Designing Fuel-Economy Standards in Light of Electric Vehicles

Kenneth Gillingham

No 29067, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Electric vehicles are declining in cost so rapidly that they may claim a large share of the vehicle market by 2030. This paper examines a set of practical regulatory design considerations for fuel-economy standards or greenhouse gas standards in the context of highly uncertain electric vehicle costs in the next decade. The analysis takes a cost-effectiveness approach and uses analytical modeling and simulation to develop insight. I show that counting electric vehicles under a standard with a multiplier or assuming zero upstream emissions can reduce electric vehicle market share by weakening the standards. Further, there are tradeoffs from implementing a backstop conventional vehicle standard along with a second standard that also includes electric vehicles, but such a backstop offers the possibility of ensuring that low-cost conventional vehicle technologies are exploited.

JEL-codes: H23 Q48 Q53 Q54 Q58 R48 (search for similar items in EconPapers)
Date: 2021-07
New Economics Papers: this item is included in nep-cwa, nep-ene, nep-env, nep-isf and nep-tre
Note: EEE
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Published as Designing Fuel-Economy Standards in Light of Electric Vehicles , Kenneth T. Gillingham. in Environmental and Energy Policy and the Economy, volume 3 , Kotchen, Deryugina, and Stock. 2022

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Related works:
Journal Article: Designing Fuel-Economy Standards in Light of Electric Vehicles (2022)
Chapter: Designing Fuel-Economy Standards in Light of Electric Vehicles (2021)
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