September 2012: A new report by the Organisation for Economic Co-operation and Development (OECD), titled “Market Development for Green Cars,” analyzes the barriers to the development of the market for alternative fuel vehicles (AFVs) and proposes policies to overcome them.

The report discusses the global automotive industry and the market for AFVs, assessing their economic and technological competitiveness. The paper then analyzes various rationales for public policy intervention, focusing on: inertia resulting from slowly changing norms and habits, and low returns on research and development; inadequate infrastructure; government failures, such as fossil fuel subsidies and regulatory uncertainty; and market failures, such as information deficits for customers on the environmental costs of greenhouse gas (GHG) emissions and air pollution from traditional cars.

The paper then discusses policies to foster increased market development for AVF technologies, including: public procurement; performance-based and technology-based regulations and standards; price-based measures; support for commercialization; infrastructure provision; and information-based measures.

The report incorporates outcomes of 2012 OECD workshops on “The Green Road Ahead: What Role for Government Policy in Fostering Clean Vehicle Markets?” and the “2012 OECD Green Car Workshop.” [Publication: Market Development for Green Cars]