Estimating the Pollution Abatement Potential of Electric Vehicle Subsidies

Research Team: Erich Muehlegger (lead) and David Rapson

University: UC Davis

Problem Statement: California policymakers consider electric vehicles (EVs) an important element of reducing urban air pollution, lowering carbon emissions and reducing overall petroleum consumption. California's Executive Order B-48-18 calls for 5 million zero-emission vehicles statewide by 2030 as part of a goal to reduce greenhouse gas emissions and petroleum use in cars and trucks. This project seeked to understand the environmental benefits generated by California EV subsidies by studying what cars are displaced when California households buy EVs. When calculating pollution abatement of EVs, it is insufficient to simply observe what type of car is sold or retired when a household buys an EV. What matters is the fuel efficiency of the car that would have been purchased had the household chosen a conventional vehicle rather than an EV.

Project Description: The true net environmental benefit of an electric vehicle is relative to the vehicle that an electric vehicle buyer would have bought and driven had they not opted for an electric vehicle. This “counterfactual” vehicle cannot be observed, but its fuel economy can be estimated. This project used quasi-experimental variation in a generous California electric vehicle subsidy program to show that buyers of electric vehicles would have, on average, purchased fuel-efficient gasoline-powered cars had they not gone electric.

Status: Completed

Budget: $75,750

Project Partner(s): California Air Resources Board

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