the EV is charged by an efficient natural gas generator, the implied CO2 emissions savings are significantly lower than in the case where the EV is charged by a 50/50 mix of natural gas and renewables.
Correcting Estimates of Electric Vehicle Emissions Abatement: Implications for Climate Policy
Authors: Erich Muehlegger, David S. Rapson
From: University of California, Davis
EV adoption and carbon taxes
In this paper, Gillingham et al. study the interactions between electric vehicle policies and carbon pricing. They show that the two policies may not always be complementary and the emissions benefits of electric vehicle policies may actually be reduced in the presence of carbon pricing over a very relevant range of moderate carbon prices. The intuition for this finding is that carbon pricing can reorder the dispatch of electricity generation, pushing coal generation to the margin more often, and increase the demand for electricity, slowing the retirements of coal plants.
Our findings provide a cautionary tale for policymakers. They show how electric vehicle policies can be less effective at reducing long-run emissions under moderate carbon pricing than under no carbon pricing or under much higher carbon pricing, and thus would be less likely to be social welfare-improving.
Carbon Policy and the Emissions Implications of Electric Vehicles
Authors: Kenneth Gillingham, Marten Ovaere, Stephanie M. Weber
From: Yale University, Ghent University
