How Cost-effective are Electric Vehicle Subsidies in Reducing Tailpipe- Emissions? An Analysis of Major Electric Vehicle Markets

We estimate the cost-effectiveness of plug-in electric vehicle (PEV) subsidies in reducing tailpipe-[CO.sub.2] emissions in China, the U.S., and nine European countries. We find that the per-tonne cost of tailpipe-[CO.sub.2] avoided increases linearly with the government-subsidized percentage of the...

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Bibliographic Details
Published in:The Energy journal (Cambridge, Mass.) Mass.), 2023-05, p.223
Main Authors: Sheldon, Tamara L, Dua, Rubal, Alharbi, Omar Abdullah
Format: Article
Language:English
Subjects:
Air pollution
Economic aspects
Electric vehicles
Greenhouse gases
Subsidies
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Summary:We estimate the cost-effectiveness of plug-in electric vehicle (PEV) subsidies in reducing tailpipe-[CO.sub.2] emissions in China, the U.S., and nine European countries. We find that the per-tonne cost of tailpipe-[CO.sub.2] avoided increases linearly with the government-subsidized percentage of the PEV price. Costs are relatively higher in the Netherlands and Denmark, which subsidized high-priced PEVs including plug-in hybrids, and lower in the U.S., where PEVs replaced higher-emissions cars. Chinese PEV subsidies have a short-run static cost of up to $1,600 per tonne, far exceeding the social cost of carbon, suggesting that subsidies are more a part of China's industrial policy than its carbon policy. When subsidy-induced PEV sales and power generation emissions are considered, the ordering of countries based on the cost-effectiveness of subsidies changes. The long-run dynamic subsidy cost is expected to be lower, as current subsidies may drive future innovation and sales, and due to grid decarbonization.
ISSN:0195-6574
DOI:10.5547/01956574.44.2.tshe