Impact of the dual-credit policy on improvements in fuel economy and the production of internal combustion engine vehicles

Gaoxiang Lou, Haicheng Ma, Tijun Fan, Hing Kai Chan

Research output: Journal PublicationArticlepeer-review

20 Citations (Scopus)

Abstract

The implementation of the parallel management method for Corporate Average Fuel Consumption (CAFC) and New Energy Vehicles (NEV) Credits (thereafter “the dual-credit policy”) has increased the pressure on conventional automakers, although multiple ways to comply with this policy exist. We develop a decision-making model to optimize the fuel economy improvement level and the production of internal combustion engine vehicles (ICEVs) under the dual-credit policy. Combined with theoretical analysis and numerical simulation methods, the effects of the dual-credit policy on the enterprise level are discussed. The implementation of the dual-credit policy may not be able to help automakers improve the fuel economy of ICEVs or reduce the production of high fuel consumption vehicles (HFCVs). When the year-end NEV credit of an automaker does not meet the standard, the dual-credit policy is not conducive to the production of energy-efficient vehicles, but increases HFCV production. We recommend that the policy should decouple the standard of an NEV credit from ICEV production and establish a reasonable upper and lower limit for the price of credit transactions. We also suggest that different NEV accounting discount multiples should be established for different automakers, as a one-size-fits-all policy is not necessarily optimized.

Original languageEnglish
Article number104712
JournalResources, Conservation and Recycling
Volume156
DOIs
Publication statusPublished - May 2020

Keywords

  • Corporate average fuel consumption
  • Dual-credit policy
  • Fuel economy
  • Internal combustion engine vehicles
  • New energy vehicles

ASJC Scopus subject areas

  • Waste Management and Disposal
  • Economics and Econometrics

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