Potential Design, Implementation, and Benefits of a Feebate Program for New Passenger Vehicles in California: Interim Statement of Research Findings

A comprehensive study was undertaken to assess the potential design, implementation, and benefits of a feebate program in California as well as possible stakeholder responses. A feebate is a market- based policy for encouraging greenhouse gas (GHG) emission reductions from new passenger vehicles by levying fees on relatively high-emitting vehicles and providing rebates to lower-emitting vehicles. This study finds that feebate policies can be used in California to achieve additional reductions in greenhouse gases from new passenger vehicles beyond those projected from emission standards alone. Specifically, feebate policies affect the average emissions levels for the new vehicle fleet sold in each model year. The amount will depend on the design features of the feebate policy and other modeling assumptions. For the period 2011-2025, a moderate feebate program based on a footprint system with average rebates of $600 and average fees of $700 yields a 3 percent improvement, or about 2 percent of the reductions needed to achieve the AB 32 target.