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Open Access Publications from the University of California

Electric Vehicle Subsidies Appear to Have Modest Pollution Reduction Benefits

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California has adopted aggressive vehicle electrification goals as a means of reducing urban air pollution, carbon emissions, and overall petroleum consumption. The state has several programs to encourage electric vehicle adoption, including the Enhanced Fleet Modernization Program, which was initially piloted in two California air districts and recently expanded to other regions. The program offers subsidies to low- and middle-income residents to scrap their old higher-polluting vehicle and purchase lower-polluting hybrid, plug-in hybrid, and battery electric vehicles, with more generous incentives for residents in disadvantaged zip codes. The extent to which this and other incentive programs help to achieve environmental policy goals depends on the emissions reduced by electric vehicles, and the emissions of the vehicle that would have been purchased had the consumer not chosen an electric vehicle. A household that purchases an electric vehicle will generate a larger environmental benefit if it would have otherwise purchased a gas guzzler rather than a gas sipper. The choice of replacement vehicle also has important implications for projecting future fuel tax revenues. If EVs replace gas sippers, fuel tax revenues will decline more slowly. If they replace gas guzzlers, fuel tax revenues will decline more quickly. To answer these questions, researchers at UC Davis compared the average fuel economy of vehicles purchased in disadvantaged zip codes inside and outside of air districts participating in the Enhanced Fleet Modernization Program, before and after the program began. This quasiexperimental design gives a reasonable estimate of what would have happened without the subsidy.

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