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A Framework for Evaluating the Benefits and Costs of Investments in Electric Vehicle Infrastructure

Electric vehicles—including hybrid electric vehicles, plug-in hybrid electric vehicles, and battery-only vehicles—are desirable alternatives to vehicles powered by internal combustion engines because they produce considerably less or no direct emissions of greenhouse gases and other pollutants that are attributed to the transportation sector. However, they use electricity to charge their batteries, the generation of which consumes fossil fuels (in some cases, coal), which increases the emission of the electricity sector. An important social and policy question is "What are the net impacts of switching from gasoline- to electric-powered vehicles?" A related question is "What are the net benefits to society from investments in infrastructure that fosters the adoption and most beneficial use of electric vehicles?"
The answers involve understanding the economic linkages between the electricity and transportation sectors. This report describes an economic framework that was developed to facilitate quantifying the level and distribution of benefits that can be attributed to electric vehicle infrastructure. The framework uses a multi-market, economic equilibrium benefit–cost construct to identify the linkages between consumer decisions regarding the purchase and operation of electric vehicles and the economic and environmental impacts of that result. Benefit–cost analysis is an established public policy evaluation tool that is well suited for the evaluation of utility infrastructure investment strategies specifically to foster the adoption of electric vehicles.
An example demonstrates how the framework can be applied to infrastructure investment decisions. It illustrates how to construct linkages between infrastructure investments and adoption and ownership to identify and monetize the impacts across sectors and illustrate the distribution among consumers. The next step is to construct an empirical representation of the framework and demonstrate its capabilities under specific market conditions.

Document Type:
Technical paper