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Title: Market-driven automotive industry compliance with fuel economy and greenhouse gas standards: Analysis based on consumer choice

Abstract

This paper explored factors that affect market-driven compliance with both Corporate Average Fuel Economy (CAFE) and greenhouse gas (GHG) standards (together called the National Program) in the United States for phase I 2012–2016 and phase II 2017–2025. We considered a consumer-choice-based simulation approach, using the MA3T model, to estimate the market acceptance of fuel efficiency (FE) technologies and alternative fuel technologies as reflected by new sales of light-duty vehicle (LDV). Because both full and extremely low FE valuations are common in the literature, we use a moderate assumption of a 10-year perceived vehicle lifetime at a 7% annual discount rate in the baseline and include both extreme views (5 years and 15 years) in the sensitivity analysis. The study focuses on market-driven compliance and therefore excludes manufacturers’ cross-subsidization. The model results suggest that the LDV industry is able to comply with both standards even without cross-subsidization and with projected high technology cost, mainly thanks to the multiple credit programs and technology advancements. The compliance robustness, while encouraging, however is based on moderate market assumptions, such as Annual Energy Outlook 2016 Reference oil price projection and moderate FE consumer valuation. Finally, sensitivity analysis results reveal two significant risk factors for compliance:more » low oil prices and consumers’ FE undervaluation.« less

Authors:
 [1];  [2]
  1. Oak Ridge National Lab. (ORNL), Oak Ridge, TN (United States). National Transportation Research Center
  2. Oak Ridge National Lab. (ORNL), Oak Ridge, TN (United States). National Transportation Research Center; Univ. of Tennessee, Knoxville, TN (United States). Dept. of Industrial and Systems Engineering
Publication Date:
Research Org.:
Oak Ridge National Lab. (ORNL), Oak Ridge, TN (United States)
Sponsoring Org.:
USDOE Office of Energy Efficiency and Renewable Energy (EERE), Vehicle Technologies Office (EE-3V)
OSTI Identifier:
1364329
Grant/Contract Number:
AC05-00OR22725
Resource Type:
Journal Article: Accepted Manuscript
Journal Name:
Energy Policy
Additional Journal Information:
Journal Volume: 108; Journal ID: ISSN 0301-4215
Publisher:
Elsevier
Country of Publication:
United States
Language:
English
Subject:
54 ENVIRONMENTAL SCIENCES; Fuel economy standards; Greenhouse gas standards; Light-duty vehicles; Consumer choice; Electric vehicles

Citation Formats

Xie, Fei, and Lin, Zhenhong. Market-driven automotive industry compliance with fuel economy and greenhouse gas standards: Analysis based on consumer choice. United States: N. p., 2017. Web. doi:10.1016/j.enpol.2017.05.060.
Xie, Fei, & Lin, Zhenhong. Market-driven automotive industry compliance with fuel economy and greenhouse gas standards: Analysis based on consumer choice. United States. doi:10.1016/j.enpol.2017.05.060.
Xie, Fei, and Lin, Zhenhong. 2017. "Market-driven automotive industry compliance with fuel economy and greenhouse gas standards: Analysis based on consumer choice". United States. doi:10.1016/j.enpol.2017.05.060.
@article{osti_1364329,
title = {Market-driven automotive industry compliance with fuel economy and greenhouse gas standards: Analysis based on consumer choice},
author = {Xie, Fei and Lin, Zhenhong},
abstractNote = {This paper explored factors that affect market-driven compliance with both Corporate Average Fuel Economy (CAFE) and greenhouse gas (GHG) standards (together called the National Program) in the United States for phase I 2012–2016 and phase II 2017–2025. We considered a consumer-choice-based simulation approach, using the MA3T model, to estimate the market acceptance of fuel efficiency (FE) technologies and alternative fuel technologies as reflected by new sales of light-duty vehicle (LDV). Because both full and extremely low FE valuations are common in the literature, we use a moderate assumption of a 10-year perceived vehicle lifetime at a 7% annual discount rate in the baseline and include both extreme views (5 years and 15 years) in the sensitivity analysis. The study focuses on market-driven compliance and therefore excludes manufacturers’ cross-subsidization. The model results suggest that the LDV industry is able to comply with both standards even without cross-subsidization and with projected high technology cost, mainly thanks to the multiple credit programs and technology advancements. The compliance robustness, while encouraging, however is based on moderate market assumptions, such as Annual Energy Outlook 2016 Reference oil price projection and moderate FE consumer valuation. Finally, sensitivity analysis results reveal two significant risk factors for compliance: low oil prices and consumers’ FE undervaluation.},
doi = {10.1016/j.enpol.2017.05.060},
journal = {Energy Policy},
number = ,
volume = 108,
place = {United States},
year = 2017,
month = 6
}

Journal Article:
Free Publicly Available Full Text
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