The impact of promoting new energy vehicles on carbon intensity: Causal evidence from China

The transport sector accounts for about a quarter of the world’s carbon emissions. Given the huge future growth of the carbon emissions of the transport sector and its tight links to socio-economic development, the introduction of new energy vehicles can not only reduce carbon emissions but also decarbonize the entire economic system by decreasing carbon intensity. Taking advantage of a promotion project in China as a natural experiment, this paper explores the causal effect of promoting new energy vehicles on reducing carbon intensity. Our empirical results show that the promotion of new energy vehicles decreases the carbon intensity in demonstration cities by about 4.5% and decomposition analyses show that less than one-fifths of the decrease comes from the reduction of carbon emissions, and the other four-fifths result from the increases in outputs. Mechanism analyses suggest that in terms of passenger vehicles, this project increases the number of newly registered pure electric passengers motor vehicles, but has no influence on public transportation and taxis. Moreover, the promotion of new energy vehicles by this project is not brought about by the subsidy policy for the private purchase of them. We also put forward some policy recommendations for constructing a low-carbon transport system.