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

Transportation's Role in Reducing U.S. Greenhouse Gas Emissions: Volume 1
uncertain lifetime cost-effects. In general, fuel efficiency technologies will
become more cost-effective as the price of fuel increases. Other important factors
influencing cost-effectiveness include the relative costs of different fuels and
future battery costs for plug-in hybrid-electrics. 75
A range of Federal policy initiatives can influence the rate of technology
advancement and the adoption of high-efficiency technologies. Vehicle- and
fuel-related policies should be considered simultaneously to maximize the
effectiveness of these policies and ensure that unnecessary overlap or
redundancy among policies does not occur.
Broadly, these approaches can be categorized as:
• GHG efficiency and fuel economy standards for new vehicles, such as the
NHTSA and EPA harmonized National Program;
• Partnerships with industry to develop standards and demonstrate new
technologies;
• Subsidies or tax credits for efficient vehicles or retrofits; either for new
vehicles or for existing vehicles, as annual payments through the registration
process;
• Updating tax rate on inefficient vehicles (i.e. Energy Tax Act of 1978 or “gas
guzzler tax”), levied either on new vehicles, or as annual fees on existing
vehicles; and subsidies for scrapping the most inefficient vehicles
(http://www.epa.gov/fueleconomy/guzzler/);
• Fuel taxes, VMT fees, or “cap and trade,” through their effect on fuel prices
and operating costs; and
• Research and development subsidies.
The effectiveness and desirability of such programs will depend, in part, on
whether or not there are market failures that cause firms to fail to develop
efficient vehicles, or that would deter users of such vehicles from purchasing
more efficient vehicles. In the case of light duty vehicles, for instance, it has been
argued that consumers, for various reasons, do not fully consider future fuel
costs in their purchases of new vehicles. 76
75 Vol. 2, Sec. 3.
In any case, private purchasers of new
vehicles would not normally consider any external public social costs of climate
change or petroleum imports. While market failure arguments are less
compelling for manufacturers and purchasers of expensive commercial
transportation equipment—such as airliners, locomotives, and ships—higher
76 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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