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The Potential of Alternative Fuel Vehicles: A Cost-Benefit Analysis

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  • Ito, Yutaka
  • Managi, Shunsuke

Abstract

This study investigates the economic validity of the diffusion of fuel cell vehicles (FCVs) and all-electric vehicles (EVs), employing a cost-benefit analysis from the social point of view. This research assumes the amount of NOx and tank-to-wheel CO2 emissions and gasoline use reduction as the benefits and the purchase costs, infrastructure expenses, and maintenance costs of alternative vehicles as the costs of switching internal combustion engine (ICE) vehicles to alternative energy vehicles. In addition, this study conducts a sensitivity analysis considering cost reductions in FCV and EV production and increasing costs for CO2 abatement as well as increasing gasoline prices. In summary, the results show that the diffusion of FCVs is not economically beneficial until 2110, even if the FCV purchase cost decreases to that of an ICE vehicle. EV diffusion might be beneficial by 2060 depending on increases in gasoline prices and CO2 abatement costs.

Suggested Citation

  • Ito, Yutaka & Managi, Shunsuke, 2015. "The Potential of Alternative Fuel Vehicles: A Cost-Benefit Analysis," MPRA Paper 62362, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:62362
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    References listed on IDEAS

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    1. MANAGI Shunsuke, 2012. "Analysis of Alternative Fuel Vehicles by Disaggregated Cost Benefit," Discussion papers 12035, Research Institute of Economy, Trade and Industry (RIETI).
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    3. Massiani, Jérôme, 2015. "Cost-Benefit Analysis of policies for the development of electric vehicles in Germany: Methods and results," Transport Policy, Elsevier, vol. 38(C), pages 19-26.
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    5. Kazimi, Camilla, 1997. "Valuing Alternative-Fuel Vehicles in Southern California," American Economic Review, American Economic Association, vol. 87(2), pages 265-271, May.
    6. Kazimi, Camilla, 1997. "Evaluating the Environmental Impact of Alternative-Fuel Vehicles," Journal of Environmental Economics and Management, Elsevier, vol. 33(2), pages 163-185, June.
    7. Nobuyuki Ito & Kenji Takeuchi & Shunsuke Managi, 2012. "Willingness to pay for the infrastructure investments for alternative fuel vehicles," Discussion Papers 1207, Graduate School of Economics, Kobe University.
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    4. Lopez, Neil Stephen & Tria, Lew Andrew & Tayo, Leo Allen & Cruzate, Rovinna Janel & Oppus, Carlos & Cabacungan, Paul & Isla, Igmedio & Ansay, Arjun & Garcia, Teodinis & Cabarrubias-Dela Cruz, Kevien &, 2021. "Societal cost-benefit analysis of electric vehicles in the Philippines with the inclusion of impacts to balance of payments," Renewable and Sustainable Energy Reviews, Elsevier, vol. 150(C).
    5. Khan, Mohd Atiqueuzzaman & Ngo, Huu Hao & Guo, Wenshan & Liu, Yiwen & Zhang, Xinbo & Guo, Jianbo & Chang, Soon Woong & Nguyen, Dinh Duc & Wang, Jie, 2018. "Biohydrogen production from anaerobic digestion and its potential as renewable energy," Renewable Energy, Elsevier, vol. 129(PB), pages 754-768.
    6. Krause, Jette & Small, Mitchell J. & Haas, Armin & Jaeger, Carlo C., 2016. "An expert-based bayesian assessment of 2030 German new vehicle CO2 emissions and related costs," Transport Policy, Elsevier, vol. 52(C), pages 197-208.
    7. Zarazua de Rubens, Gerardo, 2019. "Who will buy electric vehicles after early adopters? Using machine learning to identify the electric vehicle mainstream market," Energy, Elsevier, vol. 172(C), pages 243-254.
    8. Andrew Chapman & Hidemichi Fujii, 2022. "The Potential Role of Flying Vehicles in Progressing the Energy Transition," Energies, MDPI, vol. 15(19), pages 1-11, October.
    9. Danielis, Romeo & Scorrano, Mariangela & Giansoldati, Marco, 2022. "Decarbonising transport in Europe: Trends, goals, policies and passenger car scenarios," Research in Transportation Economics, Elsevier, vol. 91(C).
    10. Anna Kiziltan & Mustafa Kiziltan & Shihomi Ara Aksoy & Merih Aydınalp Köksal & Ş. Elçin Tekeli & Nilhan Duran & S. Yeşer Aslanoğlu & Fatma Öztürk & Nazan Özyürek & Pervin Doğan & Ağça Gül Yılmaz & Can, 2023. "Cost–benefit analysis of road-transport policy options to combat air pollution in Turkey," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 25(10), pages 10765-10798, October.
    11. Haugen, Molly J. & Paoli, Leonardo & Cullen, Jonathan & Cebon, David & Boies, Adam M., 2021. "A fork in the road: Which energy pathway offers the greatest energy efficiency and CO2 reduction potential for low-carbon vehicles?," Applied Energy, Elsevier, vol. 283(C).

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    More about this item

    Keywords

    Fuel cell vehicle; Electric vehicle; Cost benefit analysis; Sensitivity analysis;
    All these keywords.

    JEL classification:

    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
    • Q42 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Alternative Energy Sources
    • Q55 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Technological Innovation
    • R49 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Other

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