The impact of low emission zones on vehicle fleet CO2 emissions – Evidence from Madrid

Low emission zones (LEZ) are an increasingly popular policy instrument for reducing local emissions from traffic. While extensively studied in terms of reducing air pollution, little is known about the effect of LEZ on vehicle purchase decisions (increase of low emission vehicles) and corresponding reduction of vehicle fleet CO2 emissions. Therefore, this study analyses the actual effect of a representative LEZ (Madrid) in terms of shifting vehicle registrations towards alternative fuel technologies and its efficiency for reducing vehicle fleet CO2 emissions and contributing to achieving decarbonization targets.
For this purpose, we draw from vehicle registration data from the Spanish national traffic directory combined with real life fuel consumption data from monitoring portals and develop an econometric model, assessing the impact of the LEZ on AFV registrations in the city and its surroundings. The increase in AFV registration shares due to the LEZ is found to be significant but fosters rather fossil fuel powered AFV and plug-in hybrid electric vehicles (PHEV) than zero emission (electric) vehicles. This is reflected in the average CO2 emissions of the newly registered vehicle fleet, which, despite the rise in AFV, do not decrease significantly. In particular, CO2 emissions of PHEV are found to be heavily underestimated, showing huge gaps between theoretical and real life emissions. In consequence, while the LEZ is an efficient measure for stimulating the shift towards low emission vehicles, the support of non- electric AFV (including PHEV without conditions) as low emission vehicles jeopardises its efficiency in terms of GHG emissions reductions.

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