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Market-Based Policies for Green Motoring in Canada

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  • Werner Antweiler
  • Sumeet Gulati

Abstract

The most effective policy to address environmental externalities from vehicular fuel use is an appropriate fuel tax. Instead of raising fuel taxes, Canada's provincial and federal governments prefer to subsidize the purchase of fuel-efficient vehicles and the accelerated retirement of old vehicles. Are these programs effective? Can they be improved? We argue that subsidies for hybrids and electric vehicles are not cost-effective and instead recommend building on Canada's brief and modest experience with ”feebates." While British Columbia's pioneering accelerated vehicle retirement program is cost-effective, its success rests significantly on inducing participants to switch from personal vehicles to alternative transportation modes. Policy refinements will be needed to adapt the lessons learnt from this program to less favourable conditions elsewhere in Canada.

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Bibliographic Info

Article provided by University of Toronto Press in its journal Canadian Public Policy.

Volume (Year): 39 (2013)
Issue (Month): s2 (August)
Pages: 81-94

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Handle: RePEc:cpp:issued:v:39:y:2013:i:s2:p:81-94

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  1. Chandra, Ambarish & Gulati, Sumeet & Kandlikar, Milind, 2010. "Green drivers or free riders? An analysis of tax rebates for hybrid vehicles," Journal of Environmental Economics and Management, Elsevier, vol. 60(2), pages 78-93, September.
  2. Gallagher, Kelly Sims & Muehlegger, Erich, 2011. "Giving green to get green? Incentives and consumer adoption of hybrid vehicle technology," Journal of Environmental Economics and Management, Elsevier, vol. 61(1), pages 1-15, January.
  3. Diamond, David, 2009. "The impact of government incentives for hybrid-electric vehicles: Evidence from US states," Energy Policy, Elsevier, Elsevier, vol. 37(3), pages 972-983, March.
  4. Arie Beresteanu & Shanjun Li, 2011. "Gasoline Prices, Government Support, And The Demand For Hybrid Vehicles In The United States," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 52(1), pages 161-182, 02.
  5. Krupnick, Alan & McConnell, Virginia & Stoessell, Terrell & Cannon, Matthew & Batz, Michael, 2000. "Cost-Effective NOx Control in the Eastern United States," Discussion Papers, Resources For the Future dp-00-18, Resources For the Future.
  6. Greene, David L. & Patterson, Philip D. & Singh, Margaret & Li, Jia, 2005. "Feebates, rebates and gas-guzzler taxes: a study of incentives for increased fuel economy," Energy Policy, Elsevier, Elsevier, vol. 33(6), pages 757-775, April.
  7. Soren T. Anderson & Carolyn Fischer & Ian Parry & James M. Sallee, 2010. "Automobile Fuel Economy Standards: Impacts, Efficiency, and Alternatives," NBER Working Papers 16370, National Bureau of Economic Research, Inc.
  8. Ryan Sandler, 2012. "Clunkers or Junkers? Adverse Selection in a Vehicle Retirement Program," American Economic Journal: Economic Policy, American Economic Association, American Economic Association, vol. 4(4), pages 253-81, November.
  9. Fischer, Carolyn, 2008. "Comparing flexibility mechanisms for fuel economy standards," Energy Policy, Elsevier, Elsevier, vol. 36(8), pages 3106-3114, August.
  10. Anna Alberini & Winston Harrington & Virginia McConnell, 1995. "Determinants of Participation in Accelerated Vehicle-Retirement Programs," RAND Journal of Economics, The RAND Corporation, vol. 26(1), pages 93-112, Spring.
  11. Robert W. Hahn, 1995. "An Economic Analysis of Scrappage," RAND Journal of Economics, The RAND Corporation, vol. 26(2), pages 222-242, Summer.
  12. Alberini, Anna & Harrington, Winston & McConnell, Virginia, 1996. "Estimating an Emissions Supply Function from Accelerated Vehicle Retirement Programs," The Review of Economics and Statistics, MIT Press, vol. 78(2), pages 251-65, May.
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