Policies to Reduce Cars' Emissions between the Opposing Forces of Technological Change and Demand for Characteristics

Abstract

This paper carries out an empirical analysis of CO2 emissions by registered new cars in Spain, estimating both the rate at which technological change reduces emissions and the offsetting role of demand for specific characteristics. Using the full sample of registered cars in Spain during the period 2015-2020, technological change is shown to have decreased emissions by 9\%. However, the demand for specific characteristics of a car, such as its weight and power, partially offset such gains, while that for hybrid technologies improves them. The paper estimates the determinants for emissions driven by such characteristics as a function of socioeconomic and geographical attributes of consumers observed at the municipal level, as well as the role of different emissions-related policies: scrappage programmes, subsidies to the purchase of electric vehicles, fuel prices and Low Emission Zones.

Keywords: C02 emissions, Technological Change, car characteristics, hybrid technology, demand determinants