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Promoting alternative, environmentally friendly passenger transport technologies: Directed technological change in a bottom-up/top-down CGE model

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  • Veronika Kulmer

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    (Wegener Center for Climate and Global Change, University of Graz, Austria)

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    Abstract

    This paper evaluates policy options that foster the progress of alternative, environmentally friendly passenger transport technologies in order to reduce greenhouse gas emissions viable technological switch. For the example of Austria, we develop a dynamic computable general equilibrium model which explicitly considers passenger transport technologies comprising "internal combustion engine” (ICE), “plug-in hybrid electric vehicle” (PHEV), “electric vehicle” (EV) and “fuel cell electric vehicle” (FCEV). Regarding technological progress we also incorporate labor augmenting, directed technological change. For policy analysis, we study the effects of (i) a phase out of ICE and subsidy in R&D, (ii) a fuel tax and subsidy in R&D and (iii) an output subsidy on FCEV. We find that in terms of overall emission reduction, in the given time scale from 2005 to 2050, the continuous phase-out of ICE in combination with a subsidy in R&D is the most effective policy measure. The fuel tax in combination with a subsidy in R&D shows the smallest emission reduction. However, in terms of costs, impacts on consumption of private goods are the smallest among all policy instruments. Moreover, domestic output of economic sectors is boosted. Finally, results show, that the competitiveness of FCEV implies a considerable fall in emissions and favors production of several economic sectors, such as electrical machinery and chemical products. However, in order to ensure competitiveness the output subsidy on FCEV is extremely high, impacting private consumption strongly.

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    Bibliographic Info

    Paper provided by University of Graz, Department of Economics in its series Graz Economics Papers with number 2013-02.

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    Date of creation: Feb 2013
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    Handle: RePEc:grz:wpaper:2013-02

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    Web page: http://volkswirtschaftslehre.uni-graz.at/
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    Related research

    Keywords: technology policy; directed technological change; computable general equilibrium;

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    References

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    1. Christoph Bohringer and Andreas Loschel, 2006. "Promoting Renewable Energy in Europe: A Hybrid Computable General Equilibrium Approach," The Energy Journal, International Association for Energy Economics, vol. 0(Special I), pages 135-150.
    2. Weiss, Martin & Patel, Martin K. & Junginger, Martin & Perujo, Adolfo & Bonnel, Pierre & van Grootveld, Geert, 2012. "On the electrification of road transport - Learning rates and price forecasts for hybrid-electric and battery-electric vehicles," Energy Policy, Elsevier, vol. 48(C), pages 374-393.
    3. Sue Wing, Ian, 2008. "The synthesis of bottom-up and top-down approaches to climate policy modeling: Electric power technology detail in a social accounting framework," Energy Economics, Elsevier, vol. 30(2), pages 547-573, March.
    4. Loschel, Andreas, 2002. "Technological change in economic models of environmental policy: a survey," Ecological Economics, Elsevier, vol. 43(2-3), pages 105-126, December.
    5. Sue Wing, Ian, 2006. "Representing induced technological change in models for climate policy analysis," Energy Economics, Elsevier, vol. 28(5-6), pages 539-562, November.
    6. Daron Acemoglu & Philippe Aghion & Leonardo Bursztyn & David Hemous, 2009. "The Environment and Directed Technical Change," NBER Working Papers 15451, National Bureau of Economic Research, Inc.
    7. Alan Manne & Richard Richels, 1992. "Buying Greenhouse Insurance: The Economic Costs of CO2 Emission Limits," MIT Press Books, The MIT Press, edition 1, volume 1, number 026213280x, December.
    8. Frei, Christoph W. & Haldi, Pierre-Andre & Sarlos, Gerard, 2003. "Dynamic formulation of a top-down and bottom-up merging energy policy model," Energy Policy, Elsevier, vol. 31(10), pages 1017-1031, August.
    9. Goulder, Lawrence H. & Schneider, Stephen H., 1999. "Induced technological change and the attractiveness of CO2 abatement policies," Resource and Energy Economics, Elsevier, vol. 21(3-4), pages 211-253, August.
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