IDEAS home Printed from https://ideas.repec.org/a/eee/ecolec/v137y2017icp133-147.html
   My bibliography  Save this article

Picking Winners: Modelling the Costs of Technology-specific Climate Policy in the U.S. Passenger Vehicle Sector

Author

Listed:
  • Fox, Jacob
  • Axsen, Jonn
  • Jaccard, Mark

Abstract

Researchers debate the cost-effectiveness of technology-specific versus technology-neutral climate policies, but few quantify the differences. Using the case of low-carbon vehicle technologies in the US passenger vehicle sector (ethanol, plug-in electric and hydrogen), we develop a technology adoption simulation model that represents increasing returns to adoption in both financial costs and consumer preferences, representing uncertainty through Monte Carlo analysis. We compare the policy costs ($/tonne CO2 out to 2050) of: i) a technology-neutral carbon tax, ii) a somewhat neutral vehicle standard requiring low carbon vehicle sales, but allowing competition among technologies, and iii) technology-specific vehicle standards requiring sales of just one technology. On average across simulations, the carbon tax is twice as cost-effective as the best vehicle standard, in part because the tax more substantially affects vehicle use rates. Among the vehicle standards, a technology-specific standard that selects the right “winner” (plug-in electric vehicles) is more cost-effective than the neutral standard, as it more quickly stimulates technology improvement. However, there is risk in a technology-specific approach; mistakenly forcing a “loser” technology (hydrogen) results in policy costs that are 2 to 5 times higher than other policies. Results can help policymakers trade-off the costs and risks of different climate policy options.

Suggested Citation

  • Fox, Jacob & Axsen, Jonn & Jaccard, Mark, 2017. "Picking Winners: Modelling the Costs of Technology-specific Climate Policy in the U.S. Passenger Vehicle Sector," Ecological Economics, Elsevier, vol. 137(C), pages 133-147.
  • Handle: RePEc:eee:ecolec:v:137:y:2017:i:c:p:133-147
    DOI: 10.1016/j.ecolecon.2017.03.002
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0921800916310850
    Download Restriction: Full text for ScienceDirect subscribers only

    File URL: https://libkey.io/10.1016/j.ecolecon.2017.03.002?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. Daron Acemoglu & Philippe Aghion & Leonardo Bursztyn & David Hemous, 2012. "The Environment and Directed Technical Change," American Economic Review, American Economic Association, vol. 102(1), pages 131-166, February.
    2. McCarthy, Patrick S, 1996. "Market Price and Income Elasticities of New Vehicles Demand," The Review of Economics and Statistics, MIT Press, vol. 78(3), pages 543-547, August.
    3. Mark Jaccard, 2009. "Combining Top Down and Bottom Up in Energy Economy Models," Chapters, in: Joanne Evans & Lester C. Hunt (ed.), International Handbook on the Economics of Energy, chapter 13, Edward Elgar Publishing.
    4. Weber, K. Matthias & Rohracher, Harald, 2012. "Legitimizing research, technology and innovation policies for transformative change," Research Policy, Elsevier, vol. 41(6), pages 1037-1047.
    5. Mai, Trieu & Mulcahy, David & Hand, M. Maureen & Baldwin, Samuel F., 2014. "Envisioning a renewable electricity future for the United States," Energy, Elsevier, vol. 65(C), pages 374-386.
    6. Chris Bataille, Mark Jaccard, John Nyboer and Nic Rivers, 2006. "Towards General Equilibrium in a Technology-Rich Model with Empirically Estimated Behavioral Parameters," The Energy Journal, International Association for Energy Economics, vol. 0(Special I), pages 93-112.
    7. Stern,Nicholas, 2007. "The Economics of Climate Change," Cambridge Books, Cambridge University Press, number 9780521700801, November.
    8. Kenneth A. Small & Kurt Van Dender, 2007. "Fuel Efficiency and Motor Vehicle Travel: The Declining Rebound Effect," The Energy Journal, International Association for Energy Economics, vol. 0(Number 1), pages 25-52.
    9. Carrillo-Hermosilla, Javier, 2006. "A policy approach to the environmental impacts of technological lock-in," Ecological Economics, Elsevier, vol. 58(4), pages 717-742, July.
    10. Daron Acemoglu & Ufuk Akcigit & Douglas Hanley & William Kerr, 2016. "Transition to Clean Technology," Journal of Political Economy, University of Chicago Press, vol. 124(1), pages 52-104.
    11. Arthur, W Brian, 1989. "Competing Technologies, Increasing Returns, and Lock-In by Historical Events," Economic Journal, Royal Economic Society, vol. 99(394), pages 116-131, March.
    12. Kalkuhl, Matthias & Edenhofer, Ottmar & Lessmann, Kai, 2012. "Learning or lock-in: Optimal technology policies to support mitigation," Resource and Energy Economics, Elsevier, vol. 34(1), pages 1-23.
    13. Yeh, Sonia & Rubin, Edward S., 2012. "A review of uncertainties in technology experience curves," Energy Economics, Elsevier, vol. 34(3), pages 762-771.
    14. Horne, Matt & Jaccard, Mark & Tiedemann, Ken, 2005. "Improving behavioral realism in hybrid energy-economy models using discrete choice studies of personal transportation decisions," Energy Economics, Elsevier, vol. 27(1), pages 59-77, January.
    15. David L. Greene & K.G. Duleep & Walter McManus, 2004. "Future Potential of Hybrid and Diesel Powertrains in the U.S. Light-Duty Vehicle Market," Industrial Organization 0410003, University Library of Munich, Germany.
    16. Jean Charles Hourcade & Mark Jaccard & Chris Bataille & Frédéric Ghersi, 2006. "Hybrid Modeling: New Answers to Old Challenges," Post-Print halshs-00471234, HAL.
    17. Sanden, Bjorn A. & Azar, Christian, 2005. "Near-term technology policies for long-term climate targets--economy wide versus technology specific approaches," Energy Policy, Elsevier, vol. 33(12), pages 1557-1576, August.
    18. Fischer, Carolyn & Newell, Richard G. & Preonas, Louis, 2013. "Environmental and Technology Policy Options in the Electricity Sector: Interactions and Outcomes," RFF Working Paper Series dp-13-20, Resources for the Future.
    19. Axsen, Jonn & Mountain, Dean C. & Jaccard, Mark, 2009. "Combining stated and revealed choice research to simulate the neighbor effect: The case of hybrid-electric vehicles," Institute of Transportation Studies, Working Paper Series qt02n9j6cv, Institute of Transportation Studies, UC Davis.
    20. Joanne Evans & Lester C. Hunt (ed.), 2009. "International Handbook on the Economics of Energy," Books, Edward Elgar Publishing, number 12764, December.
    21. Rhodes, Ekaterina & Axsen, Jonn & Jaccard, Mark, 2015. "Gauging citizen support for a low carbon fuel standard," Energy Policy, Elsevier, vol. 79(C), pages 104-114.
    22. Axsen, Jonn & Bailey, Joseph & Castro, Marisol Andrea, 2015. "Preference and lifestyle heterogeneity among potential plug-in electric vehicle buyers," Energy Economics, Elsevier, vol. 50(C), pages 190-201.
    23. K. J. Arrow, 1971. "The Economic Implications of Learning by Doing," Palgrave Macmillan Books, in: F. H. Hahn (ed.), Readings in the Theory of Growth, chapter 11, pages 131-149, Palgrave Macmillan.
    24. Jaffe, Adam B. & Newell, Richard G. & Stavins, Robert N., 2005. "A tale of two market failures: Technology and environmental policy," Ecological Economics, Elsevier, vol. 54(2-3), pages 164-174, August.
    25. Loschel, Andreas, 2002. "Technological change in economic models of environmental policy: a survey," Ecological Economics, Elsevier, vol. 43(2-3), pages 105-126, December.
    26. Small, Kenneth A., 2012. "Energy policies for passenger motor vehicles," Transportation Research Part A: Policy and Practice, Elsevier, vol. 46(6), pages 874-889.
    27. Axsen, Jonn & Mountain, Dean C. & Jaccard, Mark, 2009. "Combining stated and revealed choice research to simulate the neighbor effect: The case of hybrid-electric vehicles," Resource and Energy Economics, Elsevier, vol. 31(3), pages 221-238, August.
    28. Björn Nykvist & Måns Nilsson, 2015. "Rapidly falling costs of battery packs for electric vehicles," Nature Climate Change, Nature, vol. 5(4), pages 329-332, April.
    29. Nic Rivers & Mark Jaccard, 2005. "Combining Top-Down and Bottom-Up Approaches to Energy-Economy Modeling Using Discrete Choice Methods," The Energy Journal, International Association for Energy Economics, vol. 0(Number 1), pages 83-106.
    30. Murphy, Rose & Jaccard, Mark, 2011. "Energy efficiency and the cost of GHG abatement: A comparison of bottom-up and hybrid models for the US," Energy Policy, Elsevier, vol. 39(11), pages 7146-7155.
    31. McCollum, David & Yang, Christopher, 2009. "Achieving deep reductions in US transport greenhouse gas emissions: Scenario analysis and policy implications," Energy Policy, Elsevier, vol. 37(12), pages 5580-5596, December.
    32. Kleit, Andrew N, 1990. "The Effect of Annual Changes in Automobile Fuel Economy Standards," Journal of Regulatory Economics, Springer, vol. 2(2), pages 151-172, June.
    33. Jean-Charles Hourcade, Mark Jaccard, Chris Bataille, and Frederic Ghersi, 2006. "Hybrid Modeling: New Answers to Old Challenges Introduction to the Special Issue of The Energy Journal," The Energy Journal, International Association for Energy Economics, vol. 0(Special I), pages 1-12.
    34. Jaccard, Mark & Murphy, Rose & Rivers, Nic, 2004. "Energy-environment policy modeling of endogenous technological change with personal vehicles: combining top-down and bottom-up methods," Ecological Economics, Elsevier, vol. 51(1-2), pages 31-46, November.
    35. Rivers, Nic & Jaccard, Mark, 2006. "Useful models for simulating policies to induce technological change," Energy Policy, Elsevier, vol. 34(15), pages 2038-2047, October.
    36. Rose Murphy and Mark Jaccard, 2011. "Modeling Efficiency Standards and a Carbon Tax: Simulations for the U.S. using a Hybrid Approach," The Energy Journal, International Association for Energy Economics, vol. 0(Special I).
    37. 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.
    38. Bordley, Robert F & McDonald, James B, 1993. "Estimating Aggregate Automotive Income Elasticities from the Population Income-Share Elasticity," Journal of Business & Economic Statistics, American Statistical Association, vol. 11(2), pages 209-214, April.
    39. Mark K. Jaccard & John Nyboer & Crhis Bataille & Bryn Sadownik, 2003. "Modeling the Cost of Climate Policy: Distinguishing Between Alternative Cost Definitions and Long-Run Cost Dynamics," The Energy Journal, International Association for Energy Economics, vol. 0(Number 1), pages 49-73.
    40. Noel Melton & Jonn Axsen & Daniel Sperling, 2016. "Moving beyond alternative fuel hype to decarbonize transportation," Nature Energy, Nature, vol. 1(3), pages 1-10, March.
    41. Richard Duke & Daniel M. Kammen, 1999. "The Economics of Energy Market Transformation Programs," The Energy Journal, International Association for Energy Economics, vol. 0(Number 4), pages 15-64.
    42. Mau, Paulus & Eyzaguirre, Jimena & Jaccard, Mark & Collins-Dodd, Colleen & Tiedemann, Kenneth, 2008. "The 'neighbor effect': Simulating dynamics in consumer preferences for new vehicle technologies," Ecological Economics, Elsevier, vol. 68(1-2), pages 504-516, December.
    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. Aryanpur, Vahid & Balyk, Olexandr & Daly, Hannah & Ó Gallachóir, Brian & Glynn, James, 2022. "Decarbonisation of passenger light-duty vehicles using spatially resolved TIMES-Ireland Model," Applied Energy, Elsevier, vol. 316(C).
    2. Alhamzah Alnoor & Khai Wah Khaw & XinYing Chew & Sammar Abbas & Zeeshan Zaib Khattak, 2023. "The Influence of the Barriers of Hybrid Strategy on Strategic Competitive Priorities: Evidence from Oil Companies," Global Journal of Flexible Systems Management, Springer;Global Institute of Flexible Systems Management, vol. 24(2), pages 179-198, June.
    3. Bassem Haidar & Pascal da Costa & Jan Lepoutre & Fabrice Vidal, 2020. "Which combination of battery capacity and charging power for battery electric vehicles: urban versus rural French case studies," Post-Print hal-03071656, HAL.
    4. Lee, Jeongeun & Koo, Yoonmo, 2023. "A general equilibrium analysis of individual choice behavior on alternative fuel vehicles," Ecological Economics, Elsevier, vol. 204(PB).
    5. Geerten Van de Kaa & Daniel Scholten & Jafar Rezaei & Christine Milchram, 2017. "The Battle between Battery and Fuel Cell Powered Electric Vehicles: A BWM Approach," Energies, MDPI, vol. 10(11), pages 1-13, October.
    6. Jiang, Hong-Dian & Xue, Mei-Mei & Liang, Qiao-Mei & Masui, Toshihiko & Ren, Zhong-Yuan, 2022. "How do demand-side policies contribute to the electrification and decarburization of private transportation in China? A CGE-based analysis," Technological Forecasting and Social Change, Elsevier, vol. 175(C).
    7. Bhardwaj, Chandan & Axsen, Jonn & McCollum, David, 2022. "Which “second-best” climate policies are best? Simulating cost-effective policy mixes for passenger vehicles," Resource and Energy Economics, Elsevier, vol. 70(C).
    8. Dumortier, Jerome & Elobeid, Amani & Carriquiry, Miguel, 2022. "Light-duty vehicle fleet electrification in the United States and its effects on global agricultural markets," Ecological Economics, Elsevier, vol. 200(C).
    9. Lancker, Kira & Quaas, Martin F., 2019. "Increasing marginal costs and the efficiency of differentiated feed-in tariffs," Energy Economics, Elsevier, vol. 83(C), pages 104-118.
    10. Melton, Noel & Axsen, Jonn & Goldberg, Suzanne, 2017. "Evaluating plug-in electric vehicle policies in the context of long-term greenhouse gas reduction goals: Comparing 10 Canadian provinces using the “PEV policy report card”," Energy Policy, Elsevier, vol. 107(C), pages 381-393.
    11. Bistline, John E.T. & Blanford, Geoffrey J., 2020. "Value of technology in the U.S. electric power sector: Impacts of full portfolios and technological change on the costs of meeting decarbonization goals," Energy Economics, Elsevier, vol. 86(C).
    12. Blanco, Herib & Gómez Vilchez, Jonatan J. & Nijs, Wouter & Thiel, Christian & Faaij, André, 2019. "Soft-linking of a behavioral model for transport with energy system cost optimization applied to hydrogen in EU," Renewable and Sustainable Energy Reviews, Elsevier, vol. 115(C).
    13. Sykes, Maxwell & Axsen, Jonn, 2017. "No free ride to zero-emissions: Simulating a region's need to implement its own zero-emissions vehicle (ZEV) mandate to achieve 2050 GHG targets," Energy Policy, Elsevier, vol. 110(C), pages 447-460.
    14. Siskos, Pelopidas & Zazias, Georgios & Petropoulos, Apostolos & Evangelopoulou, Stavroula & Capros, Pantelis, 2018. "Implications of delaying transport decarbonisation in the EU: A systems analysis using the PRIMES model," Energy Policy, Elsevier, vol. 121(C), pages 48-60.
    15. Dugan, Anna & Mayer, Jakob & Thaller, Annina & Bachner, Gabriel & Steininger, Karl W., 2022. "Developing policy packages for low-carbon passenger transport: A mixed methods analysis of trade-offs and synergies," Ecological Economics, Elsevier, vol. 193(C).
    16. Michael Cary, 2020. "Have greenhouse gas emissions from US energy production peaked? State level evidence from six subsectors," Environment Systems and Decisions, Springer, vol. 40(1), pages 125-134, March.
    17. Afzal S. Siddiqui & Sauleh A. Siddiqui, 2022. "Ambiguities and nonmonotonicities under prosumer power," TOP: An Official Journal of the Spanish Society of Statistics and Operations Research, Springer;Sociedad de Estadística e Investigación Operativa, vol. 30(3), pages 492-532, October.

    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. Sykes, Maxwell & Axsen, Jonn, 2017. "No free ride to zero-emissions: Simulating a region's need to implement its own zero-emissions vehicle (ZEV) mandate to achieve 2050 GHG targets," Energy Policy, Elsevier, vol. 110(C), pages 447-460.
    2. Melton, Noel & Axsen, Jonn & Goldberg, Suzanne, 2017. "Evaluating plug-in electric vehicle policies in the context of long-term greenhouse gas reduction goals: Comparing 10 Canadian provinces using the “PEV policy report card”," Energy Policy, Elsevier, vol. 107(C), pages 381-393.
    3. Rhodes, Ekaterina & Hoyle, Aaron & McPherson, Madeleine & Craig, Kira, 2022. "Understanding climate policy projections: A scoping review of energy-economy models in Canada," Renewable and Sustainable Energy Reviews, Elsevier, vol. 153(C).
    4. Axsen, Jonn & Wolinetz, Michael, 2023. "What does a low-carbon fuel standard contribute to a policy mix? An interdisciplinary review of evidence and research gaps," Transport Policy, Elsevier, vol. 133(C), pages 54-63.
    5. Ekaterina Rhodes & Kira Craig & Aaron Hoyle & Madeleine McPherson, 2021. "How Do Energy-Economy Models Compare? A Survey of Model Developers and Users in Canada," Sustainability, MDPI, vol. 13(11), pages 1-39, May.
    6. Bhardwaj, Chandan & Axsen, Jonn & Kern, Florian & McCollum, David, 2020. "Why have multiple climate policies for light-duty vehicles? Policy mix rationales, interactions and research gaps," Transportation Research Part A: Policy and Practice, Elsevier, vol. 135(C), pages 309-326.
    7. Bhardwaj, Chandan & Axsen, Jonn & McCollum, David, 2022. "Which “second-best” climate policies are best? Simulating cost-effective policy mixes for passenger vehicles," Resource and Energy Economics, Elsevier, vol. 70(C).
    8. Jaccard, Mark & Murphy, Rose & Zuehlke, Brett & Braglewicz, Morgan, 2019. "Cities and greenhouse gas reduction: Policy makers or policy takers?," Energy Policy, Elsevier, vol. 134(C).
    9. Hammond, William & Axsen, Jonn & Kjeang, Erik, 2020. "How to slash greenhouse gas emissions in the freight sector: Policy insights from a technology-adoption model of Canada," Energy Policy, Elsevier, vol. 137(C).
    10. Mark Jaccard and Suzanne Goldberg, 2014. "Technology Assumptions and Climate Policy: The Interrelated Effects of U.S. Electricity and Transport Policy," The Energy Journal, International Association for Energy Economics, vol. 0(Special I).
    11. Li, Francis G.N. & Bataille, Chris & Pye, Steve & O'Sullivan, Aidan, 2019. "Prospects for energy economy modelling with big data: Hype, eliminating blind spots, or revolutionising the state of the art?," Applied Energy, Elsevier, vol. 239(C), pages 991-1002.
    12. Murphy, Rose & Jaccard, Mark, 2011. "Energy efficiency and the cost of GHG abatement: A comparison of bottom-up and hybrid models for the US," Energy Policy, Elsevier, vol. 39(11), pages 7146-7155.
    13. Giraudet, Louis-Gaëtan & Guivarch, Céline & Quirion, Philippe, 2012. "Exploring the potential for energy conservation in French households through hybrid modeling," Energy Economics, Elsevier, vol. 34(2), pages 426-445.
    14. Lancker, Kira & Quaas, Martin F., 2019. "Increasing marginal costs and the efficiency of differentiated feed-in tariffs," Energy Economics, Elsevier, vol. 83(C), pages 104-118.
    15. Wolinetz, Michael & Axsen, Jonn, 2017. "How policy can build the plug-in electric vehicle market: Insights from the REspondent-based Preference And Constraints (REPAC) model," Technological Forecasting and Social Change, Elsevier, vol. 117(C), pages 238-250.
    16. Steve Pye & Chris Bataille, 2016. "Improving deep decarbonization modelling capacity for developed and developing country contexts," Climate Policy, Taylor & Francis Journals, vol. 16(sup1), pages 27-46, June.
    17. Murphy, Rose & Rivers, Nic & Jaccard, Mark, 2007. "Hybrid modeling of industrial energy consumption and greenhouse gas emissions with an application to Canada," Energy Economics, Elsevier, vol. 29(4), pages 826-846, July.
    18. Brand, Christian & Cluzel, Celine & Anable, Jillian, 2017. "Modeling the uptake of plug-in vehicles in a heterogeneous car market using a consumer segmentation approach," Transportation Research Part A: Policy and Practice, Elsevier, vol. 97(C), pages 121-136.
    19. Hoyle, Aaron & Peters, Jotham & Jaccard, Mark & Rhodes, Ekaterina, 2024. "Additional or accidental? Simulating interactions between a low-carbon fuel standard and other climate policy instruments in Canada," Energy Policy, Elsevier, vol. 185(C).
    20. Todd D. Gerarden & Richard G. Newell & Robert N. Stavins, 2017. "Assessing the Energy-Efficiency Gap," Journal of Economic Literature, American Economic Association, vol. 55(4), pages 1486-1525, December.

    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:ecolec:v:137:y:2017:i:c:p:133-147. 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.elsevier.com/locate/ecolecon .

    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.