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

Transportation's Role in Reducing U.S. Greenhouse Gas Emissions: Volume 1
expected because drivers tend to undervalue fuel prices in their purchase
decisions. 165 Whereas cap and trade prices would likely be low initially and
increase over time, a high cost impact is needed to make research, development,
and adoption of new technology worthwhile to the private sector.
While some argue that a cap and trade system should be allowed to function on
its own to encourage the most cost-effective strategies economy-wide, others
hold that complementary transportation strategies should be concurrently
pursued. In the face of a potential delay in transportation sector response to
economy-wide signals, a multi-policy approach has several advantages.
Implementation of strategies targeted directly to the transportation sector can
stimulate technology development that would support transportation efficiencies
over time. This early investment would be more cost-effective than deferred
technology research in coming decades, and would better position U.S.
producers to compete in the global economy. Further, complementary strategies
can help counter the market failures anticipated by consumers’ response to
increased fuel costs.
Congress is considering proposals to achieve economy-wide carbon pricing. Of
particular importance to the transportation sector in the design of a cap and trade
program is the use of auction revenues. A portion of auction revenues or of the
revenues from a broad carbon tax could be allocated to transportation in two
areas: 1) multimodal infrastructure and system development that supports
additional GHG reductions and provides benefits to all groups to remedy the
equity issues created by higher energy prices; and 2) research to develop
advanced transportation technologies and fuels. In addition, recognizing that
any economy-wide market-based measures would have impacts on low-income
populations, any carbon-pricing program could include provisions to address
equity disparities through individual tax credits, carbon-efficient travel
subsidies, lump-sum rebates to low-income households, and public transit
initiatives.
165 Greene, D. L., J. German and M. A. Delucchi (2009). “Fuel Economy; The Case for
Market Failure.” In Reducing Climate Impacts in the Transportation Sector, D. Sperling
and J. S. Cannon, eds, Springer.
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