Making the Transition to a ‘Green’ Vehicle Fleet : An analysis of the choice and usage effects of incentivising the adoption of low-emission vehicles

Abstract: Making the transition to a ‘green’ vehicle fleet is a noteworthy endeavour for any policy maker. Under the current global pressures of increasing greenhouse gas emissions there is no doubt that all efforts that can be adopted in order to improve the sustainability of our cities should be explored. In saying this however, it is crucial when designing such policies that proper cost-benefit analyses are performed; taking into account the potentially negative rebound effects of such measures and understanding which individuals are affected by such policies.Comprising of two papers, this thesis analyses the choice and usage effects of an exemption for low-emission vehicles (LEVs) from Stockholm’s congestion charging scheme. The ambition of this study has been to understand: the extent to which this exemption policy influenced the demand for LEVs; which individuals were targeted; whether the policy led to any rebound effects (increased LEV usage); and ultimately what the effect of this policy was in terms of changes in emissions.Paper I employs a MNL model to examine the demographics of those individuals who purchased an LEV in Stockholm during 2008 and the extent to which the exemption policy influenced this demand. It was found that those owners living within the cordon but who commuted across the boundary for work had the highest propensity towards purchasing an exempt LEV. The exemption policy was found to have increased the share of exempt LEVs by 1.9% to 18.9% in total, corresponding to an additional 550 exempt LEV purchases in 2008 due to this policy.In Paper II, the differences in annual usage rates between demographically-similar LEV and conventional vehicle owners are calculated using propensity score matching in order to control for potential self-selection effects. Through this procedure it was found that the direct emissions of vehicle owners who adopted LEVs were reduced by 52.4%. Although the exemption policy was partially responsible for increasing the number of LEVs, it also appears to have encouraged an increase in annual usage, leading to rebound effects that offset the potential reduction in emissions (increase in LEV usage: 12.2% for owners that lived inside / worked outside cordon; 8.5% for owners that lived outside / worked inside cordon).Through the analysis detailed in the two papers of this thesis, the effects of an incentive based policy in Stockholm upon both the demand and usage of LEVs have been highlighted. The benefits, as well as the possible complications of this initiative have also been discussed, in the hope of enlightening policy makers to ensure that potential emissions reductions are maximised for similar policy initiatives in the future. With personal vehicles likely to continue dominating the share of home-work trips over the coming years, cities must continue their efforts in encouraging the transition to a ‘green’ vehicle fleet. It is important, however, that these efforts lead to incentive based policies that are balanced, reasonable, and designed to minimise potentially substantial rebound effects.