Strong policies with sustainable incentives are needed to accelerate the EV transition. With the financial sustainability of EV incentive programs being questioned, a self-financing market mechanism such as feebates could be the ‘need of the hour’ solution. Different policy objectives could be served by feebates influencing its design and effectiveness. While there are key design elements that should be considered, there is no ‘optimal’ feebate design. Irrespective of the policy goals, a feebate will impact both the supply side, i.e., the automotive industry and the consumer side. Globally, feebates can be used to effect technology leapfrogging while navigating the political economy of clean transportation policy in different country contexts. In this dissertation, a case study approach is used to evaluate the use of a feebate policy in different geographical contexts, and their role in accelerating the transition to ZEVs. The first chapter reviews the European context wherein feebates have become a widely used policy tool and draws lessons for policy design. In the second and third chapters, a feebate policy is designed for the United States and India, while accounting for their distinct policy approaches to encouraging ZEV adoption. The first chapter provides a comprehensive review of feebate mechanisms in Europe, their evolution and impact on EV sales between 2015 – 2022, compared to previous reviews that assessed these mechanisms in their early stages of implementation between 2010 - 2015. Key elements of a feebate design and its implementation are identified, that can be replicated in other country contexts, ensuring an accelerated ZEV transition is made feasible, in a sustainable and cost-effective manner for governments. The United States, under the Biden Administration, has set an ambition of reaching a 50% sales share for zero-emission vehicles by 2030 and is pursuing a combination of aggressive fuel economy standards along with tax credits for EV purchase that supports both battery and plug-in hybrid electric vehicles. Some states in the US, led by California, have adopted ZEV sales mandates as well as additional purchase incentives to encourage increased sales. More importantly, feebates have been attempted in the past, both at the state and federal level in the US through legislation. In contrast, India’s approach to road transport decarbonization has been an ‘all-possible technologies’ and multi-fuel strategy, allowing for CNG, biofuels, strong hybrids and EVs. This also emerges from a relatively complex governance structure. India has a unique EV incentive program that favors only BEVs, with no support for PHEVs, but at the same time has a CO2 regulation with no penalties for non-compliance and a vehicle taxation mechanism that promotes other alternatives. This has also led to lack of certainty for industry in terms of optimizing investments, which a clear policy and technology pathway would provide. In both the second and third chapters focusing on the US and India respectively, a market-based mechanism, in this case, a feebate policy, that is self-financing and provides more market certainty for both producers and consumers for a long-term transition pathway is evaluated. These two chapters make two important contributions: (i) revenue-neutral incentive systems are possible while supporting increasing sales of light duty EVs along the target path, i.e. towards a 100% EV sales share by 2035 in the US and towards a 30-40% share by 2035 in India; and (ii) revenue-neutrality can be achieved with relatively low average fees on entry level ICE vehicles, at the very least, maintaining economic equity among vehicle buyers. In the case of India, the analysis evaluates the feebate design with a single policy objective of driving ZEV adoption (as opposed to inclusion of PHEVs in the US context), and thus, also focuses on a reform of the vehicle taxation system towards a CO2-based taxation approach. The analysis brings into context the case of developing countries like India, where poor quality regulations such as fuel economy standards with no penalties for non-compliance or attribute-based relaxations, limit the impact of supply side policies in driving technology shifts. A feebate mechanism, will align the push for fuel economy improvements, vehicle taxation structure and the EV incentive program towards a common goal of a targeted ZEV adoption. Last but not the least, the analysis in this dissertation shows that even if the feebate mechanism is not implemented by government, it can be used by individual automotive manufacturers to establish their own internal pricing mechanisms across ICE and EV products to determine a profitable business pathway during the EV transition.

Effective policy tools are urgently needed to enable the United States to keep pace with international climate goals. “Feebates”—fees applied to the purchase of vehicles with higher emissions and rebates for clean ones—have become an effective and increasingly common strategy for shaping vehicle markets in European countries. A holistic policy framework that will accelerate the transition to zero emission vehicles (ZEVs) in the US will likely include strong federal policies such as sales mandates, purchase fees for higher emission vehicles, and purchase incentives for ZEVs. Researchers from the University of California, Davis examined what makes a feebate policy work and how this strategy can be leveraged to shift US vehicle markets. The research included a review and analysis of feebate mechanisms in European countries. This policy brief summarizes research findings and provides policy implications.

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Strong policies are needed to accelerate the zero-emission vehicle (ZEV) transition so that it occurs at a pace in line with international climate goals. The purchase price of new vehicles tends to be the variable that most affects consumer decisions. With urgency for a ZEV transition, fiscal pressure for governments can be high as rebates for consumers and incentives supporting manufacturers in the switch to ZEV technologies will be needed for a mass-market transition. Fees on high-polluting vehicles—and rebates on clean ones—have become an effective and increasingly common strategy in European countries. The feebate mechanism can raise the necessary capital for financing a ZEV transition in combination with other regulatory mechanisms. This paper reviews and assesses feebate design types, issues, and implementation strategies in France, Germany, Italy, Sweden, and the United Kingdom. These examples show that feebates can be designed in a variety of ways to meet unique policy objectives and that periodic adjustments are helpful in achieving goals. Among twelve design considerations for an effective feebate, the authors find that: (1) focusing on a single fee parameter, such as CO2 emissions, can be a simple yet effective mechanism; (2) a continuous functional form for the fee and a stepwise rebate are likely to be most effective in driving EV adoption; and (3) pure feebates, where fee revenue funds EV incentives by program design, provide certainty for manufacturers, regulators, and consumers.

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The United States (US), under the Biden Administration, has set a goal of reaching a 50% sales share for zero-emission vehicles by 2030. The administration is pursuing a combination of aggressive fuel economy and greenhouse gas performance standards along with tax credits for consumers who purchase electric vehicles (EVs). Given the anticipated high costs of the EV transition and limited public funds, policy mechanisms that generate extra-budgetary funding are enticing. Feebates—where a fee charged on some purchases is used to offer a rebate for others—can serve as a self-sustaining tool. Feebates have been attempted at the state and federal level in the US but did not pass legislatures due to a lack of political support for levying a fee on internal combustion engine (ICE) vehicles. However, as governments face increasing fiscal constraints, there is greater support for self- funding EV incentive programs. Feebate policies can provide certainty for both producers and consumers to facilitate a steady transition to sustainable transportation. This paper assesses the potential utility of feebates for shaping the US light-duty vehicle market. The analysis demonstrates that: (1) revenue-neutral incentive systems are possible and (2) revenue-neutrality can be achieved with relatively low fees on ICE vehicles to support economic equity among buyers. From an industry perspective, market certainty can be created by incorporating fuel economy targets into a fee schedule as pivot points and allocating fees to finance rebates. This would likely influence industry investment decisions in ways that increase EV production and model availability.

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The global move towards achieving net zero emissions will increase demand for low-carbon and clean technologies such as wind turbines, solar photovoltaics, electric vehicles and energy storage. However, the production of these technologies depends heavily on a few geographically concentrated minerals with limited availability. This report highlights the vulnerabilities in the supply chain of seven minerals: lithium, cobalt, nickel, copper, manganese, graphite and rare earths. It examines mineral criticality assessment frameworks and the global concentration of reserves and mineral processing facilities. The report also explores technologies that could reduce global dependence on these critical minerals. Further, it recommends specific actions to improve supply and reduce demand, tracking the critical mineral value chain and co-development of technologies to explore, mine and process minerals. It also talks about the need to develop mineral stockpiles. The report also emphasises circularity and scaling up alternative technologies to reduce mineral demand.

The report has been commissioned by the Ministry of Mines, Government of India to inform the G20 Energy Transition Working Group (ETWG) negotiations.

Key Findings

-Most critical minerals are geographically concentrated in their resources, reserves and production

-Just 15 countries possess between 55 to 90 per cent of global reserves of critical minerals for low-carbon technologies. The same 15 countries also produced 70 to 95 per cent of these minerals in 2022.

-Mine production is already more than 2 per cent of global reserves for manganese, copper, nickel and cobalt.

-Mine production of lithium and rare earths has more than doubled between 2016 and 2022.

-The analysis shows that the focus on clean technologies (solar, wind, batteries for electric vehicles and grid storage, and grid infrastructure) will account for majority of the lithium demand (80–91 per cent) by 2050. Nickel demand from clean technologies is estimated to be between 34-55 per cent of the total demand by 2050, while copper demand is estimated to range between 29 and 43 per cent by 2050. Cobalt demand from the clean energy sector is expected to cross 55 per cent of the total demand in 2050.

-Co-developing the mineral exploration, mining, and processing technologies will ensure the production of minerals scales globally.

-The demand for new minerals can reduce significantly by scaling up the circular economy