A Computable General Equilibrium Analysis of Expanded Use of Alternative Fuel Vehicles

Alternative Fuel Vehicles (AFVs) have been suggested as a low-carbon alternative to conventional fossil fuel-based transportation and have received increasing interest, attention and investment from automakers, consumers, policy makers and researchers. While there have been considerable technologies advances in AFV technology, they require further technological advancement to lower costs sufficiently to capture a significant share of the vehicle market that currently continues to be dominated by conventional fossil fuel technologies. We use a Computable General Equilibrium Model (CGE) – ADAGE to integrate expansion of AFVs along with rapidly changing electricity generation sources to examine the market potential of alternative fuel technologies, interactions between expanded use of these technologies and the U.S. economy, energy and food, coupled with net environmental benefits. Results show that AFVs not only compete with each other, but also with conventional fuel vehicles which promotes biofuel usage. When consumers are sensitive to the electricity price and change their charging behavior, electric cars are expanding more rapidly and use more renewable electricity generation. This brings additional benefit on electricity sector in GHG emissions mitigation. The results would provide some policy implications for policy design on how to view consumers’ acceptance of AFVs and their potential role in meeting overall fuel economy standards.