Advanced and Alternative Fuel Vehicle Policies: Regulations and Incentives in the United States

Transportation policy is playing an increasingly important role in the transition towards more fuel-efficient vehicles and alternative fuel vehicles (AFVs). Whether the policy seeks to promote adoption through mandatory requirements or through monetary incentives, or to address issues related to adoption of AFVs, it is clear that such policies can have large-ranging impacts on the future of the US transportation system. The work I conduct in my dissertation seeks to understand these policies, in the past, present, and future. I evaluate the effects of the Energy Policy Act of 2005 (EPACT) on the adoption of HEVs. As part of EPACT, a tax credit incentives program was implemented for consumers purchasing HEVs. Using a unique fixed effects regression approach with lagged instrumental variables, I am able to estimate the effects of the incentives. I find most significant responses occur when incentives exceed $1,000 in tax cd credit. Depending on the vehicle model the presence of EPACT yielded increases in sales of 5% to 15%. This increase is relatively smaller compared to many existing studies, which my work indicates is likely the result of over-attribution of sales to policy. I go on to examine the effects of the adoption of electric vehicles on funding for transportation infrastructure. A significant portion of revenue for transportation infrastructure comes from taxes on gasoline, these funds will likely be diminished to some extent as electric vehicles are adopted as they consume little to no gasoline as fuel. Using several existing electric vehicle models, I find that at the per-vehicle level, revenue generation can be upwards of 50% lower in certain states depending on how fees are charged. The total annual revenue generation at the federal level could decrease by as much as $200 million by 2025, though this is quite a small portion of total revenues for transportation infrastructure. I demonstrate that the revenue decrease can easily be made up through small policy fee changes in either flat fixed or through incremental increases in use fees, though implementation of such policies can be difficult politically. I also focus on the recent implementation of alternative fuel vehicle incentives in the 2009 update of the CAFE standards. I demonstrate that while the AFV incentives help spur the production and adoption of AFVs, there is a short-term emissions penalty due to the structure of the policy. i find that every AFV sold results in an increase in emissions rate for another vehicle of 50-400 grams of CO2 per mile, comparable to adding an additional conventional vehicle onto the road. The cumulative effect is an increase of 20 to 70 million metric tons of CO2 for vehicles sold between 2012 and 2025. I further extends this work by investigating how other policies promoting AFV sales interact with the CAFE policy. I focus specifically on the California ZEV mandate interaction and find that there is an increase of 120 million metric tons of CO2 for new cars sold between 2012 and 2025. The analysis also demonstrates a counter intuitive effect: the greater the success of ZEV in inducing adoption of AFVs, the greater the short-term emissions penalty due to the two policies. Finally I examines the response of driving behavior response to changes in gasoline prices. Using a unique dataset obtained from Pennsylvania's Department of Transportation, we are able to observe annual driving behavior at the individual vehicle level from 2000 through 2010. We observe heterogeneity of price elasticities using two methods: separating data by quantiles over the factors of interest and by interacting the factors of interest as categorical variables with gasoline prices. We find statistically significant variations in elasticities: for driving intensities we observe values of -0.172 increasing up to -0.0576 as the amount driven annually increases, for gasoline prices we observe a range of elasticities from -0.002 to -0.05 for prices below $4/gallon with a sudden increase to -0.182 for prices above $4/gallon, lastly for fuel economies we find that below 20 MPG elasticities are highest at -0.173 with decreasing responsiveness as vehicle fuel economy increases. Heterogeneity needs to be accounted for in order to properly understand policy effects: responses based on average elasticity values are likely to be incorrect.