Session Report: Diffusion of Alternative Fuel Vehicles

In this parallel session, chaired by Jeroen Struben, all three presenters are discussed the diffusion of alternative fuel vehicles (AFVs). The talks and the models discussed were very different, yet each shed light on the daunting transition that we face in the essential effort to reduce emissions and petroleum dependence in the transportation sector.

First, Mathias Bosshardt presented “Developing a diffusion model of competing alternative drive-train technologies.” Mathias first reviewed the model structure and showed how the it was validated with historical data from the introduction of diesel fuel in Germany.

Two key areas of discussion in Mathias’ presentation were social norm building and critical mass. Social norm building captures the process of how the attractiveness of a drive-train technology, in terms of inherent attractiveness, comparative attractiveness and customer satisfaction, contributes to how much of the market is captured. In turn, attractiveness of the drive-train technology is one factor in whether the technology will reach critical mass. Government subsidies can help with initial adoption and in turn reaching critical mass, as can competitive drive-train technologies, which can actually help each other penetrate the market.

Derek Supple of MIT’s System Dynamics Group

Next, Derek Supple presented his paper “Managing the Transition toward Self-Sustaining Alternative Fuel Vehicle Markets.” While clean energy and sustainability are clearly broad reaching and important concepts that have only recently been embraced by the mainstream, Supple began by illustrating just how critical it is to address the specific case of petroleum dependence in the transportation sector. While the model he presents is ambitious in its approach to tackling different types of technologies and aspects of policies, it is very focused in terms of the problem addressed; the need is real and it is urgent.

This model is aimed at business strategists and policy makers, and is designed to help the audience understand the dynamics of the transition period, when multiple factors are working together (or not) so that the technology can reach critical mass. The model captures decision making behavior in multiple sectors (policy makers, consumers, producers, fuel retailers) as well as the urban/rural divide and the emergent feedback mechanisms. The key underlying feedback structures are driven by customer familiarity, fueling infrastructure, and industry learning.

The results presented in this session were based on Central/Southern California and the introduction of hydrogen fuel cell vehicles as the only alternative to internal combustion engines. A variety of policy and industry strategies were explored, including supply incentives, adoption incentives, and marketing.

The presentation and the paper are certainly sufficient to illustrate one of the goals: the market formation transition is, indeed, dynamically complex. Furthermore, even very strong policies require long duration (20+ years) to be effective. The researchers also concluded that the model presented provides a useful framework for discussion and for understanding how complementary assets give rise to a highly nonlinear system with multiple tipping points.

Finally, session chair Jeroen Struben presented from his work in progress, “ From stylized facts to multiple mechanisms: diffusion analysis of past and present alternative fuel introductions.” This research has appeared in Energy and Environment Newsletter and MIT Tech Talk .

Dr. Struben and Mr. Supple work together, and their research is related. Struben’s work moves toward being an empirical study, examining what we can learn from introduction of natural gas vehicles in New Zealand and Argentina, ethanol in Brazil (both attempts), diesel in German, France, and Austria, etc. Yet the underlying dynamics at work are very familiar: consumer familiarity, manufacturing experience, and infrastructure.

This work determines, based on a significant amount of evidence, that the traditional S-Curve used when evaluating technology adoption does not apply to adoption of AFVs. According to the researchers, t he range of dynamics at work and the number of players involved suggests that successful introduction of AFVs requires not only a portfolio of policies carried out over a long period of time, but also coordination among those players. A formidable challenge, but in the Energy & Environment Newsletter article , Professor John Sterman sees much reason for optimism – the existence of the reinforcing feedbacks means that there exists a tipping point “The vicious cycles be come virtuous cycles of greater adoption, greater familiarity and fuel availability, and lower costs.”

Maggie A. Kean