Efficient subsidy distribution for hydrogen fuel cell vehicles based on demand segmentation

The transportation sector paradigm is being changed to achieve carbon neutrality by 2050. Governments have been actively providing subsidies as part of the effort to replace existing internal combustion engine vehicles with alternative fuel vehicles (AFVs). However, subsidization is not a sustainable approach. Some countries, including the United States, the United Kingdom, and China, are reducing AFV subsidies. Meanwhile, Korea, which ranks first in the global market share for hydrogen fuel cell vehicles (HFCVs), provides insufficient HFCV subsidies. Therefore, this study redefines demand to better distribute these limited subsidies. Demand is segmented into "new demand" and "transferred demand" according to the pattern of demand transfer; the effective subsidy level for each demand segment is discussed. We find that to maximize reductions in CO2, the most effective purchase subsidy is 70 % for transferred demand and 90 % for new demand. In addition, the most cost-effective purchase subsidy combination is 10 % for transferred demand and 60 % for new demand.