Influence of dual-credit policy on the energy conservation and emission reduction technology R&D of Chinese auto industry

Abstract

The dual-credit policy, as an important industrial policy in the automotive industry to replace fiscal subsidies, aims to achieve the dual objectives of energy conservation and emission reduction (ECER) and promote the development of new energy vehicles by establishing a dual credit system based on the average fuel consumption of conventional vehicles and credits for new energy vehicles. This paper employs a game model to investigate the differential impact of the dual-credit policy on ECER among automobile manufacturers with different industry structures. The study finds that the existing policy primarily favors manufacturers adopting the integration mode, followed by the multilateral mode and supply-monopoly mode respectively. Furthermore, R&D cost coefficient, unit price of credits, degree of competition and elasticity of cross-demand for fuel-saving functions are the four main factors that influence the profit model of the automobile industry. The findings of this study suggest that targeted policies need to be formulated for different industry structures during the adjustment of the policy in order to fully stimulate their enthusiasm for ECER. Additionally, the flexible combination of the four factors should be considered when formulating a specific dual-credit policy so as to achieve more energy saving and emission reduction effect in the automobile industry.