How do demand-side policies contribute to the electrification and decarburization of private transportation in China? A CGE-based analysis

Abstract

Deploying electric vehicles (EVs) is an important strategy for addressing local pollution and greenhouse gas emissions worldwide. However, EV purchase subsidies in China are being phased down, which could result in an oversupply of EVs. Therefore, based on a computable general equilibrium model with detailed transport and electricity technologies modules, this study focuses on establishing several feasible demand-side policies for private transport electrification and decarbonisation in China and analyses their environmental and socioeconomic effects. Results show that the effects of keeping subsidies are best for EV penetration in the short-term, and those of improving consumption preference are optimal in the long run. However, both measures show relatively limited effects on carbon abatement, energy savings, and electrification. Therefore, to improve overall EV penetration, we suggest a combination of keeping subsidies in the short-term and moderately improving EV consumption preference in the long run. Moreover, to improve the carbon abatement effect of EV deployment, a subsidy for renewable electricity should be implemented to promote the cost competitiveness of low-carbon electricity, which has positive effects on carbon abatement, fossil energy savings, electrification and smaller GDP loss. Meanwhile, targeted operations planning for EVs, petroleum-fuelled vehicles, electricity and petroleum enterprises were also proposed under different macro-control policy scenarios.