Impact of High Occupancy Vehicle (HOV) Lane Incentives for Hybrids in Virginia

This paper examines the impact of Virginia’s policy of exempting hybrid-electric vehicles from minimum occupancy requirements on state HOV lanes. Virginia registration statistics are used to compile hybrid market shares on a county level to compare the impact of HOV lane access to other socioeconomic variables. The HOV incentive is shown to have a significant impact in Northern Virginia, but not in the Hampton Roads area. The paper also addresses the criticisms and potential unintended consequences of the incentive policy, including whether it has impacted the “green” image of the hybrid in Virginia. Introduction This article examines the impact of HOV lane exemption policies for hybrid-electric vehicles, focusing primarily on the state of Virginia. Sales and general interest in Hybrid Electric Vehicles (HEVs) has risen steadily in recent years in response to rising fuel costs and increased concern about pollution and greenhouse gas emissions. Hybrid vehicles utilize the same gasoline fuel infrastructure as conventional Internal Combustion Engine (ICE) vehicles, yet represent a distinct technology improvement that can provide greater fuel economy and reduced emissions for equivalent vehicle performance by recapturing energy normally lost during breakJournal of Public Transportation, Vol. 11, No. 4, 2008 40 ing (U.S. Department of Energy 2007). As an energy efficiency technology, HEVs also address positive externalities associated with resource management, the environment, and energy security, which are not taken into account by the market (Jaffe and Stavins 1994). In addition, HEVs face barriers to diffusion that are common to many new cost-saving technologies, such as high initial unit costs, lack of knowledge by potential adopters, high discount rates for future cost savings, and low consumer risk tolerance (Jaffe and Stavins 1994; Stoneman and Diederen 1994; Argote and Epple 1990). To account for these externalities and barriers to adoption, the U.S. Federal Government and many state governments have offered a variety of incentives and privileges to consumers who purchase hybrids and alternative fuel vehicles (U.S. Department of Energy 2007), one of the most notable being an exemptions from minimum vehicle occupancy requirements in High Occupancy Vehicle (HOV) carpool lanes. This privilege can result in considerable time savings for commuters who purchase hybrids. Where HOV lanes exist and have sufficient excess capacity, allowing hybrids or alternative fuel vehicles on HOV lanes with a single occupant provides a means of promoting adoption with almost no direct marginal costs to taxpayers, other than the cost of publicizing, administering, and enforcing the program. Virginia was the first state to adopt this policy, starting in 2000, and since 2005 several other states, including Florida, Georgia, Utah, New York, New Jersey, California and Arizona, have allowed hybrids on at least some of the state’s HOV lanes (U.S. Department of Energy 2007). Due to its seven-year history of allowing hybrids on HOV lanes, Virginia provides an excellent case study of the impact of HOV incentive policies for hybrids and may provide insights for other jurisdictions considering similar policy incentives. To that end, this paper examines the background of Virginia’s HOV lane incentive and its impact on local adoption patterns. It compares the impact of Virginia’s HOV lane policy to other potential determinants of hybrid vehicle adoption, including income, environmentalism, and commuting characteristics. Additionally, it looks at the potential for unintended consequences of the policy and whether there is evidence that HOV incentives have led to a backlash against the “green” image of hybrids in Virginia. This paper builds on previous research into the determinants of hybrid vehicle adoption. Kahn (2007) found that environmentalism (as indicated by Green Party affiliation) was associated with hybrid ownership, based on regression analysis of census track-level data in six California cities. Heffner et al. (2005) conducted detailed interviews with households in Northern California that own HEVs and