Standards for greenhouse gas emissions and fuel economy induce innovation in clean car technologies

Governments around the world mostly rely on two types of policy to reduce greenhouse gas emissions from road transport – fuel taxes, which affect driving behaviour, and standards that regulate either average fuel economy or average emissions directly, which affect technology adoption. This column shows that standards have also been effective in inducing clean innovation in car technologies, especially those for electric and hydrogen vehicles. Indeed, the findings suggest that standards were the main policy driver behind clean innovation in the car market over the past two decades.