by Lauren Mackenzie Sizemore

Abstract 

Global climate change, emphasis on the global, requires local solutions. Every entity plays a role, some more than others. Yet, when improvements in pollution or emissions in one region leads to more problems in another, how is the net cost or benefit to be deciphered for the environment, for the economy, and for humanity in general? Advanced Clean Cars II (ACC II), a proposed policy in California, United States, is a practical test of this question. For each model year beginning in 2026, the potential law gives a percentage of new vehicle sales that must be zero-emission vehicles (ZEVs) – cars that do not emit exhaust gas or other pollutants from the onboard source of power – or plug-in-hybrid electric vehicles (PHEVs). By 2035, ACC II would require all new vehicles purchased in California to be either a ZEV or a PHEV. With reduced tailpipe emissions, California expects to benefit from reduced smog, less carbon emissions, better air quality, a reduction in air-related health issues such as asthma, and increased sales from California-based electric vehicle companies such as Tesla and Rivian. Since air is a common resource, improving California’s quality also betters air globally. Yet emissions and pollution produced during the mining, production, and scrappage phases work in opposition to the decreased tailpipe emissions. By converting each type of pollutant into a per vehicle dollar cost, I paint a better picture of the global cost-benefit. The per vehicle cost is scaled based on the expected number of electric and conventional vehicles in California which is predicted under two scenarios: ACC II passes with full enforcement and the law is not passed. I forecast the number of electric vehicles likely bought in both instances using the Bass Model for New Product Growth of Consumer Durables (Bass 1969). I determine that a maximum of eighteen states, including California, could successfully implement ACC II and lower emissions given their 2021 electricity grid’s carbon intensity.

Professor Connel Fullenkamp, Faculty Advisor
Professor Michelle Connolly, Faculty Advisor

JEL Codes: Q5, Q51, Q58

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