Form Submission: Participation Entry

Research Day Entry

The Emissions Effects of Electric Vehicles Under Carbon Policy

While carbon taxes represent the first-best policy to reduce CO2 emissions, more targeted approaches to individual sectors, such as subsidies or R&D investment, are often more politically popular. This paper examines the emissions consequences of increased electric vehicle (EV) demand, a nationwide carbon tax, and the interaction between the two. We provide quantitative results through 2050 using a detailed economy-wide model of US energy production and consumption, Yale-NEMS. Preliminary results suggest several insights about the interplay between EV penetration, its level, and a carbon tax. The increased load from vehicle electrification prompts investment in new generation, which tends to be cleaner than existing generation, and this effect is more pronounced at higher levels of EV demand. Under a carbon tax, that new generation is likely to be cleaner (renewables or natural gas), which reduces the emissions from the electricity sector. Ultimately, high levels of EV penetration reduce economy-wide CO2 emissions on the order of 2.7% by 2050, while the carbon tax reduces emissions by closer to 18.5%. In combination, the CO2 emissions reductions are nearly 1% larger than the sum of the separate scenarios, due to the complementarity between the two policies. We also will examine the way these effects vary across regions.