Alternative fuels and vehicles choice model

This report describes the theory and implementation of a model of alternative fuel and vehicle choice (AFVC), designed for use with the US Department of Energy`s Alternative Fuels Trade Model (AFTM). The AFTM is a static equilibrium model of the world supply and demand for liquid fuels, encompassing resource production, conversion processes, transportation, and consumption. The AFTM also includes fuel-switching behavior by incorporating multinomial logit-type equations for choice of alternative fuel vehicles and alternative fuels. This allows the model to solve for market shares of vehicles and fuels, as well as for fuel prices and quantities. The AFVC model includes fuel-flexible, bi-fuel, and dedicated fuel vehicles. For multi-fuel vehicles, the choice of fuel is subsumed within the vehicle choice framework, resulting in a nested multinomial logit design. The nesting is shown to be required by the different price elasticities of fuel and vehicle choice. A unique feature of the AFVC is that its parameters are derived directly from the characteristics of alternative fuels and vehicle technologies, together with a few key assumptions about consumer behavior. This not only establishes a direct link between assumptions and model predictions, but facilitates sensitivity testing, as well. The implementation of the AFVC model as a spreadsheet is also described