An Approach to Study Impact of Public Policy, Exogenous Variables, and Vehicle Design on Greenhouse Gas Emission

This paper presents a model to study impacts public policies and other exogenous variables (technological, market, and economic variables beyond designer’s control) on optimum vehicle designs and on Greenhouse Gas (GHG) emissions in the US transportation sector. The overall model consists of a government model and an enterprise model. The inputs to the overall model are public policies, exogenous variables, and the current market mix of four types of vehicles: two gasolinebased vehicles (gasoline and gasoline-electricity hybrid vehicles) and two alternate-fuel vehicles (battery-electric and fuel-cell vehicles (FCVs)). For each combination of public policies and exogenous variables, the enterprise model finds optimum vehicle designs that maximize the profit and updates the market mix according to the new vehicle designs. Given the updated market mix, the government model estimates GHG emissions for each combination of public policies and exogenous variables and selects the public policies that minimize GHG emissions. The paper demonstrates the model using a fuel-cell vehicle design as an illustrative example. Public policies are infrastructure investments for hydrogen fueling stations and subsidies for purchasing alternate-fuel vehicles. An exogenous variable is a gasoline price.