Vehicle Standards in a Climate Policy Framework

Abstract

Policy makers have long turned to vehicle regulation for addressing public concerns about transportation's energy and environmental impacts. This paradigm is ratified in recent action to raise Corporate Average Fuel Economy (CAFE) standards and issue vehicle greenhouse gas (GHG) emissions standards both in California and federally. At the same time, U.S. policy makers are moving toward a national program to limit GHG emissions economy wide. The most robust strategy entails capping emissions from all major sectors including transportation. Such a policy would place an overall constraint on the dominant, carbon dioxide (CO2) portion of vehicle GHG emissions, which are also regulated by vehicle standards. This overlap raises questions of how vehicle-specific regulations should relate to the broader policy and what metric vehicle standards should use in such a context. Answers can be found by reviewing the strengths and weaknesses of past policies and drawing on recent discussions regarding the design of national climate policy. One conclusion is that climate policy should require agencies to administer vehicle standards as part of an overall transportation sector GHG management plan that explicitly considers the costs and benefits of the standards relative to other measures that affect emissions. Another is that vehicle standards should be based on an energy metric rather than on GHG emissions rates, which depend on the fuel supply system and not just the vehicle itself. In general, vehicle standards should be promulgated as part of a policy structure that provides appropriate incentives for all actors in the sector: fuel suppliers, transportation infrastructure and land-use planners, consumers and vehicle manufacturers. Such an approach will ensure balanced and ongoing progress in limiting transportation emissions in a manner reasonably commensurate with national climate protection goals, such as those defined by a declining cap on GHG emissions economy wide.