The Potential of Alternative Fuel Vehicles: A Cost-Benefit Analysis

Ito, Yutaka and Managi, Shunsuke (2015): The Potential of Alternative Fuel Vehicles: A Cost-Benefit Analysis. Forthcoming in: Research in Transportation Economics

Abstract

This study investigates the economic validity of the diffusion of fuel cell vehicles (FCVs) and all-electric vehicles (EVs), employing a cost-benefit analysis from the social point of view. This research assumes the amount of NOx and tank-to-wheel CO2 emissions and gasoline use reduction as the benefits and the purchase costs, infrastructure expenses, and maintenance costs of alternative vehicles as the costs of switching internal combustion engine (ICE) vehicles to alternative energy vehicles. In addition, this study conducts a sensitivity analysis considering cost reductions in FCV and EV production and increasing costs for CO2 abatement as well as increasing gasoline prices. In summary, the results show that the diffusion of FCVs is not economically beneficial until 2110, even if the FCV purchase cost decreases to that of an ICE vehicle. EV diffusion might be beneficial by 2060 depending on increases in gasoline prices and CO2 abatement costs.

• Item Type: MPRA Paper
• Language: English
• Keywords: Fuel cell vehicle; Electric vehicle; Cost benefit analysis; Sensitivity analysis
• Subjects: D - Microeconomics > D6 - Welfare Economics > D61 - Allocative Efficiency ; Cost-Benefit Analysis; Q - Agricultural and Natural Resource Economics ; Environmental and Ecological Economics > Q4 - Energy > Q42 - Alternative Energy Sources; Q - Agricultural and Natural Resource Economics ; Environmental and Ecological Economics > Q5 - Environmental Economics > Q55 - Technological Innovation; R - Urban, Rural, Regional, Real Estate, and Transportation Economics > R4 - Transportation Economics > R49 - Other

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