1. How Alternative Vehicle Sales Trigger Higher-Emitting Fleets
AFV
Alan Jenn
Postdoctoral Research Fellow
Engineering and Public Policy Carnegie Mellon University
(now at UC-Davis)
Inês Azevedo
Associate Professor
Engineering and Public Policy Carnegie Mellon University
Jeremy J. Michalek
Professor
Engineering and Public Policy Mechanical Engineering
Carnegie Mellon University

2. A brief history of CAFE 1975: response to oil crisis
1990: cars stagnant for two decades, then tightened during Obama administration
2012: following CA and 2007 ruling, joint NHTSA CAFE & EPA GHG standards
2012: attribute-based
2025: 54.5 mpg (on 2-cycle test)

3. A binding constraint
No manufacturer except Tesla would have satisfied the 2016 standards with their 2009 fleet

4. Implications of a binding standard
Congressional Budget Office (2012)
“With CAFE standards in place … putting more electric (or other high-fuel-economy) vehicles on the road will produce little or no net reductions in total gasoline consumption and greenhouse gas emissions.”
Goulder et al. (2012): “Leakage”
But new standards also have incentives for AFV sales

5. AFV incentives in CAFE/GHG policy
Weighting factors and multipliers incentivize sale of AFVs by relaxing the CAFE/GHG target when AFVs are sold

6. Illustration of effect
Case of Chevy Volt with a single balancing vehicle model of equal sales volume

7. Net effect per AFV sold GHGs increase of 0 to 60 metric tons
0 to 6,700 gallons extra gasoline consumed
Depending on vehicle model and year

8. Cumulative effect Using AEO AFV sales projections for cars:
30-70 million metric tons CO2
3-8 billion gallons of gasoline consumed
Compared to no AFV incentives or no AFV sales
On-road effect may be 30-40% higher

9. Policy options No change Eliminate CAFE AFV incentives
Eliminate other AFV sales incentives
Redesign policy
Alternative policy

10. Policy options No change Eliminate CAFE AFV incentives
Eliminate other AFV sales incentives
Redesign policy
Alternative policy
Tolerate near-term increases in gasoline consumption and GHG emissions in pursuit of long term gains of a fleet transition
Whether or not benefits outweigh costs depends on degree to which policy accelerates post-2025 fleet transition

11. Policy options No change Eliminate CAFE AFV incentives
Eliminate other AFV sales incentives
Redesign policy
Alternative policy
Eliminates increase in fleet emissions per AFV sold but not leakage effect
More difficult for automakers -- negotiations in setting CAFE policy may have resulted in less stringent standards if incentives had been excluded

12. Policy options No change Eliminate CAFE AFV incentives
Eliminate other AFV sales incentives
Redesign policy
Alternative policy
Eliminating ZEV mandate, PEV subsidies, etc. would reduce fleet emissions through 2025
However, could stall efforts to transition fleet

13. Policy options No change Eliminate CAFE AFV incentives
Eliminate other AFV sales incentives
Redesign policy
Alternative policy
Fleet emissions increase proportionally to number of AFVs sold, and state ZEV policy mandates sale of more AFVs
Improved coordination of federal and state policy design could potentially help reduce such interactions
Nontrivial

14. Policy options No change Eliminate CAFE AFV incentives
Eliminate other AFV sales incentives
Redesign policy
Alternative policy
Pricing externalities among most efficient options
Can avoid or mitigate leakage
Target end goals rather than specific technologies
Foundation on which to build other policies

15. Contact: Jeremy Michalek jmichalek@cmu. edu Jenn, A. , I. L
Contact: Jeremy Michalek Jenn, A., I.L. Azevedo and J.J. Michalek (2016) "Alternative fuel vehicle adoption increases fleet gasoline consumption and greenhouse gas emissions under United States corporate average fuel economy policy and greenhouse gas emissions standards," Environmental Science & Technology, v50 n5 p