i n t e r n a t i o n a l j o u r n a l o f h y d r o g e n e n e r g y 4 2 ( 2 0 1 7 ) 1 8 6 9 9 e1 8 7 0 8

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A study of supporting legal policies for improving

China's new energy automobile industry based on
environmental benefits equilibrium-
enlightenment from the environmental subsidies
of Germany legal system

Miao He, Jinsheng Zhou*, Ling Liu

China University of Geosciences, Beijing, 100083, China

article info abstract

Article history: Economic legislation is an important system factor for economic development nowadays.
Received 21 February 2017 This paper discussed how to improve legal policy for supporting new energy automobile
Received in revised form industry development on behalf of reducing pollutant in the atmosphere. Analysis
23 March 2017 methods used in this paper are system law methods combined with economic analytical
Accepted 18 April 2017 methods to demonstrate rationality. The authors find that policies implied are more in-
clined to new-car sales while ignoring the potential consumers who have got a car and
want to replace it. Environmental subsidies for replacement of new energy automobiles
Keywords: can promote consumption so as to boost its industry development. And the replacement
New energy automobile can optimize private owned car stock to lower exhaust and improve environment. So the
Environmental subsidies authors make recommendation that the nation can learn from Germany car replacement
Industry supporting policy environmental subsidies legal policy by introducing it to new energy vehicles replacement.
Sustainable development This legal policy is good for both new energy automobile industry development and social
Legal regulation environmental benefits.
© 2017 Hydrogen Energy Publications LLC. Published by Elsevier Ltd. All rights reserved.

the development of economy. Even we can see some huge

Introduction slogans: “If we want economic development, we should let
environment protection goes first” in China's large and
It is well known that automobile emissions are one of the medium-sized cities. Visible environmental problems have
important factors of atmospheric pollution. In recent years, become an important factor of restricting China's economic
China's sustaining haze caused by air pollution posed a development. Since the sustainable development of economy
serious threat to human health and cause a series of prob- is the basis of social sustainable development and the key
lems: factories limited production, primary and secondary factor of promoting overall national strengths in China, we
schools temporarily suspended lessons, and people outdoor should think about how to adjust auto industry to reduce the
activities decreased, all of which are to some extent influence negative impact on environment.

* Corresponding author.
E-mail address: [email protected] (J. Zhou).
http://dx.doi.org/10.1016/j.ijhydene.2017.04.184
0360-3199/© 2017 Hydrogen Energy Publications LLC. Published by Elsevier Ltd. All rights reserved.
18700 i n t e r n a t i o n a l j o u r n a l o f h y d r o g e n e n e r g y 4 2 ( 2 0 1 7 ) 1 8 6 9 9 e1 8 7 0 8

However, as an important vehicle, automobile play an policy which the government subsidizes qualified private
important role in people's daily life and commercial activities. consumers who plan to change their cars to improve cars
Besides, automobile industry product is in an up road of the selling and cut down cars pollution by replacing high emission
overall industry system. Since 2001, the profit of the auto- standard car with low emission standard one. Can China's
mobile industry began to grow rapidly and the auto industry new energy automobile industry by introducing environ-
will still in the rapid growth in the next ten years. Related mental subsidies to release the purchasing power of residents
research [1] shows that correlation degrees of auto industry for new energy vehicles, accelerate the phase-out of low
and other industries are much higher than some other in- environment standard cars? In the following sections, the
dustries. The consumption ratio of steel products in auto in- author will analyze legislations and policies to find a reason-
dustry is 4e6%; ratio of pig iron products is 0.7e1.2%; ratio of able supporting path that accord with the specific situation of
gasoline products is 80e90%; ratio of diesel products is 20%; auto industry and the environment.
ratio of the machine tool products is 12e15%; ratio of the tire
products is 40%; ratio of toughened plastic products is 45%;
ratio of the engineering plastics products is 11%; ratio of paint Materials and methods
products is 10%. Obviously, the development of the automo-
bile industry can effectively promote the development of The methods employed in this study are system law methods
other industries. In addition, the automobile industry is a and cost benefit method. Based on the use of legal documents
labor-intensive industry, which plays a certain role in solving and statistical data primarily and then analyze policy effi-
the employment problem and labor transfer problems in ciency by cost benefit method from economic and ecological
China's industrialization. In addition, with the accumulation view. Though these methods, the authors analyze the relevant
of national wealth and the improvement of residents' con- legal system and policies and the automobile industry situa-
sumption level and the improvement of the infrastructure and tion in China. Then the authors analyze a legal policy of Ger-
the rapid advance of urbanization, China's auto consumption many called environmental subsidies which is an important
is in rapid growth and automobile consumption is still an part of economic governance in Germany. Material and data
important factor in stimulating domestic demand and in are from books, papers and authority websites.
radiating the development of related services.
Under these conditions, how to fulfill residents transport The present legal environment and industry supporting
demand and expand domestic consumption demand? And policy of new energy automobile in China
how to maintain auto industry as the pillar industry? A bal-
ance should be held between industrial development and The present legal environment of auto industrial
environmental protection. We should comprehensively Generally speaking, industrial policy law is an important
considerate contribution of automobile industry for the means for China's macro-control economic management [10]
overall industrial production and for the drive efficiency of which provides a legally basis for supporting automobile in-
other industries and also the radiation effect for service in- dustry development. A preliminary legal system has been
dustry. Traditional auto industry seems difficult to master the formed in China to support the automobile industry. This
both: people's demand for automobile consumption and the system is comprised of different levels of effective legal doc-
negative effects to the environment caused by using auto- uments such as the Constitution, legislation, authorized
mobiles [2]. Nevertheless, with the development of the auto- legislation, administrative regulations, ministry regulations
mobile industry, new energy vehicles have stepped from and so on. From the point of the source of legal rights, as the
experimental research into the sell market. New energy ve- fundamental law, the Constitution of the People's Republic of
hicles not only possess the function of the traditional cars [3,4] China provides that the state has the right and responsibility
but also have higher emissions standards [5], which means to improve economic results and develop the productive
from the angle of control and prevention atmospheric pollu- forces by disseminating advanced science and technology and
tion are worthy of promoting. By researching and marketiza- improving the systems of economic administration. This
tion, new energy vehicles raise his voice jump into the principle provides the power foundation for China's economic
traditional car market, assisted by the national industrial legislation and the government's economic management.
policy. And the vehicles fuel source such as hydrogen has The first industry policy outline has provided a legal basis
been proved are economical [6,7]. However, the market-share for the automobile industry support policy. Enacted and Is-
at this time is still too much of nothing. Related data show that sued according to law, the relevant industrial policy specifies
the currently market share of the new energy vehicles in the methods and measures which the government can adopt
China is 0.4% and in the world is 3% [8]. to support industry development and economic macro-
How to improve the market share of new energy vehicles is control. The first Industrial support policy in China, can be
a hard handled business. Account for the emerging industries, traced back to “the Nineties National Industrial Policy” in 1994,
reasonable industry supporting policy is still the important which formulated and promulgated by the National Devel-
driving force. To unify economic and environment benefits, opment and Reform Commission, is the first long-term in-
break the environment restricts and realize economic and dustrial policy in China. This outline is an important means to
social sustainable development of in China, the government maintain economy in a sustained, rapid and sound develop-
should fully consider environmentally friendly policies in the ment, which plays an important role in strengthening and
economic development policy making [9]. Environmental improving macroeconomic regulation and control, adjusting
subsidies applied by Germany government is a kind of legal and optimizing industrial structure and improving the quality
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Table 1 e 2010 the central government published seven strategic emerging industries. (Data Source [11]).
Emerging industries Main direction of emerging industries
1 Advanced energy conservation and environmental High efficiency energy conservationyAdvanced environmental protection
protection industry industryyRecycling and reuse
2 A new generation of information technology industry The next generation communication networkyInternet of thingsyTri-
networks integrationyNew type of flat-panel displayyHigh performance
integrated circuitsyTop software
3 Biological industry Biological medicineyBiological agricultureyBiological manufacturing
4 New energy industry Nuclear energyySolar energyyWind energyyBiomass energy
5 New energy vehicles industry Plug-in hybrid electric VehicleyPure electric vehicles
6 Top equipment manufacturing industry AerospaceyMarine engineering equipmentyTop intelligent equipment
7 The new material industry Special function and high performance composites material

of the industry. In this way the outline is the guidance and “catalogue of industrial structure adjustment”, low-emission
basis of industry policy making. This outline has provided a economy passenger cars, electric cars, ethanol fuel cars and
legal basis for the automobile industry support policy: it other new energy vehicles are on the encouraged industrial
pointed out the country would accelerate the development of structure. The nation implements credit support policy with
automobile and some other manufacturing and construction encouraged industrial structure when the manufacturer
industry to develop them into pillar industries. conform to the principle of credit and preferential tax policies
According to the orientation in legislation, the new energy and when manufacturer in accordance with provisions of
automobile industry is one of the strategic emerging in- enterprise income tax reduction, import tax, etc.
dustries in China. In the strategic level of economic develop- In addition, new energy automobile industry meet the de-
ment, Industry type are divided into emerging industry, mands of the sustainable development of the clean produc-
leading industry, pillar industry and eliminated backward tion and energy saving. “Cleaner Production Promotion Law of
production capacity so as to distinguish different industries, the People's Republic of China” and “The Law of People's Re-
implement varies targeted industry regulation and improve public of China on Energy Conservation” and other laws and
the industrial structure and arrangement, guides action ac- regulations support the auto industry structure which fulfill
cording to circumstances adroitly to promote economic the point of view to reduce the production of products used in
development. Emerging industry and pillar industry is the the process of pollution emissions in cleaner production
national key development industry type. There is a difference verification from cost accounting and tax incentives, technical
in the emerging industrial the country divided some of the support and environmental protection. For example a regu-
emerging industries which called strategic emerging in- lation from the “Cleaner Production Promotion Law” recog-
dustries and adopted a proactive fiscal policy and tax prefer- nize and reward cleaner production work units and
ential policies to foster strategic emerging industries individuals that have made remarkable achievements, such
becoming the leading industry. The automobile industry as a as for cleaner production research, demonstration and
whole is a type of pillar industry since the 1990s legislation. training, the implementation of the national key technological
According to the legal document “A decision on speeding up transformation projects cleaner production and cleaner pro-
cultivating and developing strategic emerging industries” in duction method stipulated in voluntary saving resources,
2010 of the state council. It can be seen that the nation will reduce pollutant emissions agreement technical renovation
speed up the cultivation and development of strategic programs of the content of the financial support. Enterprise
emerging industries and new energy vehicles is one of the can book expenses incurred for cleaner production auditing
seven strategic emerging industries from Table 1. Thus plays a and training as enterprise operation cost. “The Energy Con-
good promoting role in the development of automobile in- servation Law” regulates the State encourages the develop-
dustries, especially new energy automobile industry by sci- ment, production and use of energy efficient and
entific and technological innovation, market foster, and environmentally friendly automobile, motorcycle, locomo-
financial assistance. tive, vehicles, vessels and other means of transport, the old
As far as the industry structure adjustment is concerned, and outdated means of transport shall be scrapped and
new energy vehicles belongs to encourage industry in the in- replaced. The state encourages the development and appli-
ternal structure adjustment of automobile industries. In 2005, cation of means of transport to use clean fuel and oil substi-
the state council enact administrative rules “Interim pro- tute fuel.
visions on implementation of promoting industry structure Besides, new energy vehicles owned to encouraged con-
adjustment”, according to the National People's Congress sumption car type according to the state legislation. “The
authorized, is relatively high industrial policy legislation. Ac- Government Procurement Law of the People's Republic of
cording to this legistation the industrial structure can be China” pointed out the general government procurement
divided into four types: encouraged, allowed, restrict and should help to achieve the country's economic and social
eliminate. This legal document provided a legal basis to make development policy goals, including environmental protec-
the catalog of industrial structure adjust. According to the tion, support underdeveloped areas and ethnic minority
authorization of the State Council, National Development and areas, promote the development of small and medium-sized
Reform Commission has published the catalog of industrial enterprises. Also, the general provisions of the new amend-
structure adjustment. According to the 2011 revision of the ment of “Law of The people's Republic of China on the
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Protection of Consumer Rights and Interests” prescribes that On the aspect of industry technical support, new energy
state advocates the consumption patterns which are civilized, vehicles research projects which are listed in the national
healthy, resource conservation and environmental protection “863” during the 15 major subjects of science and technology
while against waste. since 2001. These projects got the plan to adopt the strategy
Under the new economic development situation, newly that started with gasoline-powered cars and heading for
published “the 13th Five-Year Plan” again emphasize that new hydrogen fuel cars.
energy vehicles is the strategic emerging industry and points At the level of national strategic, in “The 11th Five-Year”
out that the policy are going to support the development of plan, the nation put forward the strategy of “energy saving
new energy vehicles, to form a new growth point, so to pro- vehicles and new energy vehicles”. This strategy paid a high
mote new industry supporting function. “The 13th Five-Year level attention to the policy of the development of research
National Strategic Emerging Industry Development Plan” and industrialization of new energy vehicles. Gradually, there
pointed out that we will realize the large-scale application of has been formed a complete research and demonstration
new energy vehicles and build a new model of sustainable arrangement. “The 13th Five-Year National Strategic
development. Emerging Industry Development Plan” further put forward
Generally speaking, as an important component of China's that implement the innovation driven development strategy,
legislation, industrial legislation and policy have provided speed up the breakthrough of core technology in new energy
legal basis and policy guarantee to support the development area.
of Chinese automobile industry. And this has played an In terms of supportive policy of marketing, in 2009, the
important role in promoting the development of new energy nation had published intensive support policies in new energy
vehicles industry (see Fig. 1). automobile market expansion. One of them which was worth
mentioning is the “The Private Purchase Of New Energy Ve-
Characteristics and potential problems of new energy vehicles hicles Financial Aid Funds Management Interim Measures”,
industry supporting policy jointly issued by Ministry of Finance, Ministry of Science and
New energy vehicles industry receives a lot of dividend pol- Technology, Ministry of Industry and Information Technology
icies during its development. New energy vehicles is different and the National Development and Reform Commission spe-
from the traditional fossil energy fuel cars and they can cifically promote China's new energy automobiles marketing.
discharge less or little air pollutant [13,14], so they have the So far as concerned, research and development of new
characteristics of using clean energy and protecting air envi- energy vehicles affected by the bonus policies and the tech-
ronment. And this is impetus why the nation pushes to nologies are matured day by day. However, the new energy
develop them. New energy automobiles industry in China automobile market is still on a rough road.
began to develop at the beginning of this century and spring An interview (see Table 2) about the impetus for people to
up nowadays. During the development process it got a lot of buy new energy vehicles shows that the motivation reasons at
dividend policies. There are such characteristics in China's present for private consumers who choose to buy new energy
new energy automobile industry development supporting vehicles mainly based on two aspects. On the one hand, in
policy: industry leading technical support policies go first; the some cities, Citizens should abide the lottery system when
national strategic level emphasizes following; and then sub- they aim to buy a car. Some citizens apply many times in the
sequent marketing supporting policies. lottery system but missed and they have the demand to solve

automobile became
Economics Legislation Economics Policy
pilar industry

The Constitution of the People's Republic The Nineties National Industrial Policy

of China 1982/ Cleaner Production 1994/ Interim Provisions On

Promotion Law 2002,2012/ The Energy automobile Implementation of Promoting Industry

Conservation Law2007,2016/ industry Structure Adjustment 2005/ Catalogue of

Amendment of the Protection of structure adjust Industrial Structure Adjustment2013/The

Consumer Rights and Interests law 2013/ 13th Five-Year Plan 2016

The Government Procurement Law2002

automobile industrial structure Developing new energy

optimization and upgrading vehicles

Fig. 1 e The framework of automobile industry supporting policy progress in China. (Data Source [12]). Annotation:
mentioned above are the issuing dates, sometimes they are equal with the Implementation dates and sometimes before the
implementation dates.
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Table 2 e BTV journalist's interview memoirs for the motivations to buy new energy vehicles. (Data Source [15]).
Journalist's question Consumer's answer
1 Journalist: why would you choose to buy a new Consumer A: I apply for lottery system for a fuel car for several years and
energy vehicle? still missing and I need a car
Consumer B: mainly because temporarily I can't shoot the lottery, and my
family need a car now, so I have to choose the new energy vehicles
2 Journalist: If subsidy is cancelled, will you choose to Consumer A: without subsidies, the price is relatively high for me
buy a new energy vehicle? Consumer B: I probably still need a carefully consideration, after all, the
price are more than 20 thousand, if I bought a petrol car, I might have
bought a good car, a very good one

their own transform needs so they choose the new energy the “Promoting Private Car Sales Regulations” also enacted
vehicles which are not limited by the lottery system; On the subsequently.
other hand, there are subsidies for new energy automobile The legislative purpose that the Germany government
manufacturers, which makes the consumers accept the sale sought to introduce environmental subsidies are as follows: in
price of new energy vehicles. The motivations of consumers to 2008 economic crisis triggered by the global financial crisis has
choose new energy vehicles mainly based on their own in- caused sales difficulties for auto enterprises so the one is to
terests not the awareness to cut down emission and protect help the auto industry get rid of the enterprises difficulties
the environment. Besides, in consumers eyes new energy caused by the decline in sales. The other one is a consideration
vehicles are not the first choices, and the reason may sum- from environmental protection view, reducing vehicle emis-
marize as not satisfy with limited rechargeable battery lasting sions to the atmosphere environment pollution by using
and battery life and worry about the not very perfect charging cleaner new type cars to replace lower standard old type cars
infrastructure in cities. So, the consumers are scrupling and [16].
thinking twice before buying. Besides, new energy automo- Environmental subsidies for private car introduced by
biles depreciation rate are higher than conventional cars, this Germany government constituted by investment and repay-
is also one aspect of consumers concerns. In addition, there is ment fund of official character and will subsidize private
a fall back mechanism in the current national subsidies for consumers when he or she buying a new car. Because of the
new energy automobile manufacturers. This means after applicants need to buy a smaller environmental impact car
reaching the sales standards set by the government, the gov- which means the exhaust emission standard is higher (EUIV
ernment subsidy standards will reduce. And according to the level), so called environmental subsidies. The German gov-
legal document “Application of New Energy Vehicles in ernment first initially invest 1.5 billion euros. After that
2016e2020 Financial Support Policy” joint issued by the Min- because of the policy was popular with consumers, an addi-
istry of Finance, Ministry of Industry and Information Tech- tional 3.5 billion euros funds was added [16]. The regulation
nology, National Development and Reform Commission, since mentioned above concretely prescribes the specific conditions
2017, subsidies are falling down substantially. This will make which the consumers can be entitled to environmental sub-
the manufacturer arise the sale price for new energy auto- sidies. The specific conditions shall be met at the same time as
mobiles and will have a negative impact on the motivation of follows: first, applicants should be private consumers, and the
consumers to purchase new energy vehicles. application excluded official business cars; Second, the ap-
In current condition the market share of new energy ve- plicants should have the car ownership for at least nine years
hicles is quite little, the demand for new energy vehicles is not (old cars should began to use 9 years ago at least) and the
first choice but a compelling choice. These factors are not good applicants should apply for discarding within the allotted time
news for new energy vehicles marketing. So the government (within the time of January 4, 2009eJune 30, 2010) in accor-
should take more active measures to promote the new energy dance. If it is a second-hand vehicle, the owner should own
automobile market share. Only in this way can help to change the car for at least 1 year (applicants have the vehicle
customers’ attitudes. ownership for at least one year); Third, applicants should buy
a new car in the fixed time (a period during January 14, 2009
The legal system of environmental subsidies of Germany's and December 31) the regulation prescribes car of the year
automobile industry reward for the workers can be concluded as the new car and a
new car or car of the year reward for the workers should meet
Automobile industry is a pillar industry of the Germany environmental standards (rules for at least meet the EU IV
economy, the sale of automobile takes nearly half of the emission standard); In addition, the fund should have balance
market share in the European automobile market. Widely when consumer apply for environmental subsidies.
knowned brands such as Benz, BMW and Volkswagen are The implementation of environmental subsidies policy not
international famous brands. Affected by the global financial only help to promote the German car sales, to help the auto
tsunami in 2008, Germany's automobile industry faced crisis. industry to reverse the decline in stable employment, but also
Even some established companies sank into payment crisis reduce the pollution of the atmosphere at the same time by
caused by the decline in sales. In this case, Germany intro- introducing new cars of a higher environmental standard. So,
duced environmental benefits in “Economic Growth and Sta- in this way, both economic benefits and environmental ben-
bility Promotion Act” in 2009. Aim at boosting private car sales efits can be realized.
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An analyze of the effectiveness of environmental subsidies Therefore, for the purchase of new energy vehicles, the
to support new energy vehicles sale introduction of environmental subsidies could make con-
sumers who originally have no intention to replace old cars or
Now the question is whether the environmental subsidies tend to replace traditional fuel vehicles ultimately choose to
policy can have the positive impact as expected. It can be replace new energy cars. At the same time, after we estimate
analyzed from the point of cost-benefit analysis. Here we as- the reserves and growth rate of our country's automobiles, we
sume that consumers own cars produced before nine years can find that there is a great private car replacement market.
ago and consumers have the ability to buy his or her new car, Fig. 2 is a contrast between private automobile stock changing
we aim to analyze each kind of consumer preferences of cost trends and the gross domestic product (GDP) changing trends
benefit analysis. between 2006 and 2015 in China. We can see that the growth
Based on the situation that consumers are thrift and not rate of private car ownership is higher than the gross national
consider purchasing a new car temporarily, to continue use product growth rate and in 2006 the private car ownership
the old products, he or she need to pay for maintenance cost have exceed 10 million vehicles. So there is a big market for
(including the yearly check cost time, fuel cost, parking cost) replacing the car produced before 2006. While through the
denoted C1, the convenience degree of using (using time, use choice of consumers can realize the maximization of envi-
of comfort level) denoted U1, using produced external envi- ronmental benefits that means reduce automobile exhaust
ronment negative (harmful gases) denoted E1. pollution to the environment and this is conducive to China's
In the case that the consumers have a replacement de- economic and social sustainable development.
mand for new cars, we assume that consumers demand
standardization is 1 and assume that consumers' basic in-
come is I0. This means each consumer has only 1 unit of used Results and discussion
cars. We assume that the old unit car fulfill the standard of car
replacement and conform to density rate the consumer own Equilibrium of effectiveness of environmental subsidies to
the old products’ newness rate denote t is arranged between support new energy vehicles sale
0 and 1 evenly on average. So, the consumer have two choice:
(1) choose to replace conventional cars (generally, people tend Above-mentioned part we do a theoretical analysis about the
to choose their own familiar product or the product with high replacement behavior of consumer demand from the
awareness, so select again to replace conventional cars is a perspective of environmental protection. The analysis shows
kind of rational behavior), needed purchase costs denote W2, that through the introduction of environmental subsidies can
needed to pay the cost of useness and maintenance denote C2, maximized promote consumer identity for new energy vehi-
the convenience degree of use denote U2, the environmental cles and then choose to replace new energy vehicles. Whether
externalities denote E2; (2) choose to replace the new energy the use of new energy vehicles can achieve better social
vehicles, needed purchase costs denote W3, needed to pay the benefits than other measures? Whether the use of new energy
cost of useness and maintenance denote C3, the convenience vehicles can improve social welfare and therefore to achieve
degree of use denote U3, the environmental externalities equilibrium between atmospheric environment governance
denote E3. We compare among above these three situations: and economy development ? Economic development is an
It can be seen that: important standard of social welfare increase. Traditional
economics believe that if we use a function to describe wel-
(1) C1 > C2; U1 < U2. E1 > E2 fare, the welfare function should be a function of individual
(2) C1 > C3; U1 < U3; E1 > E3 utility function [14]. The social welfare function can be
(3) E2 > E3 expressed as function 1:

W ¼ W ðU1; U2; …; UnÞ (1)

Hence, we are more focused on the influence to the envi-
ronment of the three different types of cars, so we measured This function is an increasing function of the individual
from the Angle of environmental protection. From this point utility function, when individual utility realize the Pareto op-
of view, three types of consumer choice caused environ- timum which means in the individual utility equilibrium
mental negative externalities are E1 > E2; E1 > E3; E2 > E3. So, condition, then can reach the best social benefits. Here we
environmental benefits: E3 > E1 > E2. consider environmental benefits as a composition of individ-
In a circumstance that we take no account of the envi- ual utility and social utility.
ronmental benefits, the cost of consumer use are C1 > C2; Hence, the below sections will compare the effectiveness
C1 > C3. Benefits of Use are U1 < U2; U1 < U3. of policy that promote the use of new energy vehicles measure
Hence, consumers often based on maximization their own with the traditional vehicle restrictions measures and develop
interests to choose the spending behavior. Therefore, if we public transport/green transport measures.
want to change the former two types of consumer choice to
achieve the maximization of environmental benefits, we need Benefit analysis of traditional vehicle restrictions measures
to make the W3 < W2 and U3 > U2. U3 > U1. policy
The current positive policies and measures can help to make In view of haze weather nowadays, some local governments
U3 > U2. U3 > U1. Then in the circumstance that the environ- took temporarily “odd-even” traffic restrictions. During the
mental subsidies are introduced, it is possible to make W3 < W2. traffic restrictions period, the air condition is improved. These
 i n t e r n a t i o n a l j o u r n a l o f h y d r o g e n e n e r g y 4 2 ( 2 0 1 7 ) 1 8 6 9 9 e1 8 7 0 8 18705

Fig. 2 e GDP and private car stock change trend 2006e2015. (Data Source [17]). (Annotation: The blue line represents the
gross domestic product (GDP) (units: billion Yuan); the yellow histogram on behalf of the private car quantity change (units:
Ten thousands cars)). (For interpretation of the references to colour in this figure legend, the reader is referred to the web
version of this article.)

temporary measures took place during the Beijing Olympics for short-distance transport. But on the edge of the vast city
Games and during the APEC meeting in Beijing, cooperated area and people who frequently have long distance trans-
with limited factory production so greatly improved the air portation demands, the inconvenient of public transportation
quality that the public praised on social mediaethere is a blue and green travel tools such as bicycle are their traveling
sky which is called a “APEC (asiaepacific economic coopera- nightmares. Besides, in the vast rural areas, public transport is
tion) blue”. The restrictions system is desirable when working just a blueprint. Therefore, actively develop green travel tools
as a temporary restrictions by given full consideration to the such as public transport and bicycles is feasible in the dense
national image and public interest. However, in view of the population area, but can not be used in all areas. For large
normalized haze weather, it will lead to a conflict of personal cities and vast rural, private cars can't be replaced by public
interests and public interests by using “odd-even” traffic re- transport and bicycles.
strictions. The public against the restrictions measures also
published their views “On what legal basis should I pay full Summary
price to buy car and pay full vessel use tax while only let me In the case when single car emissions is certain, car emissions
use my own car for limiting one day by without limiting one pollution will increase when the number of cars increase.
day?”. Such restrictions measures will affect car owner tenure Although the stricter of traditional fuel vehicle emission
interests, and the measures limiting one day by without standards will improve the automobile exhaust pollution, but
limiting one day will affect the automobile manufacturers' due to the huge stock of cars, car exhaust pollution will
sales; car repair and maintenance service interests and thus remain at a higher level. To use new energy vehicles to replace
affect the interests of manufacturers in other related in- the existing low emission standards of traditional fuel cars
dustries. Under the condition of universality agreement in the can reduce automobile exhaust pollution effectively. The
interests of the individuals, there constitute a group interests, relationship between auto stock and auto emission before and
and then, constitute a new public interests. Then the paradox after introducing environmental subsidies can be expressed in
of the public interests formed. Visibly, through the restrictions the following left curves (see Fig. 3). Meanwhile, because the
measures, the influence of vehicle emissions to the atmo- automobile industry is in an important position of the na-
sphere will be reduced, and will affect the public welfare in the tional economy, the growth of the auto industry will prompt
long run. economic growth. And the growth of the auto industry de-
pends on the automobile consumption of people. Automobile
The policy effect analysis of prompt public transportation and consumption demands will increase with the increase of na-
green transportation tools tional wealth. In addition, private auto as an important traffic
Actively develop green transportation tools such as public tool plays an irreplaceable important position in people's daily
transport and bicycles can alleviate the air pollution of vehicle trips. So, the increases of cars number will increase the overall
emissions to some extent. However, with the rapid urbani- social welfare. However, the environmental pollution will
zation, more and more city form multiple coexistence pattern reduce the social welfare. Taking environmental pollution
which means there are one city center and a number of deputy factor into consideration, cars stock increase will add social
city centers in one city. Though space view city scale expands benefits at first but after car stock have increased to more than
rapidly, public transport will realize no blind area within the a certain number, the social benefit decreased, and now we
scope of coverage of urban area and bicycle is more suitable are in such a situation. However, as the automobile exhaust
18706 i n t e r n a t i o n a l j o u r n a l o f h y d r o g e n e n e r g y 4 2 ( 2 0 1 7 ) 1 8 6 9 9 e1 8 7 0 8

Auto emisson
Welfare
P1: Pullition before Environmental subsidies W: Welfares take economics and
implement environment into account
P2: Pullition after Environmental subsidies
implement
P1

P2

O O
Auto stock Auto stock

Fig. 3 e Environmental subsidies and welfares equilibrium. Adapted from Ref. [18].

emission standards improved, the exhaust emissions will and environmental benefits. Also this measure is accorded
decrease while social welfare will increase, especially when with the concept of green development. A supply side reform
introducing the car replacement environment subsidies to for the new energy vehicles industry in our country, the
replace low emission standard car stock by new energy vehi- author believes can start from establishing a system of envi-
cles. So, the relationship between social welfare and auto ronmental subsidies. The subsidies can make industry
stock before and after introducing environmental subsidies development, the change of consumption pattern combined
can be expressed in the following right curve (see Fig. 3). We with national macroeconomic regulation and control.
can see the falling down curve again goes up after the intro- Concretely can be done from the following perspects:
duction of environment subsidies and social welfare First of all, from the source structure environmental sub-
increased as a whole after all. sidies may establish in form of funds which supervised by the
Through the whole above analysis, we found that benefits relevant government departments and managed by a credible
of developing new energy vehicles can not only have both financial institutions. Funds source can be consisted of man-
tangible benefits for consumers' favor and manufacturers' ufacturer's profit, the central and local governments' financial
income but also have intangible benefits (soft benefits) for the allocation, industry associations' fund raising and tax transfer
general public environment rights. It can handle the in- [10].
conveniences caused by long time vehicle restrictions, public Secondly, from the scope of subsidies, we can consider the
transportation insufficient, bicycle travel inconvenience and following factors:
therefore the impaired public welfare. By fostering new The object of the subsidies shall be purchased new energy
growth and promoting consumption, the production and vehicles which can effectively dedicate to reduce emissions of
development of the economy will be promoted, and thus so- air pollutants. Research and development of new energy ve-
cial utility and the overall social welfare will be improved too. hicles in China are in the world leading position. However, due
Existing policy for new energy automobile industry promotion to the low market recognition and incomplete of related
is limited to new cars trade while ignoring without consid- supporting facilities market slumps [20]. But, compared with
ering the consumer demand for replacing their old cars. By traditional gasoline or diesel petrol vehicles, new energy ve-
using legal measures of environmental subsidies policy, we hicles have great advantage in protecting environment and
can further expand new energy automobile market shares and saving energy. Automobile exhaust environmental standard
therefore increase social welfare. in China began to be introduced from the year 1999. At present
nation-wide implement National IV Standard with key areas
Suggestion and discussion adoption National V Standard. And China plans to implement
National VI Standard during the year 2020e2023. Given the
Subsidies have strong flexibility. It can be used case by case serious situation of air pollution, we can introduce high
and one thing one debate and can be adjusted with the change emission standard's new energy vehicles in the form of
of environment and the adjustment of conditions. So it's an replacement which can in advance improve the emission
ideal compensation distribution system [19]. The Germany standard. According to the “Implementation Regulations of
environmental subsidies based on the foundation of fund has Road Traffic Safety Law” in 2004 and the ministry of public
received good economic benefit and environmental benefit by security and the general administration of quality supervi-
adjusting and changing guide consumption pattern and sion, inspection and quarantine jointly issued “the opinions
combining to promote economic development and environ- on strengthening and improving vehicle inspection” in 2014
mental protection. For new energy vehicles industry in our the MOT regulation in China are as follows: private operating
country, we can establish allowances system which accords cars and minivans in six years can apply for annual inspection
with the situation of our economic and social environment. mark and environmental mark without online detection;
Adjust from the supply side to change consumer behavior during 7e15 years should do the yearly inspection once a year;
patterns and thus to achieve the unity of economic benefits after 15 years should do the inspection twice a year; And
 i n t e r n a t i o n a l j o u r n a l o f h y d r o g e n e n e r g y 4 2 ( 2 0 1 7 ) 1 8 6 9 9 e1 8 7 0 8 18707

before the online detection the cars should first comply with present national conditions, the consumption of durable
trail gas emission test. In view of this situation, we can follow goods like cars, not only can shape the domestic demand and
German standard to fix the car manufacture year with nine affects consumers and people's way of life and living envi-
years ago to take the replacement. Cars manufactured more ronment. So the author thinks that, in view of the present
than nine years usually have relatively low standards for serious environmental problems and people's consumption
environmental protection, and the owners have a relatively demand, introducing the environmental benefits for new en-
stronger desire for replacement, and thus is conducive to ergy car replacement consumption can shape a more healthy
policy development and will have better policy implementa- way of life and improve the environment for the residents by
tion effect. expanding the potential consumers. The economic signifi-
Besides, allowance application qualifications can be cance of environmental subsidies is also can achieve good
considered by the standards of life region. For allowance economic benefit for new energy automobile manufacturers,
applicable time can be considered in a short term on a trial and stimulating the development of related industries for in-
basis. Whether to extend the policy is determined by policy dustrial development and mature. For a country, while by the
implementation effect. shape of demand can spur economic development and ach-
After all, as an alternative choice for policy and law, do the ieve good industrial support effect and environmental benefit,
policy have side effect? The author wondering that adoption so to realize economic development and ecological environ-
new energy vehicles replacement allowance will have some ment protection in parallel. Also, from the experience of in-
impact on traditional fuel vehicles sales market in the short dustrial development, the choice of consumer is the decisive
term, but in the long run will prompt traditional fuel car decided standards to successfully develop the industry.
makers to develop new energy automobile market. And with Manufacturers also constantly improve the quality, variety
strength of traditional manufacturers to join the new energy and service level of goods according to the needs of the con-
automobile market it can bring positive influence of market sumers. Thus through combining the actual conditions of our
competition of new energy vehicles, moreover, it will make country and drawing the experiences of Germany, we can
vendors to improve the technology and perfect service to win introduce the policy intervention mode of environmental
the market, which is a good thing for new energy automobile subsidies in the economic legislation in China.
industry.

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