California's Ozone-reduction Strategy for Light-duty Vehicles Direct Costs, Direct Emission Effects and Market Responses

Economic costs and environmental effects are analyzed for California's multi-pronged strategy for reducing emissions from passenger cars and light-duty trucks, vehicles that are believed to account for a substantial fraction of ozone-producing emissions across the state. The study analyzes costs, emissions effects, effects on vehicle markets, and the distribution of costs for regulations. These regulations include those concerning new gasoline-powered vehicles only, others affecting both new and existing gasoline-powered vehicles, and also the extremely controversial zero-emission vehicle mandate. The study considers policy choice in the face of extreme uncertainty about the effects of several policy elements, particularly the scrappage program, enhanced vehicle inspection and maintenance, on-board emission diagnostic systems, and the zero-emission vehicle mandate. The zero-emission vehicle mandate poses major economic and environmental risks but there are also major risks to repealing the mandate altogether. The study concludes by suggesting principles for making zero-emission vehicle policy in the face a extreme uncertainty about the development of technology for battery-powered electric vehicles and the future effectiveness of policies to control emissions from gasoline vehicles.