Transition to Low-Carbon Vehicle Market: Characterization, System Dynamics Modeling, and Forecasting

Abstract

Rapid growth in vehicle ownership in the developing world and the evolution of transportation technologies have spurred a number of new challenges for policymakers. To address these challenges, this study develops a system dynamics (SD) model to project the future composition of Iran’s vehicle fleet, and to forecast fuel consumption and CO2 emissions through 2040. The model facilitates the exploration of system behaviors and the formulation of effective policies by equipping decision-makers with predictive insights. Under various scenarios, this study simulates the penetration of five distinct vehicle types, highlighting that an increase in fuel prices does not constitute a sustainable long-term intervention for reducing fuel consumption. Additionally, the model demonstrates that investments aimed at the rapid adoption of electric transportation technologies yield limited short-term reductions in CO2 emissions from transportation. The projections indicate that the number of vehicles in Iran is expected to surpass 30 million by 2040, with plug-in and hybrid electric vehicles (EVs and PHEVs) comprising up to approximately 2.2 million units in the base scenario. It is anticipated that annual gasoline consumption and CO2 emissions from passenger cars will escalate to 30,000 million liters and 77 million tons, respectively, over the next two decades. These findings highlight the need for a strategic approach in policy development to effectively manage the transition towards a lower-carbon vehicle fleet.