Abstract:The primary focus of this research is the cost savings from employing a marketable permit system (MPS) relative to traditional regulatory approaches for meeting current and future emission control standards. The research project is divided into three parts. In the first, marketable permits for the introduction of alternative fuel vehicles (AFVs) are examined. In the second, the emission control cost-effectiveness of alternative-fuel vehicles is analyzed. In the third, a permit system for the adoption of alternative fuels is addressed. This document reports on the work completed on the first part, marketable permits for vehicles.

To estimate the costs of emission control with a MPS, data on emission control costs for conventional gasoline vehicles were collected. A survey of car dealers for twelve vehicle manufacturers in the Sacramento area was performed from January 1991 through July 1991. Dealers were asked to provide cost information on emission control parts for a variety of engine families. These data were combined with information on manufacturers' and dealers' markup and assembly costs to estimate the total costs of emission control per vehicle. These data suggest that, on average, vehicle manufacturers spend about $840 per vehicle for emission control purposes. There is substantial variation among manufacturers, with American producers reporting the lowest emission control costs and European producers reporting the highest. Total emission control costs for new cars sold in California in 1990 are estimated to be about $1.3 billion. Data on the emission characteristics of conventional vehicles were obtained from CARB's certification data. These data provide an important baseline for establishing the economic competitiveness of EVs and CNGVs.

Note:Prepared for the California Institute for Energy Efficiency.