by Jenneille Hsu, Vahagn Karapetyan, Román Lopez, and Jasmine Tilley

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This report compares the relative costs and environmental performance of alternative fuel light-duty vehicles, including hybrid, plug-in hybrid, electric, natural gas, and hydrogen fuel cell. It is tailored to the South Coast Air Basin as appropriate, though many findings apply generally. Our analysis provides an answer the question of which alternative vehicles or combination of vehicles can most effectively help the region meet mandated air quality standards.

The evaluative criteria used are grouped into three categories. Consumer appeal is the first category and includes safety, range, and existing refueling availability. Second, we consider monetary costs, including the purchase and ownership costs of the vehicles as well as the cost to build necessary refueling infrastructure. Last, we consider environmental damage from both tailpipe emissions and lifecycle perspective, which includes fuel extraction, production, and distribution.

We find no major differences in safety. Among range and existing infrastructure we find the shorter range of electric vehicles as compared to natural gas and hydrogen is somewhat offset by a greater recharging infrastructure, though the current appeal of hybrids is obvious with their great range and use of the existing gasoline network.

All alternatives have a substantial cost premium above a comparable gasoline vehicle. However, each alternative also realizes fuel and maintenance savings compared to gasoline vehicles. Whether this stream of savings offsets the purchase price premium is sensitive to assumptions and explored in the report. On this measure, the expense of hydrogen fuel cell vehicles sets them far above the rest in terms of cost and likely makes them an infeasible option for the near term.

In terms of infrastructure costs, hybrids and plug-in hybrids are the best option, requiring little to no new infrastructure, followed closely by electric vehicles. The cost of natural gas infrastructure is somewhere in between that of electric and the more expensive hydrogen infrastructure. More importantly, at the point of ―critical mass‖ - where there are enough filling stations to support drivers and enough alternative vehicles to make these stations economically viable -the relative cost of infrastructure compared to the cost of vehicles is quite small. We test this finding with various cost estimates and find that the same basic result holds.

On environmental performance both fuel cell and electric vehicles offer zero emissions at the tailpipe. However, electric and to a lesser extent plug-hybrid actually perform worse than baseline on a lifecycle comparison, mainly because electricity is currently generated at coal-fired power plants, though this may change over time. Natural gas and hybrid offer reduction across the board in lifecycle pollutants. Fuel cell and electric have the potential to become near-zero emission lifecycle with the development of renewable energy production.

We identify two development paths for alternative vehicles. In one path hybrid vehicles prepare the way for plug-in hybrids and eventually all-electric vehicles as renewable energy production improves their environmental profile. In the other scenario the infrastructure put in place to distribute natural gas to refueling stations can also be used to produce hydrogen and build a market for fuel cell vehicles, if and when the cost of these vehicles becomes reasonable. We find that technological uncertainties make choosing one path over another difficult, although these paths are certainly not mutually exclusive. Rather than recommending one path as the ―right‖ one, we evaluate and recommend policies that will have near-term effects and emphasize co-benefits, so the success of the policy will not be tied solely to the pattern of technology development.