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Energy policies for passenger motor vehicles

  • Small, Kenneth A.

This paper assesses the costs and effectiveness of several energy policies for light-duty motor vehicles in the United States, using a version of the National Energy Modeling System. The policies addressed are higher fuel taxes, tighter vehicle efficiency standards, and financial subsidies and penalties for the purchase of high- and low-efficiency vehicles (feebates). I find that tightening fuel-efficiency standards beyond those currently mandated through 2016, or imposing feebates designed to accomplish similar changes, can achieve by 2030 reductions in energy use by all light-duty passenger vehicles of 7.1–8.4%. A stronger feebate policy has somewhat greater effects, but at a significantly higher unit cost. High fuel taxes, on the order of $2.00 per gallon (2007$), have somewhat greater effects, arguably more favorable cost-effectiveness ratios, and produce their effects much more quickly because they affect the usage rate of both new and used vehicles. Policy costs vary greatly with assumptions about the reason for the apparent myopia commonly observed in consumer demand for fuel efficiency, and with the inclusion or exclusion of ancillary costs of congestion, local air pollution, and accidents.

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Article provided by Elsevier in its journal Transportation Research Part A: Policy and Practice.

Volume (Year): 46 (2012)
Issue (Month): 6 ()
Pages: 874-889

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Handle: RePEc:eee:transa:v:46:y:2012:i:6:p:874-889
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  1. Lawrence H. Goulder & Ian W.H. Parry & Dallas Burtraw, 1997. "Revenue-Raising versus Other Approaches to Environmental Protection: The Critical Significance of Preexisting Tax Distortions," RAND Journal of Economics, The RAND Corporation, vol. 28(4), pages 708-731, Winter.
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  5. Anderson, Soren T. & Kellogg, Ryan & Sallee, James M., 2013. "What do consumers believe about future gasoline prices?," Journal of Environmental Economics and Management, Elsevier, vol. 66(3), pages 383-403.
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  8. Ross Morrow, W. & Gallagher, Kelly Sims & Collantes, Gustavo & Lee, Henry, 2010. "Analysis of policies to reduce oil consumption and greenhouse-gas emissions from the US transportation sector," Energy Policy, Elsevier, vol. 38(3), pages 1305-1320, March.
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  10. Bento, Antonio M. & Goulder, Lawrence H. & Jacobsen, Mark R. & von Haefen, Roger H., 2007. "Distributional and Efficiency Impacts of Increased U.S. Gasoline Taxes," Working Papers 127021, Cornell University, Department of Applied Economics and Management.
  11. Johnson, Kenneth C., 2006. "Feebates: An effective regulatory instrument for cost-constrained environmental policy," Energy Policy, Elsevier, vol. 34(18), pages 3965-3976, December.
  12. Lawrence H. Goulder & Roberton C. Williams III, 2003. "The Substantial Bias from Ignoring General Equilibrium Effects in Estimating Excess Burden, and a Practical Solution," Journal of Political Economy, University of Chicago Press, vol. 111(4), pages 898-927, August.
  13. Meghan R. Busse & Christopher R. Knittel & Florian Zettelmeyer, 2009. "Pain at the Pump: The Differential Effect of Gasoline Prices on New and Used Automobile Markets," NBER Working Papers 15590, National Bureau of Economic Research, Inc.
  14. White, Michelle J, 2004. "The "Arms Race" on American Roads: The Effect of Sport Utility Vehicles and Pickup Trucks on Traffic Safety," Journal of Law and Economics, University of Chicago Press, vol. 47(2), pages 333-55, October.
  15. Andrew N. Kleit, 2004. "Impacts of Long-Range Increases in the Fuel Economy (CAFE) Standard," Economic Inquiry, Western Economic Association International, vol. 42(2), pages 279-294, April.
  16. Kenneth A. Small & Kurt Van Dender, 2007. "Fuel Efficiency and Motor Vehicle Travel: The Declining Rebound Effect," The Energy Journal, International Association for Energy Economics, vol. 0(Number 1), pages 25-52.
  17. 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, vol. 33(6), pages 757-775, April.
  18. Greene, David L. & Patterson, Philip D. & Singh, Margaret & Li, Jia, 2005. "Corrigendum to "Feebates, rebates and gas-guzzler taxes: a study of incentives for increased fuel economy" [Energy Policy 33 (2005) 757-775]," Energy Policy, Elsevier, vol. 33(14), pages 1901-1902, September.
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