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An evaluation of policy options for reducing greenhouse gas emissions in the transport sector: The cost-effectiveness of regulations versus emissions pricing

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  • Nicholas Rivers, Randall Wigle

    (Wilfrid Laurier University)

Abstract

The reduction of greenhouse gas emissions from road transport is a key policy goal that is being pursued by both federal and provincial governments using a range of policies. This paper considers the cost of alternative approaches to reducing emissions from road passenger travel in Canada. Our findings reinforce the widely-held belief that a revenue-neutral carbon tax is the most cost-effective tool to reduce greenhouse gas emissions. Regulatory instruments on their own, such as a low carbon fuel standard, vehicle greenhouse gas intensity regulation, or zero emission vehicle mandate, achieve a given reduction at much higher cost. We show, however, that a combination of regulatory instruments can better approach the cost-effectiveness of a carbon tax than individual regulations. We provide insight about the optimal combination of regulatory instruments in the Canadian context, and find that both a low carbon fuel standard and an zero emission vehicle mandate can be jointly used to reduce GHG emissions from the transport sector. Our analysis is timely, given the rapidly evolving policies in this sector.

Suggested Citation

  • Nicholas Rivers, Randall Wigle, 2018. "An evaluation of policy options for reducing greenhouse gas emissions in the transport sector: The cost-effectiveness of regulations versus emissions pricing," LCERPA Working Papers 0107, Laurier Centre for Economic Research and Policy Analysis, revised 01 Jan 2018.
    • Handle: RePEc:wlu:lcerpa:0107
    Note: LCERPA Working Paper No. 2018-1, January 2018
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    References listed on IDEAS

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    Cited by:

    1. Ross Mckitrick, 2023. "Economic Implications of a Phased-in EV Mandate in Canada," Working Papers 2301, University of Guelph, Department of Economics and Finance.
    2. William B.P. Robson & Alexandre Laurin, 2019. "Less Debt, More Growth: A Shadow Federal Budget for 2019," C.D. Howe Institute Commentary, C.D. Howe Institute, issue 531, February.
    3. Tracy Snoddon, 2018. "The Rocky Road to Canada-wide Carbon Pricing," e-briefs 284, C.D. Howe Institute.
    4. Randall Wigle, 2019. "The Economic Case for EV Supports? Or: Network Effects, EV Pessimism and EV Supports," LCERPA Working Papers ec0123, Laurier Centre for Economic Research and Policy Analysis, revised 23 Oct 2019.

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    Keywords

    Greenhouse gas emissions; low carbon fuel standard; electric vehicles; carbon tax; road transport;
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