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

Transportation’s Role in Reducing U.S. Greenhouse Gas Emissions: Volume 2
FY 2007 were $34.3 billion to the Highway Account and $5.0 billion to the Mass Transit
Account (FHWA, 2008f).
The on-road system efficiency strategies analyzed in this report will reduce total Federal
Highway Trust Fund revenues in rough proportion to fuel savings and GHG reductions.
Under the 2030 combined scenario described above, the net impact on revenues could
range from about $0.9 to $1.5 billion annually. 4
Strategies focused on heavy-duty vehicles
will have a somewhat greater relative impact than those focused on light-duty vehicles
because of the higher tax rate on diesel fuel (24.4 vs. 18.4 cents per gallon).
This analysis describes potential impacts to Federal highway revenues under the current
finance scenario. Funding shortfalls could be mitigated or avoided in the future through
shifts in tax structures or through alternative infrastructure funding mechanisms.
Induced Demand
An important consideration in estimating the greenhouse gas and other benefits of system
efficiency and travel activity GHG reduction strategies is “induced demand,” where
improvements in travel conditions lead to increases in travel that may offset the GHG
reduction benefits of the improvements. The magnitude of the induced demand from
reduced travel times or travel costs is a source of considerable uncertainty and further
research is needed. 5
While induced demand does offset some of the GHG benefits of
certain strategies, it also reflects an increase in mobility due to the lower cost of travel and
in this way reflects a benefit to society. A more detailed discussion of how induced
demand works is included in Appendix A. Induced demand effects are reflected in most
of the GHG reduction and cost-effectiveness estimates presented in this report for traffic
management, traveler information, and bottleneck relief strategies, so the benefits of these
strategies are lower than they would be without consideration of induced demand.
Induced demand effects are also reflected in a number of the strategies for reducing
carbon-intensive travel activity, as discussed in Section 5.0. A related concept, the
“rebound effect” (increased travel as a result of lower fuel costs due to more fuel-efficient
vehicles), affects the vehicle fuel efficiency strategies as discussed in Section 3.0.
Induced demand has the potential to affect GHG emissions, fuel savings, and air pollution
benefits of the following system efficiency strategies in particular:
4 Based on a total fuel savings of 4.6 to 7.2 million gallons and a tax rate of 20.3 cents per gallon
(gasoline at 18.4 cents weighted 69 percent, and diesel at 24.4 cents weighted 31 percent).
5 U.S. DOT is designing research to provide a better understanding of the role of induced demand
in offsetting GHG improvements from congestion reduction strategies.
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