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Technology Choices under Emissions Policy and Technology Diffusion constraints : the case of Passenger Vehicles

Abstract : Policy instruments on passenger vehicle emissions aim at reducing negative environmental externalities from vehicles use. To regulate CO2 emissions, fuel economy standards have been put in place in Europe and in the US, among others. These standards are made more stringent over time. This thesis analyzes how automotive firms anticipate and prepare their future technology portfolio to comply with expected future standards. To do so, we develop a model of optimal technology choice that captures technology diffusion constraints.With this framework, this thesis investigates three policy questions. First, we ask how the form of anticipation can affect near- and long-term technology choices. We find that focusing solely on near-term objectives can lead to failure to comply with a long-term target. In fact, meeting the near-term target is not a necessary nor a sufficient condition to satisfy long-term compliance. Moreover, when there is partial anticipation, as in a myopic view of the future, technology choices will be stuck with low abatement technologies creating a path dependency that limits long-term abatement potential.Second, we ask how much indexing fuel economy standard to mass (as in Europe or China) changes the optimal technology. We show that, for the same emission target, there is no significant difference in the social cost of mobility for an average vehicle with and without mass index. Thus a heavier vehicle fleet has the same cost than a lighter one. However, the technology choices are different, and mass indexed fuel economy standards lead to sidestepping lightweight technologies despite being cost effective from a CO2 emissions abatement point of view.Third, we ask how technology choices change when policies with multiple objectives overlap. We focus on two externalities associated with mobility: CO2 emissions and local air pollution. We show three type of effects of overlapping policies. First, a technology specific policy such as the Zero Emission Vehicle Mandate in combination with a fuel economy standard induces carmakers to develop more expensive green technologies and prevents cheap, dirty technologies from disappearing compared to the case of a fuel economy standard alone. Second, the combination of policies can lead to very high costs when technologies adapted to each policy are very different. Third, we find an ambiguous effect of overlapping policies relative to single-objective policy in terms of emissions performance.
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Submitted on : Friday, January 10, 2020 - 4:05:07 PM
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Juan Vera Molina. Technology Choices under Emissions Policy and Technology Diffusion constraints : the case of Passenger Vehicles. Economics and Finance. Université Paris Saclay (COmUE), 2019. English. ⟨NNT : 2019SACLA021⟩. ⟨tel-02435183⟩



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