Wheeling & Dealing: A Cap-and-Trade Program for Vehicle Fuels by Policy Integrity
Aug 5, 2014
Simple and elegant proposal that unfortunately will hit a large political stonewall. Cap and trade has never been implemented for mobile sources. The authors suggest this is done upstream and then the costs are reflected in the price. Two questions: (i) what are the alternative options available to refiners for reducing the carbon footprint of their fuel ? (and no ethanol does not really count) and (ii) why don't you integrate this in a nation-wide cap and trade anyway?
Aug 18, 2014
Thanks to the judges for their insightful comments. New text in the "Who will take these actions?" section addresses your first question. New text in the "Summary" section addresses your second question.
Sep 3, 2014
The EPA has already put in place tight fuel economy standards, requiring the fuel economy of new LDVs in 2025 to be twice of those produced recently. It is not clear at all, why this additional piece of legislation is required and how it interacts with the new CAFE standard. I seriously doubt that this proposal has any chance of being adopted. I am not sure EPA actually has the authority to create a cap and trade program. They do have authority to regulate (limit) pollutants with a human health impact. Even if they do have the authority, the social tolerance for such a program in today's environment is challenging. The interesting part of the proposal is to apply the program only to fuels. a cap and trade program would also provide more financial incentive than current volume-based programs such as the Renewable Fuel Standard. A simpler and possibly more effective way to limit CO2 emissions in the near future is through fuel economy standards which were just updated to 54.5 MPG by EPA and NHTSA in the US. I am wondering if the writer is familiar with existing fuel efficiency standards / programs. I am surprised for instance that the Corporate Average Fuel Economy (CAFE) is not mentioned. The introduction of a transportation-specific or global CO2 cap-trade system is clearly a significant action in reducing GHG emissions in the US. However, the proposal, does not address the crucial political stonewalling that any such measure will receive in the legislature. Even with this obstacle overcome, the proposal does not provide specific details of how it will act as a catalyst for change? What are the mechanisms for incentivizing the purchase of fuel-efficient cars and EV s as these options are on the users but the cap is on the fuel distributors. How would you deal with leakage in a sectoral system? (i.e. if electricity sector is not included, then the emissions from EVs would not be counted.All the above can be addressed in a well thought out system but this proposal (and the linked report) do not provide these answers. The proposal is clear, interesting, well presented and potential impacting. On the other hand, it is not particularly innovative and, as the same authors acknowledge, entails also negative impacts. Anyhow, in virtue of its workability and effectiveness, I am quite convinced that this is one of the first actions to be carried out in order to reduce CO2 emissions.