Does electric vehicle promotion in the public sector contribute to urban transport carbon emissions reduction?

Abstract

China issued a major policy in 2009 to promote electric vehicle (EV) adoption in public sectors (i.e., public transit and public services), which are in the form of EV purchase subsidies and EV-related infrastructure investment. This is one of the world's largest scales of EV promotion in the public transport sector, instead of the private car sector. This policy is of great significance given that the acceptance of EVs by the public can speed up the replacement of existing gasoline vehicles. Based on the panel data of 80 prefecture cities in China, this study applies a multi-stage PSM-DID model to quantify the effects of this policy on reduceing urban transport emissions. The empirical results show that the policy is effective in lowering urban transport emissions by an average of 16.3%. Annual per capita emissions from urban transport were also reduced by an average of 28.87 kg. Our DID models are also adapted to estimate the time-varying policy effects for heterogeneous cities. The mechanism of the policy's effect is also investigated. The policy is found to increase both the EV penetration in the public sector and the overall scale of urban passenger traffic, with countervailing effects on urban transport emissions. The overall reduced emission suggests that the benefits of higher emission efficiency brought by high EV adoption outweigh the negative effect of an increasing urban traffic scale. Our robustness checks also demonstrated that the direct subsidy of EV purchases for the public sector, not for the private cars, seems more effective in reduceing urban transport emissions. Our empirical results thus advocate the government's support of EV promotion in public sectors to reduce urban transport emissions, although the private EV purchase appears to receive more favors under existing policies.