Transportation's Role in Reducing U.S. Greenhouse Gas Emissions ...

Transportation's Role in Reducing U.S. Greenhouse Gas Emissions: Volume 1
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One study estimated that an increase in the Federal fuel tax of approximately 20
cents per gallon would reduce transportation GHGs by 2.3 percent in 2030—with
about three quarters of the effect coming from improvements in fuel efficiency
and one-quarter from reduced VMT. 123
Levels equivalent to motor fuel costs in
Western Europe, or an increase in the fuel tax of about $2.40 per gallon, could
reduce transportation GHGs by 23 percent in 2030.
However, these higher prices would impose burdens on lower-income
consumers and some businesses, and therefore would need to be implemented in
concert with policies to address equity concerns. To give a sense of scale, fuel
use per light duty vehicle averages 578 gallons per year. 124 This would decrease
as vehicle efficiency improves.
Since an increase in the Federal motor fuels tax would only apply to the
transportation sector, it could be adjusted to a higher level at which it would be
likely to have a more substantial impact in the near term. Instituted primarily as
a GHG reduction policy, this would entail imposing higher costs on the
transportation sector than other sectors. However, unlike a cap and trade system
or carbon tax, revenue raised through a motor fuel tax would have a strong
precedent for being dedicated to transportation investments, as is currently the
case with the existing 18.4 cent Federal motor fuels tax for gasoline and 24.4 cent
tax for diesel.
An increase in the motor fuel tax could be scaled to generate sufficient revenue to
cover shortfalls in the Highway Trust Fund and the gap between current
transportation investment levels and the levels that the DOT Conditions and
Performance Report estimates are necessary to maintain the conditions and
performance of highways, bridges, and transit. Furthermore, it would maintain
the “user-pay” principle of funding transportation investments from charging
transportation users, rather than relying on general fund transfers to cover
revenue shortfalls, which has been a recent trend with the general fund bailout of
the trust fund in 2008 and 2009. Reinvesting the revenue in transportation
infrastructure could yield mobility and congestion reduction benefits. Funding
could be reinvested in strategies to further reduce GHG emissions from
transportation, such as investments in alternative modes and system efficiency
strategies. The motor fuels tax has the advantage of low administrative and
compliance costs.
123 Cambridge Systematics, 2009 (cited). The calculation was performed using a 1 cent
per mile fee for the lower scenario, which equates to about 20 cents per gallon at the
current average fuel efficiency of about 20 mpg for light-duty vehicles; and 12 cents
per mile for the higher scenario, or about $2.40 per gallon. The calculations assume an
elasticity of VMT with respect to operating costs of -0.45, as described in Appendix A.
124 Federal Highway Administration, Highway Statistics 2006.