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sector contributes to a considerable share of energy consumption and Greenhouse
Gas (GHG) emissions worldwide. In 2015, 50% of world oil consumption was consumed for road transportation 1
and in 2014, 35% of world energy was used in the transportation sector (21% of world energy consumption was used in passenger cars) 1.
In 2010, about 14% of worldwide GHG emissions was
from the transportation sector 2.
The share of the transportation sector in
a country’s GHG emissions varies among the countries all over the world. For instance, in the US, the transportation sector is a major contributor to GHG emissions and
accounted for 27% of GHG emission in 2015 3.
Out of that 27%, 60% of emission is from light-duty vehicles and 23% from
medium and heavy-duty vehicles 4.
In China, this share is smaller, and
transportation sector accounted for 6% of emissions in 2012 5.

The important concern
regarding the emissions from transportation sector is that the GHG emissions
emitted from combustion in Internal Combustion Engine Vehicles (ICEVs) are emitted in urban areas where a considerable
population lives. It should be noted that
emissions from ICEVs are not just limited
to CO2 emissions but these vehicles emit particulates, NOx, CO, and hydrocarbons which are considered as local pollutants 6.
These emissions affect the local air pollution and may cause health issues in
urban areas.

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Another reason
for the focus on reducing emissions in
the transportation sector is the potential
for GHG emission
reduction available in the transportation
sector compared to potential in industrial and electricity sectors. The
research and policies in support of renewable energy development in the electricity sector and energy conservation
management in the industrial sector have
been in place for a long time. This means
that a considerable amount of potential in GHG emission reduction in those
sectors has been already captured. However, fossil fuels (petroleum and other
liquid fuels such as natural gas plant liquids, biofuels, gas-to-liquids, and
coal-to-liquids) still account for 96 % of energy consumption in transportation sector which
shows a significant potential in reducing GHG emissions 7. This
is a notable point especially for countries that have a high percent of
emission-free electricity
generation capacity and can use that emission-free electricity to provide the energy needed in the transportation sector.

To cut CO2 emissions by 80% by 2050 (as decided by G8 leaders
and the European Union in 2009), a 95% carbon emission reduction should
happen in transportation sector 6. However, based on the expected number of passenger cars
by 2050 and knowing the emissions and efficiency of ICEVs, the reduction target
for transportation sector cannot be achieved through an increase in efficiency of ICEVs alone 6.

this limit, different countries/jurisdictions all over the world have invested in alternative fuel vehicles. As defined by the US Department of Energy, an
alternative fuel vehicle is “a
dedicated, flexible fuel, or dual-fuel vehicle designed to operate on at least
one alternative fuel” 8. Biodiesel,
electricity, ethanol, hydrogen, natural gas, and propane are considered as alternative fuels in this
definition 8.

In this work,
we are focusing on reviewing the incentives for vehicles that operate on
hydrogen and electricity as an alternative fuel. We are not considering
biodiesel and ethanol as there is uncertainty about the capability of biofuels
to fuel the transportation sector at large scale 6.
We are not also considering natural gas and propane as they are considered as
fossil fuels like gasoline and diesel, although they may have lower emissions.

The focus of
this work is then on incentives allocated to electric vehicles (EVs). By EVs in
this work, we mean the vehicles that fully or partly move by an electric motor 9.
EVs may have different technologies. Three EV technologies considered in this work are:

BEV (Battery Electric
Vehicle): BEVs are vehicles that use an electric motor as the powertrain
system. The electricity needed to run the motor is
stored in a battery. The battery is
charged through electric charging points which may be located in a public or private electric charging

PHEV (Plug-in Hybrid Electric Vehicle): PHEVs have a hybrid
powertrain system which includes an ICE (Internal combustion Engine) and an
electric motor. The ICE uses conventional fuel (gasoline, for instance) to
operate while the electric motor uses the electricity stored in the battery to
operate. The battery can be charged via
an electric charging point. A PHEV then can run in
ICE mode or electric motor mode.

FCV (Fuel-Cell Vehicle):
FCVs are electric vehicles that operate based on an electric motor. The electricity input to the motor is generated in a fuel cell that uses hydrogen
as input. FCVs are fueled in a hydrogen refueling
stations (HRSs) and have tanks on the vehicle to store hydrogen.

EVs have less air and noise pollution, emit less GHG
emissions and have lower user costs per km compared to ICEVs, and can also lead
to an increase in the share of renewable energy in a country/jurisdiction 9. EVs are also more efficient than ICEVs because of their electric
powertrain system. In that sense, electrification of transportation sector may decreas
the primary energy consumption because of the increase in the well-to-wheel
efficiency of an electric powertrain system compared to an ICE system 6.

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