Comprehensive evaluation of policy measures to expand use ofenvironmental friendly vehicles in China focusing on reduction ofgreenhouse gas
Keyu LU(University of Tsukuba)
Takeshi MIZUNOYA(University of Tsukuba)
Helmut YABAR(University of Tsukuba)
Yoshiro HIGANO(University of Tsukuba)
Keyword: GHG; I/O model; Comprehensive evaluation; New energy industry; Environmental
friendly vehicle; Subsidy; Carbon tax; Balances.

1.Introduction
1.1 BackgroundA rapid expansion of the human activity in recent years has become to face the new barrier ofenvironmental issues with overwhelming happiness and benefit. Environmental problems are the results of
the loss of global balance between the environmental burdens by human activity and processing capacitiesof the nature. As a high population and high economy growth country, China is facing kinds of serious
environmental problems like Green House Gas emission, Acid rain and so on.
In this paper, we pay attention on reduction of Green House Gas emission problem via environmental
friendly vehicles introduction in China. To realize this objective effectively, we need pay attention onintroducing new energy industry also.
1.2 Objective of the study
This paper discusses the current automotive situation and improvement options in China, and suggests anevolution policy by environmental friendly vehicles introduction to treat with serious GHG emission bynormal automotives, to realize sustainable development and environmental friendly solutions, throughcomputer simulation based on Input-Output model.
1.3 Method of the study
In this research, input-output model of China economy, which explicitly includes electricity vehicle
manufacturing sectors; energy sectors; transportation sectors; normal industry sectors; petroleum sectors,
are constructed and the model is expanded to include household and government sectors so that prices, tax
and subsidies are endogenously determined by LINGO simulation.

2. Simulation Modeling
2.1 Goal & Scope
The simulation model is an extensive expanded I/O model which combined interdependent sub-models ofmaterial balance, value balance and energy balance in China. It based on nonlinear programming method todecrease GHG discharged by automotives in China and decrease GHG & air pollutants emission in thisregion, and find out policy options to maximum economy activities (GDP).

2.2 Framework
Figure 1 is the model framework of this study. This research separated social economy into 3 parts--industry sector; government; household. And make industry into 5 big parts including: petroleum
production sector; normal industry; automotive manufacturing sector; energy sector; transport sector.
Because we can get enough information through simulation by this separation: when we introduce EV&HV, we can know gasoline and diesel price change; know EV and HV manufacturing industry change;know energy supply and energy situation change; know transport sector’s GHG emission change; and evenknow GDP change.
Energy from energy sectors to other sectors to be consumed. When EV manufacturing sector be introduced,
we must support new energy sector by subsidy, or it will be meaningless (will be proved at next chapter).
Materials are consumed as intermediate input in industries & intermediate produce, and be consumed bygovernment and household sector as final consume (demand). In this paper, carbon tax will be introduced
as a resource of subsidy. Government levy taxes from industries and spend them as subsidy to new energy
sector and EV&HV manufacturing sector or new energy sector, transport sector and household.
Figure 1. Framework of model.

oversea

GHG

Import &export

Capital stock

GHG

Investment

Industry
Consumption

Petroleumproduction sector

Intermediate input

Government
Normal industry

Automotive
manufacturingsectorNormal energy
sectorNew energy sector

Normal tax& carbontax

Subsidy

Normaltax

Consumption

Transport sector※※※ Energy ※※※※※Materials※※※※※Values ※Sectors which effected by the popularization of EV&HVHousehold

GHG

2.3 Carbon tax and Subsidy
To implement police, consider regional environmental tax (Carbon tax) as a target tax and carry out subsidy

policy. The regional environmental tax is based on producer bearing doctrine to levy tax from GHG & air
pollutants emission industries and households—it must match their discharge amount. It is possible to use
general account as additional budget when target tax income is not enough. Set whole China as policy
implementing subject and this research will set the budget limitation in next research step.
For subsidies, this research will consider 2 implement ways: to EV&HV manufacturing industry and newenergy sector; or transport sector, household sector and new energy sector. To find out the better way basedon simulation result analysis.
2.4 Why consider New Energy Industry?
As Table 1 shows, fast charge for EV will discharge 185g/km CO2, almost same to gasoline vehicle
discharged. So when we introduce EV in China, we must introduce new energy industry as same time, or it
will be meaningless to introduce EV even cost much.
Table 1 differences of 3 kind’s vehicle

EnergyCO2 Emission

CostConsumption(g/km)(Yen/KWh)(KJ/km)Gasoline Vehicle

2689

187

9.6

Hybrid Vehicle

1097

76.3

3.91

Electric Vehicle

480

Normal charge:124

Normal charge:1.61

Fast charge:185

Fast charge:2.37

3. Expected Result
The objective element in this paper is GDP, it means this research will consider all environment limitations
first, and calculate the maximum GDP volume under these environment limitations. So the key point is thecarbon tax rate. Because it will affect economy activities and CO2 discharge volume directly, and keep a
trade-off relationship between them.
As an expected result, we will get an exact carbon tax rate by computer simulation under all environment
limitations through their model functions to realize our research objective: decrease CO2 emission byenvironment friendly vehicles’ introduction to realize sustainable development.
References:[1] MIYAZAWA Kenichi, “Introduction to Input-Output Analysis” (6th version), NIKKEI BUNKO, Nikkei Inc.
September, 1996. (In Japanese)[2] UCHIDA Susumu, HIGANO Yoshiro, “An Evaluation of Policy Measures against Global Warming byPromoting Effective Use of Potential Energy in Wastes”, 45th Congress of the European Regional ScienceAssociation, CD-ROM, paper number537, pp.1-18, 23-27, 2005.8, Vrije Universities Amsterdam.