IDEAS home Printed from https://ideas.repec.org/a/eee/energy/v155y2018icp746-762.html
   My bibliography  Save this article

Impacts of a super credit policy on electric vehicle penetration and compliance with China's Corporate Average Fuel Consumption regulation

Author

Listed:
  • Wang, Sinan
  • Zhao, Fuquan
  • Liu, Zongwei
  • Hao, Han

Abstract

A super credit policy provides favorable accounting rules for extremely low emission vehicles under several passenger vehicle fuel economy regulations. This policy was initially designed to promote promising advanced technologies complying with fleet-wide fuel economy regulations so that these technologies could achieve cost-effective breakeven points. The favorable multipliers offered range from 3.5 to 1.33 in the various fuel economy regulations by the year 2021. Under China's Corporate Average Fuel Consumption regulation, two types of super credit schemes are designed in the Phase IV Corporate Average Fuel Consumption regulation through 2020. One is the fuel-efficient vehicle super credit for vehicles with fuel consumption rates below the threshold of 2.8 L/100 km. Another is the new energy vehicle super credit for battery electric vehicles and plug-in hybrid electric vehicles. However, the effectiveness of this incentive in promoting electric vehicles and the optimal size of the multiplier are not well understood. This paper analyzes the impacts of the super credit policy from the perspective of automakers. A mathematical model based on combinational optimization is established to describe an automaker's decision-making process, and a genetic algorithm is employed to solve this problem. The conventional and plug-in hybrid electric vehicles cost-effectiveness frontier curves are fitted to illustrate the principle of new energy vehicle and fuel-efficient vehicle super credit schemes. Various multipliers of new energy vehicle and fuel-efficient vehicle super credit policy scenarios are simulated under the 2020 and 2025 Corporate Average Fuel Consumption targets. By analyzing the impact of the policy on the reduction of compliance costs, the super credit multiplier, the cost and the fuel consumption rates reduction effect are found to be the determining factors. The results confirm that the multiplier and China's super credit policy scheme will be effective by 2020, under which plug-in hybrid electric vehicles would account for 7.8% of the fleet at a cost of 6.6% Corporate Average Fuel Consumption target impairment. Under the assumed next phase of regulation by the year 2025, the optimal multipliers for the new energy vehicle and fuel-efficient vehicle super credit will be 1.5 and 1, respectively. It is noteworthy that the super credit policy may impair the energy saving target of Corporate Average Fuel Consumption regulations while promoting the market penetration of the targeted technologies. Despite other policies that benefit battery electric vehicles over plug-in hybrid electric vehicles, battery electric vehicles are not competitive with plug-in hybrid electric vehicles under either the 2020 or 2025 Corporate Average Fuel Consumption regulations. The fuel-efficient vehicle super credit policy will not promote the targeted advanced technologies under the next phase of regulation unless the 2.8 L/100 km fuel-efficient vehicle definition threshold can be adjusted along with the strengthened 2025 Corporate Average Fuel Consumption target.

Suggested Citation

  • Wang, Sinan & Zhao, Fuquan & Liu, Zongwei & Hao, Han, 2018. "Impacts of a super credit policy on electric vehicle penetration and compliance with China's Corporate Average Fuel Consumption regulation," Energy, Elsevier, vol. 155(C), pages 746-762.
    • Handle: RePEc:eee:energy:v:155:y:2018:i:c:p:746-762
    DOI: 10.1016/j.energy.2018.05.042
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0360544218308624
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.energy.2018.05.042?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Wang, Ning & Tang, Linhao & Pan, Huizhong, 2017. "Effectiveness of policy incentives on electric vehicle acceptance in China: A discrete choice analysis," Transportation Research Part A: Policy and Practice, Elsevier, vol. 105(C), pages 210-218.
    2. Lutsey, Nicholas & Sperling, Daniel, 2012. "Regulatory adaptation: Accommodating electric vehicles in a petroleum world," Energy Policy, Elsevier, vol. 45(C), pages 308-316.
    3. Brown, Stephen & Pyke, David & Steenhof, Paul, 2010. "Electric vehicles: The role and importance of standards in an emerging market," Energy Policy, Elsevier, vol. 38(7), pages 3797-3806, July.
    4. Egbue, Ona & Long, Suzanna, 2012. "Barriers to widespread adoption of electric vehicles: An analysis of consumer attitudes and perceptions," Energy Policy, Elsevier, vol. 48(C), pages 717-729.
    5. Sun, Lishan & Huang, Yuchen & Liu, Shuli & Chen, Yanyan & Yao, Liya & Kashyap, Anil, 2017. "A completive survey study on the feasibility and adaptation of EVs in Beijing, China," Applied Energy, Elsevier, vol. 187(C), pages 128-139.
    6. Cheah, Lynette & Heywood, John, 2011. "Meeting U.S. passenger vehicle fuel economy standards in 2016 and beyond," Energy Policy, Elsevier, vol. 39(1), pages 454-466, January.
    7. Al-Alawi, Baha M. & Bradley, Thomas H., 2014. "Analysis of corporate average fuel economy regulation compliance scenarios inclusive of plug in hybrid vehicles," Applied Energy, Elsevier, vol. 113(C), pages 1323-1337.
    8. Helveston, John Paul & Liu, Yimin & Feit, Elea McDonnell & Fuchs, Erica & Klampfl, Erica & Michalek, Jeremy J., 2015. "Will subsidies drive electric vehicle adoption? Measuring consumer preferences in the U.S. and China," Transportation Research Part A: Policy and Practice, Elsevier, vol. 73(C), pages 96-112.
    9. Zhang, Xiang & Bai, Xue, 2017. "Incentive policies from 2006 to 2016 and new energy vehicle adoption in 2010–2020 in China," Renewable and Sustainable Energy Reviews, Elsevier, vol. 70(C), pages 24-43.
    10. Jordi Perdiguero & Juan Luis Jiménez, 2012. "“Policy options for the promotion of electric vehicles: a review”," IREA Working Papers 201208, University of Barcelona, Research Institute of Applied Economics, revised Mar 2012.
    11. Wang, Yunshi & Sperling, Daniel & Tal, Gil & Fang, Haifeng, 2017. "China's electric car surge," Energy Policy, Elsevier, vol. 102(C), pages 486-490.
    12. Contestabile, Marcello & Alajaji, Mohammed & Almubarak, Bader, 2017. "Will current electric vehicle policy lead to cost-effective electrification of passenger car transport?," Energy Policy, Elsevier, vol. 110(C), pages 20-30.
    13. Wang, Sinan & Zhao, Fuquan & Liu, Zongwei & Hao, Han, 2017. "Heuristic method for automakers' technological strategy making towards fuel economy regulations based on genetic algorithm: A China's case under corporate average fuel consumption regulation," Applied Energy, Elsevier, vol. 204(C), pages 544-559.
    14. Hao, Han & Geng, Yong & Sarkis, Joseph, 2016. "Carbon footprint of global passenger cars: Scenarios through 2050," Energy, Elsevier, vol. 101(C), pages 121-131.
    15. Tsiakmakis, Stefanos & Fontaras, Georgios & Ciuffo, Biagio & Samaras, Zissis, 2017. "A simulation-based methodology for quantifying European passenger car fleet CO2 emissions," Applied Energy, Elsevier, vol. 199(C), pages 447-465.
    16. Yan Zhou & Michael Wang & Han Hao & Larry Johnson & Hewu Wang & Han Hao, 2015. "Plug-in electric vehicle market penetration and incentives: a global review," Mitigation and Adaptation Strategies for Global Change, Springer, vol. 20(5), pages 777-795, June.
    17. Ou, Xunmin & Zhang, Xiliang & Chang, Shiyan, 2010. "Scenario analysis on alternative fuel/vehicle for China's future road transport: Life-cycle energy demand and GHG emissions," Energy Policy, Elsevier, vol. 38(8), pages 3943-3956, August.
    18. Hao, Han & Liu, Zongwei & Zhao, Fuquan & Li, Weiqi & Hang, Wen, 2015. "Scenario analysis of energy consumption and greenhouse gas emissions from China's passenger vehicles," Energy, Elsevier, vol. 91(C), pages 151-159.
    19. Langbroek, Joram H.M. & Franklin, Joel P. & Susilo, Yusak O., 2016. "The effect of policy incentives on electric vehicle adoption," Energy Policy, Elsevier, vol. 94(C), pages 94-103.
    20. Andress, David & Das, Sujit & Joseck, Fred & Dean Nguyen, T., 2012. "Status of advanced light-duty transportation technologies in the US," Energy Policy, Elsevier, vol. 41(C), pages 348-364.
    21. Du, Jiuyu & Ouyang, Danhua, 2017. "Progress of Chinese electric vehicles industrialization in 2015: A review," Applied Energy, Elsevier, vol. 188(C), pages 529-546.
    22. Newbery, David & Strbac, Goran, 2016. "What is needed for battery electric vehicles to become socially cost competitive?," Economics of Transportation, Elsevier, vol. 5(C), pages 1-11.
    23. Hao, Han & Ou, Xunmin & Du, Jiuyu & Wang, Hewu & Ouyang, Minggao, 2014. "China’s electric vehicle subsidy scheme: Rationale and impacts," Energy Policy, Elsevier, vol. 73(C), pages 722-732.
    24. Diao, Qinghua & Sun, Wei & Yuan, Xinmei & Li, Lili & Zheng, Zhi, 2016. "Life-cycle private-cost-based competitiveness analysis of electric vehicles in China considering the intangible cost of traffic policies," Applied Energy, Elsevier, vol. 178(C), pages 567-578.
    25. Sen, Burak & Noori, Mehdi & Tatari, Omer, 2017. "Will Corporate Average Fuel Economy (CAFE) Standard help? Modeling CAFE's impact on market share of electric vehicles," Energy Policy, Elsevier, vol. 109(C), pages 279-287.
    26. Zhao, Xin & Doering, Otto C. & Tyner, Wallace E., 2015. "The economic competitiveness and emissions of battery electric vehicles in China," Applied Energy, Elsevier, vol. 156(C), pages 666-675.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Rodrigues, João L. & Bolognesi, Hugo M. & Melo, Joel D. & Heymann, Fabian & Soares, F.J., 2019. "Spatiotemporal model for estimating electric vehicles adopters," Energy, Elsevier, vol. 183(C), pages 788-802.
    2. Lu, Tianwei & Yao, Enjian & Jin, Fanglei & Yang, Yang, 2022. "Analysis of incentive policies for electric vehicle adoptions after the abolishment of purchase subsidy policy," Energy, Elsevier, vol. 239(PB).
    3. Wu, Jingwen & Posen, I. Daniel & MacLean, Heather L., 2021. "Trade-offs between vehicle fuel economy and performance: Evidence from heterogeneous firms in China," Energy Policy, Elsevier, vol. 156(C).
    4. Wu, Fulan & Li, Pei & Dong, Xuebing & Lu, Yuanzhu, 2022. "Exploring the effectiveness of China's dual credit policy in a differentiated automobile market when some consumers are environmentally aware," Energy Economics, Elsevier, vol. 111(C).
    5. Feng Liu & Yingshuang Tan & Sudipto Sarkar & Xueqing Zhang & Xingjun Huang, 2023. "When to invest in electric vehicles under dual credit policy: A real options approach," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 44(4), pages 2186-2198, June.
    6. Jizi Li & Yuping Zhou & Dengke Yu & Chunling Liu, 2020. "Consumers’ Purchase Intention of New Energy Vehicles: Do Product-Life-Cycle Policy Portfolios Matter?," Sustainability, MDPI, vol. 12(5), pages 1-23, February.
    7. Zhou, Lei & Kang, Rui & Wei, Haiqiao & Feng, Dengquan & Hua, Jianxiong & Pan, Jiaying & Chen, Rui, 2018. "Experimental analysis of super-knock occurrence based on a spark ignition engine with high compression ratio," Energy, Elsevier, vol. 165(PB), pages 68-75.
    8. Xinglong Liu & Fuquan Zhao & Han Hao & Kangda Chen & Zongwei Liu & Hassan Babiker & Amer Ahmad Amer, 2020. "From NEDC to WLTP: Effect on the Energy Consumption, NEV Credits, and Subsidies Policies of PHEV in the Chinese Market," Sustainability, MDPI, vol. 12(14), pages 1-19, July.
    9. Wu, Yang Andrew & Ng, Artie W. & Yu, Zichao & Huang, Jie & Meng, Ke & Dong, Z.Y., 2021. "A review of evolutionary policy incentives for sustainable development of electric vehicles in China: Strategic implications," Energy Policy, Elsevier, vol. 148(PB).
    10. Wang, Sinan & Chen, Kangda & Zhao, Fuquan & Hao, Han, 2019. "Technology pathways for complying with Corporate Average Fuel Consumption regulations up to 2030: A case study of China," Applied Energy, Elsevier, vol. 241(C), pages 257-277.
    11. Wen Wang & Zhicheng Xie & Mingfeng Feng & Yu Qi & Yi Dou, 2023. "Investigation of the Influencing Factors on Consumers’ Purchase Willingness towards New-Energy Vehicles in China: A Questionnaire Analysis Using Matrix Model," Energies, MDPI, vol. 16(15), pages 1-15, July.
    12. Liu, Feiqi & Zhao, Fuquan & Liu, Zongwei & Hao, Han, 2019. "Can autonomous vehicle reduce greenhouse gas emissions? A country-level evaluation," Energy Policy, Elsevier, vol. 132(C), pages 462-473.
    13. Siskos, Pelopidas & Moysoglou, Yannis, 2019. "Assessing the impacts of setting CO2 emission targets on truck manufacturers: A model implementation and application for the EU," Transportation Research Part A: Policy and Practice, Elsevier, vol. 125(C), pages 123-138.
    14. Ma, Haicheng & Lou, Gaoxiang & Fan, Tijun & Chan, Hing Kai & Chung, Sai Ho, 2021. "Conventional automotive supply chains under China's dual-credit policy: fuel economy, production and coordination," Energy Policy, Elsevier, vol. 151(C).
    15. Yu, Liukai & Zheng, Junjun & Ma, Gang & Jiao, Yangyang, 2023. "Analyzing the evolution trend of energy conservation and carbon reduction in transportation with promoting electrification in China," Energy, Elsevier, vol. 263(PD).
    16. Zhao, Meng & Li, Bin & Ren, Jiali & Hao, Zhihua, 2023. "Competition equilibrium of ride-sourcing platforms and optimal government subsidies considering customers’ green preference under peak carbon dioxide emissions," International Journal of Production Economics, Elsevier, vol. 255(C).
    17. Li, Jizi & Ku, Yaoyao & Yu, Yue & Liu, Chunling & Zhou, Yuping, 2020. "Optimizing production of new energy vehicles with across-chain cooperation under China’s dual credit policy," Energy, Elsevier, vol. 194(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Li, Yaoming & Zhang, Qi & Liu, Boyu & McLellan, Benjamin & Gao, Yuan & Tang, Yanyan, 2018. "Substitution effect of New-Energy Vehicle Credit Program and Corporate Average Fuel Consumption Regulation for Green-car Subsidy," Energy, Elsevier, vol. 152(C), pages 223-236.
    2. Wang, Xiaoli & Huang, Lucheng & Daim, Tugrul & Li, Xin & Li, Zhiqiang, 2021. "Evaluation of China's new energy vehicle policy texts with quantitative and qualitative analysis," Technology in Society, Elsevier, vol. 67(C).
    3. Liu, Dunnan & Xiao, Bowen, 2018. "Exploring the development of electric vehicles under policy incentives: A scenario-based system dynamics model," Energy Policy, Elsevier, vol. 120(C), pages 8-23.
    4. Nie, Qingyun & Zhang, Lihui & Tong, Zihao & Hubacek, Klaus, 2022. "Strategies for applying carbon trading to the new energy vehicle market in China: An improved evolutionary game analysis for the bus industry," Energy, Elsevier, vol. 259(C).
    5. Nie, Qingyun & Zhang, Lihui & Li, Songrui, 2022. "How can personal carbon trading be applied in electric vehicle subsidies? A Stackelberg game method in private vehicles," Applied Energy, Elsevier, vol. 313(C).
    6. Baodi Zhang & Fuyuan Yang & Lan Teng & Minggao Ouyang & Kunfang Guo & Weifeng Li & Jiuyu Du, 2019. "Comparative Analysis of Technical Route and Market Development for Light-Duty PHEV in China and the US," Energies, MDPI, vol. 12(19), pages 1-23, September.
    7. Wang, Sinan & Chen, Kangda & Zhao, Fuquan & Hao, Han, 2019. "Technology pathways for complying with Corporate Average Fuel Consumption regulations up to 2030: A case study of China," Applied Energy, Elsevier, vol. 241(C), pages 257-277.
    8. Kong, Deyang & Xia, Quhong & Xue, Yixi & Zhao, Xin, 2020. "Effects of multi policies on electric vehicle diffusion under subsidy policy abolishment in China: A multi-actor perspective," Applied Energy, Elsevier, vol. 266(C).
    9. Liu, Chang & Liu, Yuan & Zhang, Dayong & Xie, Chunping, 2022. "The capital market responses to new energy vehicle (NEV) subsidies: An event study on China," Energy Economics, Elsevier, vol. 105(C).
    10. Wen, W. & Yang, S. & Zhou, P. & Gao, S.Z., 2021. "Impacts of COVID-19 on the electric vehicle industry: Evidence from China," Renewable and Sustainable Energy Reviews, Elsevier, vol. 144(C).
    11. Hao, Han & Liu, Feiqi & Liu, Zongwei & Zhao, Fuquan, 2016. "Compression ignition of low-octane gasoline: Life cycle energy consumption and greenhouse gas emissions," Applied Energy, Elsevier, vol. 181(C), pages 391-398.
    12. Ziwen Ling & Christopher R. Cherry & Yi Wen, 2021. "Determining the Factors That Influence Electric Vehicle Adoption: A Stated Preference Survey Study in Beijing, China," Sustainability, MDPI, vol. 13(21), pages 1-22, October.
    13. Kyuho Maeng & Sungmin Ko & Jungwoo Shin & Youngsang Cho, 2020. "How Much Electricity Sharing Will Electric Vehicle Owners Allow from Their Battery? Incorporating Vehicle-to-Grid Technology and Electricity Generation Mix," Energies, MDPI, vol. 13(16), pages 1-25, August.
    14. Srinivasa Raghavan, Seshadri, 2020. "Behavioral Realism of Plug-In Electric Vehicle Usage: Implications for Emission Benefits, Energy Consumption, and Policies," Institute of Transportation Studies, Working Paper Series qt1rz000pf, Institute of Transportation Studies, UC Davis.
    15. Zixuan Wang & Xiuzhang Li, 2021. "Demand Subsidy versus Production Regulation: Development of New Energy Vehicles in a Competitive Environment," Mathematics, MDPI, vol. 9(11), pages 1-22, June.
    16. Wu, Tian & Shang, Zhe & Tian, Xin & Wang, Shouyang, 2016. "How hyperbolic discounting preference affects Chinese consumers’ consumption choice between conventional and electric vehicles," Energy Policy, Elsevier, vol. 97(C), pages 400-413.
    17. González Palencia, Juan C. & Otsuka, Yuki & Araki, Mikiya & Shiga, Seiichi, 2017. "Scenario analysis of lightweight and electric-drive vehicle market penetration in the long-term and impact on the light-duty vehicle fleet," Applied Energy, Elsevier, vol. 204(C), pages 1444-1462.
    18. Du, Jiuyu & Meng, Xiangfeng & Li, Jianqiu & Wu, Xiaogang & Song, Ziyou & Ouyang, Minggao, 2018. "Insights into the characteristics of technologies and industrialization for plug-in electric cars in China," Energy, Elsevier, vol. 164(C), pages 910-924.
    19. Yang, J. & Chen, F., 2021. "How are social-psychological factors related to consumer preferences for plug-in electric vehicles? Case studies from two cities in China," Renewable and Sustainable Energy Reviews, Elsevier, vol. 149(C).
    20. Zhuge, Chengxiang & Wei, Binru & Shao, Chunfu & Shan, Yuli & Dong, Chunjiao, 2020. "The role of the license plate lottery policy in the adoption of Electric Vehicles: A case study of Beijing," Energy Policy, Elsevier, vol. 139(C).

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:energy:v:155:y:2018:i:c:p:746-762. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.journals.elsevier.com/energy .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.