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Simulation-based appraisal of tax-induced electro-mobility promotion in Iceland and prospects for energy-economic development

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  • Shafiei, Ehsan
  • Davidsdottir, Brynhildur
  • Stefansson, Hlynur
  • Asgeirsson, Eyjolfur Ingi
  • Fazeli, Reza
  • Gestsson, Marías Halldór
  • Leaver, Jonathan

Abstract

Transition to electric vehicles (EVs) requires multidimensional policy measures incorporating vehicle fleets, energy systems, consumer behaviours, and socio-economic developments. The main objective of this paper is to evaluate the implications of a tax-induced EV transition in Iceland for GHG mitigation, energy security, and economic benefits. The analytical tools include a techno-economic simulation model of the integrated energy-transport system which is linked to an Icelandic macroeconomic general equilibrium model. The impact of a new tax reform proposal by the government is compared with the current vehicle tax policy. The government proposal scenario is also examined under further inducements for EVs incorporating a value added tax exemption and banning the sale of new petroleum fuel vehicles. All scenarios are examined under a wide range of future changes in petroleum fuel prices and EV cost reduction. The results indicate that the overall macroeconomic benefits will be negligible, but they are expected to be positive in the long term as road electrification is deepened. The results show that although the tax-induced technological solution aimed at encouraging the adoption of EVs will enable a deep GHG emissions reduction in the long term, it will not be enough to meet the short-term climate targets.

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  • Shafiei, Ehsan & Davidsdottir, Brynhildur & Stefansson, Hlynur & Asgeirsson, Eyjolfur Ingi & Fazeli, Reza & Gestsson, Marías Halldór & Leaver, Jonathan, 2019. "Simulation-based appraisal of tax-induced electro-mobility promotion in Iceland and prospects for energy-economic development," Energy Policy, Elsevier, vol. 133(C).
    • Handle: RePEc:eee:enepol:v:133:y:2019:i:c:s0301421519304720
    DOI: 10.1016/j.enpol.2019.110894
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    4. Marta Borowska-Stefańska & Michał Kowalski & Paulina Kurzyk & Miroslava Mikušová & Szymon Wiśniewski, 2021. "Privileging Electric Vehicles as an Element of Promoting Sustainable Urban Mobility—Effects on the Local Transport System in a Large Metropolis in Poland," Energies, MDPI, vol. 14(13), pages 1-24, June.
    5. David Cook & Brynhildur Davíðsdóttir & Ingunn Gunnarsdóttir, 2022. "A Conceptual Exploration of How the Pursuit of Sustainable Energy Development Is Implicit in the Genuine Progress Indicator," Energies, MDPI, vol. 15(6), pages 1-23, March.
    6. Zhang, Jiahe & Qian, Yongsheng & Zeng, Junwei & Wei, Xuting & Li, Haijun, 2023. "Hybrid characteristics of heterogeneous traffic flow mixed with electric vehicles considering the amplitude of acceleration and deceleration," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 614(C).
    7. Gunnarsdottir, I. & Davidsdottir, B. & Worrell, E. & Sigurgeirsdottir, S., 2022. "Indicators for sustainable energy development: An Icelandic case study," Energy Policy, Elsevier, vol. 164(C).
    8. Xiao Yu & Yingdong Xu & Meng Sun & Yanzhe Zhang, 2021. "The Green-Innovation-Inducing Effect of a Unit Progressive Carbon Tax," Sustainability, MDPI, vol. 13(21), pages 1-18, October.
    9. Li, Kun & Dong, Feng, 2022. "Government strategy for banning gasoline vehicles: Evidence from tripartite evolutionary game," Energy, Elsevier, vol. 254(PA).
    10. Nelly S. Kolyan & Alexander E. Plesovskikh & Roman V. Gordeev, 2023. "Predictive Assessment of the Potential Electric Vehicle Market and the Effects of Reducing Greenhouse Gas Emissions in Russia," Journal of Applied Economic Research, Graduate School of Economics and Management, Ural Federal University, vol. 22(3), pages 497-521.
    11. Spittler, Nathalie & Davidsdottir, Brynhildur & Shafiei, Ehsan & Leaver, Jonathan & Asgeirsson, Eyjolfur Ingi & Stefansson, Hlynur, 2020. "The role of geothermal resources in sustainable power system planning in Iceland," Renewable Energy, Elsevier, vol. 153(C), pages 1081-1090.

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