Climate change concerns have set the transportation sector under increasing pressure to reduce its fuel consumption and greenhouse gas (GHG) emissions. At the same time, economists and policy makers are concerned with the so-called energy efficiency paradox or energy efficiency gap: the notion of a gap between observed and supposedly cost-effective levels of energy efficiency. Besides environmental externalities, a number of further explanations—barriers to energy efficiency—for this seemingly suboptimal energy efficiency adoption behavior as well as policy recommendations to overcome these barriers have been brought forward. We review the academic literature on this issue and apply it to the domain of light-duty vehicle (LDV) fuel economy. The bottom line is that both theory and empirics suggest, although not entirely uncontended, that the market for fuel economy is characterized by several externalities as well as internalities (that is, welfare reductions—due to fuel cost undervaluation—consumers impose on themselves), leading to suboptimally low fuel economy levels and therefore providing a rationale for policy interventions. This thesis focusses on a policy instrument that is specifically dedicated to improving vehicle fuel efficiency and enjoys high popularity among policy-makers: mandatory standards for either fuel economy or specific carbon dioxide (CO2) emissions of passenger vehicles, which are key tools in many major automobile markets for meeting CO2 mitigation targets, for reducing dependence on oil imports, and increasing the welfare of motorists. By means of a theoretical model, we assess the relative favorability of different standard designs—uniform standards and manufacturer-specific standards based on a reference attribute such as weight (EU policy) or size (U.S. policy)—as well as the implications of credit trading across manufacturers. Uniform standards ignore heterogeneity in manufacturers’ abatement costs; thus, in the absence of a credit trading mechanism, they impair the cost-effectiveness of achieving the fleetwide efficiency target and cause perceived inequities. By differentiating the manufacturer-specific emissions targets, weight- or size-based standards may then improve the economic efficiency of the regulation and balance the cost distribution through a more equitable allocation of required abatement efforts, but they distort the decision among different available abatement options. This distortion can possibly offset the gains from differentiating emissions targets to a large extent or even worsen the overall cost-effectiveness. We emphasize the crucial impact of the choice of the reference attribute on the magnitude of distortion-induced welfare losses and the regulation’s overall economic efficiency properties. Making fuel efficiency standards tradable tends to improve their cost-effectiveness; yet, in case of distortionary attribute-based standards, and under certain circumstances, introducing tradability may actually have a deteriorating effect. Conducting numerical simulations, we identify the role of several structural factors (e.g., market concentration rates, technology cost structures, heterogeneity among vehicle manufacturers) for the relative cost-effectiveness and distributional equity of each kind of standard. We briefly contrast the U.S. and European policy approaches in the light of our theoretical results, arguing against the appropriateness of vehicle weight as reference parameter for attribute-based CO2 emissions or fuel economy standards. The subsequent chapters deal with the challenges arising from the upcoming, stepwise, and for ambitious GHG cuts indispensable electrification of the LDV fleet. Given growing market shares of electric drivetrains (battery-electric vehicles, plug-in hybrids, fuel cell electric vehicles), the currently widespread tailpipe CO2 emissions standards become increasingly inappropriate. With tailpipe standards implemented, electric vehicles (EV) have a large leverage on the (required) fuel economy of conventional internal combustion engine vehicles; as a consequence, uncertainty about the future market penetration of EV jeopardizes both GHG abatement targets as well as the realization of beneficial fuel cost savings. Thus, we assess potential alternative metrics for regulating vehicle efficiency—with well-to-wheel GHG standards and energy consumption standards appearing particularly promising, despite methodological challenges remaining to be resolved. In addition, we examine the interactions of vehicle efficiency standards with the broader climate policy framework—emissions trading schemes with varying sectoral scope, in particular—under consideration of different standards metrics and uncertain LDV electrification scenarios. Finally, we explore the interplay of LDV efficiency standards with other policy instruments specifically dedicated to improving new vehicles’ CO2 performance or fuel economy. We show that—contingent upon the precise design of the efficiency standards—the implementation of such complementary policies can worsen the effectively realized fuel efficiency of the fleet. The simultaneous use of multiple instruments may still be beneficial and unfold synergies, however, if the regulator is aware of the instrumental interplay and adjusts the standards as well as the complementary policy instruments accordingly.


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    Titel :

    The economics of vehicle CO2 emissions standards and fuel economy regulations.
    Begründung, Ausgestaltung und neue Herausforderungen durch strombasierte Antriebe


    Untertitel :

    rationale, design, and the electrification challenge


    Weitere Titelangaben:

    Eine ökonomische Analyse von CO2-Grenzwerten und Kraftstoffeffizienzvorgaben für Pkw


    Beteiligte:

    Erscheinungsdatum :

    2016



    Medientyp :

    Sonstige


    Format :

    Elektronische Ressource


    Sprache :

    Englisch



    Klassifikation :

    DDC:    388 / 333




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