Responsibility-sharing subsidy policy for reducing diesel emissions from in-use off-road construction equipment

Subsidy policies to encourage contractors to replace or retrofit their in-use construction equipment is an accepted and effective way to mitigate emissions generated by construction equipment. However, existing subsidy policies do not consider the emission reduction responsibility of contractors as emitters, which causes inequity problems and fails to motivate contractors to innovate more cost-effective emission reduction strategies. This study therefore proposes a responsibility-sharing subsidy policy whereby the subsidy level is determined and the responsibility of contractors is assigned in proportion to emission reductions by the attaining of minimum overall cost per ton of emissions equivalent reduced. The case of a Hong Kong contractor’s fleet of excavators is used to demonstrate the application of the proposed subsidy policy. In this case, a subsidy level in the range of HK$14,800 to HK$16,096 per ton of emissions equivalent reduced is recommended, with the responsibility of emissions reduction borne by the government from 92% to 100% and the contractor from 0% to 8%. The corresponding cost-effectiveness of the designed subsidy policy is about HK$16,096 per ton of emissions equivalent reduced, which is reasonable and acceptable. This study also finds that by assigning proper emissions reduction responsibility to contractors, governments can encourage contractors to adopt optimal strategies of replacing and retrofitting construction equipment to reduce emissions with minimum overall cost per ton of emissions equivalent reduced. The proposed subsidy policy for reducing construction equipment emissions could enable informed decisions of governments, especially for those facing a pressing demand for improving the cost-effectiveness of subsidy policy for reducing emissions from construction equipment.