Assessing policies for reducing greenhouse gas emissions from passenger vehicles

Passenger vehicles are a large and growing source of greenhouse gas (GHG) emissions. Policies aimed at inducing technological change in vehicles will likely contribute to curbing emissions. A hybrid energy-economy model of the passenger vehicle sector was built to evaluate policies in reducing emissions, and in particular, increasing the adoption of zero-emission vehicles (ZEVs). The model is technologically explicit and behaviourally realistic and incorporates drivers of technological change. It was applied to California to assess a tax on GHG emissions, a standard mandating ZEV adoption, a ZEV purchase subsidy and a research and development subsidy for ZEVs. Combinations of these policies were also examined. A standard combined with a tax was found to most cost-effectively reduce emissions and increase ZEV diffusion. The purchase subsidy was least cost-effective. More moderate emission reductions can be achieved with diffusion of ultra low-emission vehicles, but deep reductions will likely require adoption of zero-emission vehicles.