Analysis of Policies Aimed at Increasing Use of Natural Gas in the Transportation System: Final Report

016161612016Final reportPDFTech ReportNEXTRANS Project No. DTRT12-G-UTC05DTRT07-G-005Compressed natural gasCrude oilGreenhouse gasesImportsPlug-in hybrid vehiclesSubsidiesTransportation policyResearch HubMARKALCompressed natural gasUS LDV policyLight duty vehiclesUnited StatesPurdue UniversityTyner, Wallace E.Sarica, KemalIsik UniversitesiPurdue University. Department of Agricultural EconomicsNEXTRANS Center (U.S.)United States. Dept. of Transportation. Research and Innovative Technology AdministrationUniversity Transportation Centers Program (U.S.)US Transportation CollectionIn this paper the authors examine the implications of leveling the vehicle fuel choice playing field between plug-in hybrid electric vehicles (PHEV) and compressed natural gas (CNG) vehicles in the US. Currently, US policy provides a subsidy of $7,500 for most PHEV vehicles but nothing for CNG vehicles. The authors use a modified version of the MARKAL-Macro model to evaluate the impacts on the transportation system, the general economy, and greenhouse gas (GHG) emissions of maintaining only the PHEV subsidy or applying an equivalent subsidy to CNG vehicles. Some very interesting conclusions emerge from the analysis. In 2050 there are 36% more CNG internal combustion vehicles in the fleet if the CNG Light Duty Vehicles (LDV) subsidy is in effect compared with only the PHEV subsidy. On the other hand, if only the PHEV subsidy is in effect, there are 15% more of those vehicles compared to the case with the CNG LDV subsidy as well. Interestingly, the CNG subsidy also results in a reduction in GHG emissions relative to the case with only the PHEV subsidy. Oil imports also decrease with the CNG subsidy. Thus, the authors have documented that if a CNG subsidy were provided as is the case for PHEV. it would have important impacts on the transportation system