This article was published in TSE science magazine, TSE Mag. It is part of the Spring 2024 issue, dedicated to “Climate Revolution”. Discover the full PDF here and email us for a printed copy or your feedback on the mag, there.
Cars are a major contributor to climate change and local air pollution, which is the largest environmental health risk in Europe. Efforts to reduce drivers’ impact on health and climate have produced a wide range of emissions standards, subsidies and taxes. Funded by the French National Research Agency (ANR), Isis Durrmeyer and Mathias Reynaert investigated their effects on car manufacturers, consumers and the environment.
HOW CAN THIS PROJECT HELP TO CLEAN UP CAR EMISSIONS?
Isis Durrmeyer: To design the best policy, regulators must specify their objectives and the weights associated with each outcome. For instance, my research shows how a policy that is good for the climate can have hidden costs for public health. I studied the winners and losers of the French “feebate”, which sets taxes and subsidies for new cars depending on their carbon emissions. This favored diesel cars, which produce less carbon but have higher emissions of the most hazardous local air pollutants.
Mathias Reynaert: When designing taxes and emissions limits, we need to consider the competitive environment and the potential responses of firms and consumers. Our work combines these elements in equilibrium models that try to understand the effects of these regulations. The ANR grant also allowed us to provide resources and data to TSE doctoral students such as Kevin Remmy (read p. 27), who studied electric car subsidies and the effects of car taxes on neighboring countries.
SHOULD GOVERNMENTS INTERVENE?
ID: Economists can help to design and evaluate policies. I'm not sure we can say how much governments should spend, but if they spend €200 million, we can say what else could have been done with the same budget. We also try to show when a policy favors some individuals over others, as this can be crucial to public acceptance. For instance, France’s “Yellow Vests” protests were sparked by a diesel tax increase that had little impact on the overall population but penalized drivers in rural areas.
MR: When drivers get into their cars, they do not consider they will harm other people. This pollution externality is a clear argument for government intervention. How we design regulation and taxes in these complex environments will determine the effects on the climate, local pollution, health, and the economy.
FURTHER READING
Peut-on voyager sans polluer ? Can we travel without polluting? Video youtube
