Evaluating the Environmental Impact of Alternative-Fuel Vehicles

Using a dynamic microsimulation model, I investigate total emissions in the Los Angeles area as electric, compressed natural gas (CNG), and methanol vehicles are introduced under various pricing conditions. Price reductions for alternative-fuel vehicles lead to reductions in total emissions despite the usage tradeoffs that households make between limited-range vehicles and older gasoline vehicles. Price reductions for CNG vehicles are as effective at reducing emissions as price reductions for electric vehicles. Overall, the introduction of CNG and methanol vehicles lead to health benefits of between $20 and $120 million (depending upon the year) while the introduction of electric vehicles brings additional benefits of between $3.5 and $70 million per year.