Prospects for Plug-in Hybrid Electric Vehicles in the United States and Japan: A General Equilibrium Analysis

Abstract and PDF report are also available on the MIT Joint Program on the Science and Policy of Global Change website (http://globalchange.mit.edu/)The plug-in hybrid electric vehicle (PHEV) may offer a potential near term, low carbon alternative to today's gasoline- and diesel-powered vehicles. A representative vehicle technology that runs on electricity in addition to conventional fuels was introduced into the MIT Emissions Prediction and Policy Analysis (EPPA) model as a perfect substitute for internal combustion engine (ICE-only) vehicles in two likely early-adopting markets, the United States and Japan. We investigate the effect of relative vehicle cost and all-electric range on the timing of PHEV market entry in the presence and absence of an advanced cellulosic biofuels technology and a strong (450ppm) economy-wide carbon constraint. Vehicle cost could be a significant barrier to PHEV entry unless fairly aggressive goals for reducing battery costs are met. If a low cost vehicle is available we find that the PHEV has the potential to reduce CO2 emissions, refined oil demand, and under a carbon policy the required CO2 price in both the United States and Japan. The emissions reduction potential of PHEV adoption depends on the carbon intensity of electric power generation and the size of the vehicle fleet. Thus, the technology is much more effective in reducing CO2 emissions if adoption occurs under an economy-wide cap and trade system that also encourages low-carbon electricity generation.BP Conversion Research Project and the MIT Joint Program on the Science and Policy of Global Change through a consortium of industrial sponsors and Federal grants

Will Economic Restructuring in China Reduce Trade-Embodied CO2 Emissions?

We calculate CO2 emissions embodied in China’s net exports using a multi-regional input-output database. We find that the majority of China’s export-embodied CO2 is associated with production of machinery and equipment rather than energy-intensive products, such as steel and aluminum. In 2007, the largest net recipients of embodied CO2 emissions from China include the EU (360 million metric tons, mmt), the U.S. (337 mmt), and Japan (109 mmt). Overall, annual CO2 emissions embodied in China’s net exports totaled 1,177 mmt, equal to 22% of China’s total CO2 emissions. We also develop a global general equilibrium model with a detailed treatment of energy and CO2 emissions. We use the model to analyze the impact of a sectoral shift in the Chinese economy away from industry and towards services, both without and with a decrease in China’s trade surplus, and a tax on energy-intensive exports, which reflect policy objectives in China’s Twelfth Five-Year Plan (2011–2015). We find that without a decrease in the trade surplus, both policies will have a limited impact on China’s net exports of embodied CO2 emissions. The policies have an even smaller effect on global emissions, as reduced production in China is partially offset by increased production elsewhere.We acknowledge the support of the National Social Science Foundation of China (Project No. Project No. 09&ZD029) and the Institute for Energy, Environment, and Economy at Tsinghua University, which is supporting Tianyu Qi’s doctoral research as a visiting scholar at the Massachusetts Institute of Technology. We further acknowledge the support of Eni S.p.A., ICF International, and Shell International Ltd., initial sponsors of the China Energy and Climate Project in the MIT Joint Program on the Science and Policy of Global Change at MIT. None of the sponsoring organizations played a role in the study design, collection, analysis, or interpretation of the data used for this study, nor did they influence our decisions to submit the article for publication, and all errors are our own. We also acknowledge general industrial and government sponsors of the Joint Program on the Science and Policy of Global Change (http://globalchange.mit.edu/sponsors/all)

Modeling the Prospects for Hydrogen Powered Transportation Through 2100

Abstract in HTML and technical report in PDF available on the MIT Joint Program on the Science and Policy of Global Change website (http://mit.edu/globalchange/www/).Hydrogen fueled transportation has been proposed as a low carbon alternative to the current gasoline-powered fleet. Using a computable general equilibrium model of the world economy we explore the economic viability of hydrogen transportation in several different tax and carbon dioxide stabilization policy scenarios. We represent the capital, labor, fuel and other costs of hydrogen production and hydrogen powered vehicles in the economic model. We examine scenarios where the hydrogen fuel price and vehicle cost are varied over a wide range to evaluate what technology improvements would be needed, in terms of cost reductions, for hydrogen vehicles to penetrate the market. We consider scenarios with and without climate policy, and in competition with other reduced-carbon fuel substitutes, such as ethanol-blend fuels. We find that hydrogen-powered fuel-cell vehicles could make a significant contribution to de-carbonization of the transportation fuel cycle if production of hydrogen itself is not carbon-intensive. Cost targets needed for the technology to penetrate in the USA are such that the hydrogen fuel would need to be in the range of 1 to 1.7 times the 1997 price of gasoline and the vehicle mark-up above an average fuel cell automobile would need no more than 1.3 to 1.5 times an average conventional vehicle. At the lower end of these cost ranges, the vehicle fleet could be competitive by 2020 but at the upper end we would only see entry of the fleet toward the end of the century. High fuel taxes in Europe makes fuel-efficient hydrogen fuel cell technology more competitive there than in the USA. Along with cost reductions, these results assume that technical issues are solved and that market hurdles of establishing the fuel distribution system are overcome. For those involved in hydrogen vehicle research this analysis provides cost targets that would need to met and, given they are achieved, an idea of when vehicles could be competitive and under what conditions.The authors gratefully acknowledge the financial support for this work provided by the MIT Joint Program on the Science and Policy of Global Change through a consortium of industrial sponsors, Federal grants that have supported the development of the modeling framework, especially the US Department of Energy, Integrated Assessment Program in the Office of Biological and Environmental Research (BER) grant DE-FG02-94ER61937 and US EPA agreement XA- 83344601-0 and XA-83240101, and an anonymous donor

Carbon emissions in China: How far can new efforts bend the curve?

While China is on track to meet its global climate commitments through 2020, China’s post-2020 CO2 emissions trajectory is highly uncertain, with projections varying widely across studies. Over the past year, the Chinese government has announced new policy directives to deepen economic reform, protect the environment, and limit fossil energy use in China. To evaluate how new policy directives could affect energy and climate change outcomes, we simulate two levels of policy effort—a Continued Effort scenario that extends current policies beyond 2020 and an Accelerated Effort scenario that reflects newly announced policies—on the evolution of China’s energy and economic system over the next several decades. Importantly, we find that both levels of policy effort would bend down the CO2 emissions trajectory before 2050 without undermining economic development, although coal use and CO2 emissions peak about 10 years earlier in the Accelerated Effort scenario

Climate Co-benefits of Tighter SO2 and NOx Regulations in China

Air pollution has been recognized as a significant problem in China. In its Twelfth Five Year Plan (FYP), China proposes to reduce SO2 and NOx emissions significantly, and here we investigate the cost of achieving those reductions and the implications of doing so for CO2 emissions. We extend the analysis through 2050, and either hold emissions policy targets at the level specified in the Twelfth FYP, or continue to reduce them gradually. We apply a computable general equilibrium model of the Chinese economy that includes a representation of pollution abatement derived from detailed assessment of abatement technology and costs. We find that China’s SO2 and NOx emissions control targets would have substantial effects on CO2 emissions leading to emissions savings far beyond those we estimate would be needed to meet its CO2 intensity targets. However, the cost of achieving and maintaining the pollution targets can be quite high given the growing economy. In fact, we find that the Twelfth FYP pollution targets can be met while still expanding the use of coal, but if they are, then there is a lock-in effect that makes it more costly to maintain or further reduce emissions. That is, if firms were to look ahead to tighter targets, they would make different technology choices in the near term, largely turning away from increased use of coal immediately.We acknowledge the support of ENI, ICF, and Shell, initial Founding sponsors of the China Climate and Energy Project, for this application of the EPPA model. We also acknowledge BP's support of Waugh's thesis, which provided the foundation work for representing air pollution control in the EPPA model. We also acknowledge general industrial and government sponsors of the Joint Program on the Science and Policy of Global Change (http://globalchange.mit.edu/sponsors/all) through which we have developed and maintain the EPPA modeling framework

Superfund: An Assessment of Superfund Site Remedy Selectioin and Implementation

Since its inception in 1980, the U.S. Environmental Protection Agency’s (EPA) Superfund Program has served as the primary mechanism for coordinating the remediation of sites contaminated with hazardous substances. Although the program has successfully overseen cleanup at hundreds of sites, experts have identified a number of weaknesses in the remedy selection and implementation processes. Our study focuses on two weaknesses that have been identified at individual Superfund sites in the previous literature: Remedy Selection: • Selection of non-permanent remedies over permanent remedies Remedy Implementation: • Inconsistency and non-transparency shown in the documentation of cleanup objectives, site cleanup progress, and problems during remedy implementation Although these weaknesses were well documented in previous literature, our group found little evidence that the underlying cause of these weaknesses had been addressed. Our study adds to the current understanding of these weaknesses by investigating their origins using established policy and engineering systems analysis techniques. We have based our analysis on three Superfund site case studies. We offer several recommendations that address the observed weaknesses in site remedy selection and implementation. Lastly, we include suggestions for areas in which further inquiry may be useful

Climate and energy policy for U.S. passenger vehicles : a technology-rich economic modeling and policy analysis

Thesis: Ph. D., Massachusetts Institute of Technology, Engineering Systems Division, 2011.Cataloged from PDF version of thesis.Includes bibliographical references (pages 186-197).Climate and energy security concerns have prompted policy action in the United States and abroad to reduce petroleum use and greenhouse gas (GHG) emissions from passenger vehicles. Policy affects the decisions of firms and households, which inevitably react to changing constraints and incentives. Developing and applying models that capture the technological and behavioral richness of the policy response, and combining model insights with analysis of political feasibility, are important agendas for both research and policy. This work makes four distinct contributions to these agendas, focusing on the case of climate and energy policy for passenger vehicles in the United States. First, this work contributes to econometric studies of the household response to gasoline prices by investigating whether or not U.S. households alter their reliance on higher fuel economy vehicles in response to gasoline price changes. Using micro-level household vehicle usage data collected during a period of gasoline price fluctuations in 2008 to 2009, the econometric analysis shows that this short-run vehicle switching response, while modest, is more pronounced for low income than high income households, and occurs on both a total distance and per trip basis. Second, this work makes a methodological contribution that advances the state of empirical modeling of passenger vehicle transport in economy-wide macroeconomic models. The model developments include introducing an empirically-based relationship between income growth and travel demand, turnover of the vehicle stock, and cost-driven investment both in reduction of internal combustion engine (ICE) vehicle fuel consumption as well as in adoption of alternative fuel vehicles and fuels. These developments offer a parsimonious way of capturing important physical detail and allow for analysis of technology-specific policies such as a fuel economy standard (FES) and renewable fuel standard (RFS), implemented individually or in combination with an economy-wide cap-and-trade (CAT) policy. The new developments within the model structure are essential to capturing physical system constraints, interactions among policies, and unintended effects on non-covered sectors. Third, the model was applied to identify cost-effective policy approaches in terms of both energy and climate goals. The RFS and FES policies were shown to be at least six to fourteen times as costly as a gasoline tax on a discounted basis in achieving a 20% reduction in cumulative motor gasoline use. Each of these policies was shown to have only a modest effect on economy-wide carbon dioxide emissions. Combining a fuel economy standard and a renewable fuel standard produced a gasoline reduction around 20% lower than the sum of forecasted reductions under each of the policies individually. Under an economy-wide CAT policy that targets GHG emissions reduction at least cost, obtaining additional reductions in passenger vehicle gasoline use with RFS or FES policy increases the total policy cost, and does not result in additional reductions in GHG emissions. The analysis shows the importance of integrated assessments of multiple policies that act on separate parts of a system to achieve a single goal, or on the same system to achieve distinct goals. Fourth, a political analysis shows how, in the case of climate and energy policy for passenger vehicles, sharp trade-offs exist between economic efficiency and political feasibility. These tensions are shown to exist at the level of policy justification, policy type, and design choices within policies. The pervasiveness of these tensions suggests that economically-preferred policies will face the greatest barriers to implementation. This work concludes by integrating the findings from each of the individual parts to make recommendations for policy. Recognizing the heterogeneity of household responses, the prescriptions of the economic analysis, and the tensions between these prescriptions and politics, policy options should be evaluated not only based on cost effectiveness, but also on their ability to serve as stepping stones toward desirable end states by providing incentives to revisit and increase policy cost effectiveness over time.by Valerie Jean Karplus.Ph. D

Institutional complexity, management practices, and firm productivity

Formal structure is often considered important for the growth and survival of firms. Within the literature focused on the institutional antecedents of formalization, less attention has been paid to the drivers of formal management practices. To help fill this gap, we study how state and market institutional logics affect the adoption and utility of formal management practices in manufacturing firms. We theorize how institutional complexity, resulting from coexistent, conflicting state and market institutional logics, may exert differential pressure on state-owned and private firms’ decisions to adopt these practices, diverging from prior studies that focus primarily on the role of market logics in their adoption. We then test these propositions in a representative sample of 390 manufacturing firms in China with uniquely detailed data on structured management practices using regression analysis. Variation in ownership differentiates the relative influence of state and market institutional logics on firms in China’s transition economy. We find that measures of structured management practices are higher for state-owned firms, while scores are significantly lower for domestic private firms. We further show that, on average, a firm’s overall management practice score is positively and significantly related to total factor productivity (TFP) in state-owned firms, but the correlation is no different from zero in both domestic and foreign private firms. Our findings support a role for structured management practices as a response to institutional complexity, by enabling firms to satisfy multiple imperatives from distinct audiences.ISSN:0305-750