1. Analyzing consumer preferences for transport fuels through discrete choice analysis Inês Azevedo Associate Professor Department of Engineering and Public Policy Carnegie Mellon University

2. Prepared for CEDM Annual Meeting 2016 © Ines Lima Azevedo Team 2 Inês Azevedo Associate Professor Jeremy Michalek Professor Jihoon Min Post doctoral fellow Stephanie Seki PhD student John Helveston PhD student Evelyn Fairman Master student Art Boni Professor

3. Prepared for CEDM Annual Meeting 2016 © Ines Lima Azevedo We aim to answer the following questions: What are peoples’ preferences for different fuels? Does their preference change as function of the fuel production source? What are the trade-offs among fuel types? What is the price elasticity? Do people prefer domestic/local/imported fuels? Is it important to provide emissions’ information? 3

4. Prepared for CEDM Annual Meeting 2016 © Ines Lima Azevedo Existing literature on preferences for vehicles and electricity fuels, but not vehicle fuels Consumer preferences for “cleaner” vehicles:  Alternative vehicle drive trains: U.S. consumers prefer PHEVs to BEVs (Axsen & Kurani, 2008; Helveston et al., 2015;  Consumers influenced by behavior of neighbors (Mau et al., 2008; Axsen et al., 2009) and incentives (Potoglou et al., 2007)  Early adopters have different preferences from mainstream adopters (Santini & Vyas, 2005) Consumer preferences for “cleaner” fuels:  Some consumers willing to pay premium for reduced air emissions (Roe et al., 2001) as well as energy security and climate change benefits from renewable energy (e.g. Longo et al., 2008)  Some specific “green” energy sources may be more preferred than others (Borchers et al., 2007)

5. Prepared for CEDM Annual Meeting 2016 © Ines Lima Azevedo While there is literature on vehicles choices… … Very little is know on fuel choices alone, and studies have difficulty disentangling preferences for vehicles from preferences for different fuels. Understanding the preferences for fuels is key, since people react to fuel prices. 5

6. Prepared for CEDM Annual Meeting 2016 © Ines Lima Azevedo 6 Gas price elasticity - change in driving intensity as gasoline prices change. Jenn and Azevedo, working paper. The horizontal axis corresponds to the year in which the study was performed

7. Prepared for CEDM Annual Meeting 2016 © Ines Lima Azevedo Procedure We first performed in person interviews with a small group of participants We then ran the study with a pilot group of 100 people (using Amazon Mechanical Turk) We finally ran the real study with about 400 people (using Amazon Mechanical Turk) 7

8. Prepared for CEDM Annual Meeting 2016 © Ines Lima Azevedo Using a randomized controlled trial approach Structure of the survey:  set of short instructions and information materials  13 screens where participants are asked to make choices among 3 alternatives  set of demographic and other questions on fuel preference and driving behavior. 8

9. Prepared for CEDM Annual Meeting 2016 © Ines Lima Azevedo Attributes 9 Fuel type Fuel type: Gasoline Diesel Ethanol [for one group ethanol was from corn, whether for the other it was produced from NG] Natural gas

10. Prepared for CEDM Annual Meeting 2016 © Ines Lima Azevedo Attributes 10 Fuel type Cost to fill the tank Cost to fill the tank: $25 $30 $35 $40 $45 $50 $55 $60

11. Prepared for CEDM Annual Meeting 2016 © Ines Lima Azevedo Attributes 11 Fuel type Cost to fill the tank Fuel origin Fuel origin: Domestic Local [i.e., the participant’s state] Rest of the world

12. Prepared for CEDM Annual Meeting 2016 © Ines Lima Azevedo Attributes 12 Fuel type Cost to fill the tank Fuel origin CO2 Emissions 540, 355, 170 gCO2/mi

13. Prepared for CEDM Annual Meeting 2016 © Ines Lima Azevedo Using a randomized controlled trial approach We used a randomized controlled trial (which is the only way to get at causality effects).  We randomly assigned participants to 1 of 2 conditions: one group was informed that the ethanol option was produced from corn, whereas another group was told that the ethanol was produced by natural gas 13

14. Prepared for CEDM Annual Meeting 2016 © Ines Lima Azevedo Conjoint Analysis “Imagine that there is a universal fueling station that offers all these fuels: diesel, gasoline, compressed natural gas, ethanol, and biodiesel. Pretend that you are refueling your vehicle right now and that your vehicle can use any of the fuels described above. In this survey, you will be given a series of scenarios which should mimic your traditional experience at a fueling station. You will see three different fueling options at a time, and each of these fuels will have different characteristics listed on the label of the fuel pump alongside the fuel price. These characteristics include fuel economy, air emissions, and region of production.” 14

15. Prepared for CEDM Annual Meeting 2016 © Ines Lima Azevedo 13 screens with choices of 3 alternatives 15 Rest of the world

16. Prepared for CEDM Annual Meeting 2016 © Ines Lima Azevedo Preliminary Key Conjoint Findings Preferred fuel type ordering:  Gasoline, ethanol and CNG, then diesel (least preferred) Ethanol production process does not appear to be relevant to consumer choice (NG vs. corn) Local fuel was significantly more preferred than imported types. Price and emissions are important factors in consumer choices  Consumers care more about the CO2 emissions than about the fuel types Consumers appear to be concerned about energy independence and local economy. 16

17. Prepared for CEDM Annual Meeting 2016 © Ines Lima Azevedo These are hypothetical choices… This first study reflected hypothetical choices and states preferences.  Can we compare that with choices from actual users? Yes, and we have been doing this in the last month! We are performing in-person surveys at a fuel stations where consumers are already thinking about the choices we are asking them to make:  Will surveyed participants in California (Bay Area, Los Angeles) at Propel retail locations - others in TX and PA can be added later  Questions will be the same as the online version  Comparisons can be made between the two survey types Papers will be submitted for publication for the online and in- person surveys 17