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New vehicle fuel economy in the UK: Impact of the recession and recent policies

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  • Wadud, Zia

Abstract

Interests in vehicle fuel economy have increased in the past few years with the implementations of more stringent CAFE standard in USA and mandatory carbon emission standard in the EU. We seek to understand the effects of recent policies such as restructuring of Vehicle Excise Duties and EU standard on new vehicle fuel economy in the UK. In the past few years there have been substantial fluctuations in income and fuel prices, offering an interesting testing ground to understand their impact on the demand for fuel economy in vehicles. We use a monthly dataset to find that the emission standard is the largest driver for fuel economy improvements in recent years. Also, contrary to some recent findings in Europe and in UK, we find that income has an effect and that the recession had some role in improving the fuel economy. The effects of fuel prices were relatively small. Restructuring of the VED also improved new vehicle fuel economy in the UK, but the scrappage scheme had no significant effect. Results indicate that both supply and demand side policies are effective in improving fuel economy, although quantitatively the emission standard appears more effective due to its stringency. It is also important to consider the effects of income while devising demand side policies.

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  • Wadud, Zia, 2014. "New vehicle fuel economy in the UK: Impact of the recession and recent policies," Energy Policy, Elsevier, vol. 74(C), pages 215-223.
  • Handle: RePEc:eee:enepol:v:74:y:2014:i:c:p:215-223
    DOI: 10.1016/j.enpol.2014.05.017
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    1. Mattioli, Giulio & Wadud, Zia & Lucas, Karen, 2018. "Vulnerability to fuel price increases in the UK: A household level analysis," Transportation Research Part A: Policy and Practice, Elsevier, vol. 113(C), pages 227-242.
    2. Jun, Seung-Pyo & Yoo, Hyoung Sun & Kim, Ji-Hui, 2016. "A study on the effects of the CAFE standard on consumers," Energy Policy, Elsevier, vol. 91(C), pages 148-160.
    3. Augustus De Melo, Conrado & De Martino Jannuzzi, Gilberto & De Mello Santana, Paulo Henrique, 2018. "Why should Brazil to implement mandatory fuel economy standards for the light vehicle fleet?," Renewable and Sustainable Energy Reviews, Elsevier, vol. 81(P1), pages 1166-1174.
    4. Arawomo, Damilola F. & Osigwe, Augustine C., 2016. "Nexus of fuel consumption, car features and car prices: Evidence from major institutions in Ibadan," Renewable and Sustainable Energy Reviews, Elsevier, vol. 59(C), pages 1220-1228.

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