Should electric cars pay? Exempting electric cars from the Gothenburg congestion charges

University essay from Göteborgs universitet/Institutionen för nationalekonomi med statistik

Author: Robin Bagheri; Niklas Seroka; [2020-07-01]

Keywords: ;

Abstract: lead to health problems and early deaths, congestion leads to an increase in traffic accidents as well as increased travel times for people living in these areas. To combat these effects, several cities have instituted congestion charges, charging cars to drive within certain areas of these cities. A number of these congestion charges have included exemptions for more environmentally friendly cars, hoping to stimulate increased adoption of these types of cars. In 2013, Gothenburg implemented a congestion charging scheme that did not include any exemptions for environmentally friendly cars. In this thesis, we examine the potential effects that an exemption from the congestion charges for electric cars could have in the city of Gothenburg. We do this by performing a cost-benefit analysis, using information obtained from previous studies to calculate the values of different externalities. We also model the growth of the electric car market in Gothenburg, from 2019 to 2030, to see how such growth affects the impact of an exemption for electric cars. This time horizon matches the Swedish government's ambition for a car fleet that is independent of fossil fuels by 2030. Our conclusion is that instituting an exemption from the congestion charges for electric cars would not be socially beneficial. The net present value of our cost-benefit analysis remains negative under all examined growth scenarios.

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