How much do incentives affect car purchase? Agent-based microsimulation of consumer choice of new cars—Part II: Forecasting effects of feebates based on energy-efficiency

In this paper, we simulate the car market in order to forecast the effects of feebate systems based on an energy-labeling scheme using categories A to G. Very fuel-efficient (A) cars receive a cash incentive, highly inefficient (G) cars pay additional fees. Consumers have different price elasticities and behavioral options to react to feebates. They can switch to a smaller sized car, but as energy-efficiency varies widely within size segments, they can also stick to the preferred size class and choose a more efficient (smaller) engine. In addition, previously owned cars influence the next car to be chosen. We use an agent-based microsimulation approach particularly suited to predict environmental and market effects of feebates. Heteorogenous agents choose from a choice set drawn from a detailed fleet of new cars. Incentives of €2000 for A-labeled cars induce an additional rated CO2 emission decrease of new car registrations between 3.4% and 4.3%, with CO2 abatement costs between €6 and €13 per ton, and otherwise little undesired market disturbance. The risk of rebound effects is estimated to be low. After adopting the frequencies of consumer segments to a given country, the model presented is applicable to all European car markets.