This paper investigates the impacts of phasing out fossil fuel vehicles in the road transportation sector on economic and environmental resilience using a combined Markov-chain and dynamic stochastic general equilibrium (DSGE) model. The study evaluates the effects on CO2 and SO2 emissions, considering variations across cities, regions, and countries. It identifies two major driving forces beyond CO2 reduction for this transition: fuel shortages and the negative health and environmental impacts of SO2. The study also analyzes the effects of climate policy instruments on economic development and energy consumption under exogenous shocks.

Chuxiao Yang, Haitao Wu, Yunxia Guo, Yu Hao, Zhaohua Wang