International Policy Digest

Ford
Business /13 Dec 2019
12.13.19

The U.S. Ranks First in Emitting Greenhouse Gas. A Feebate Program Could Change That.

The United States emits 15% of the world’s greenhouse gas and ranks first in per capita emissions. These emissions mainly come from transportation—passenger cars and light-duty trucks. To mitigate the effects of climate change, the United States can create a feebate program to promote the development and purchase of fuel-efficient vehicles.

Currently, the U.S. has various policies on reducing transportation emissions: the motor fuel tax, the gas guzzler tax, efficiency standards requirements, and tax credits for electric vehicles. However, these policies are outdated and ineffective. It has failed to cut back emissions. The United States needs a modern, effective, and cost-efficient policy. A feebate program offers rebates on fuel-efficient vehicle purchases and charges a fee on eco-unfriendly vehicle purchases.

This program wouldn’t restrict automakers nor consumers. It would protect the consumer’s choice and the automaker’s production flexibility. The production and sales of all types of vehicles, including eco-unfriendly, would be permissible. The difference is that consumers who purchase eco-unfriendly vehicles would incur a fee whereas, those who purchase energy-saving cars, would be rewarded with a rebate.

For automakers, a feebate program would offer incentives that would promote the production of eco-friendly vehicles. This would encourage automakers to improve the efficiency of eco-friendly cars beyond the existing fuel standards. Furthermore, a feebate would not pick winning technologies as all developments that advance fuel efficiency would be equally encouraged.

A feebate program could be budget-friendly if the fees and rebates are set correctly. Revenue collected from eco-unfriendly cars would compensate for the rebates granted for fuel-efficient cars. Over time, the pivot point would raise to maintain revenue generation. Further, this adjustment wouldn’t affect automakers as the financial benefit per unit of improved efficiency would remain the same.

The U.S. can benefit from France’s experience, which has successfully implemented a feebate system since 2008. Not only does the French feebate program generate a modest revenue for the economy, but it also increased the purchase of eco-friendly cars by 28%.

Some fear that a feebate program would be a disadvantage for big families or people who opt for big cars. However, this wouldn’t be the case. Large cars and small cars would be evaluated under different pivot points based on the car’s footprint. In other words, all vehicles would share the incentive per unit of improvement. This would encourage automakers to produce eco-friendly cars while car reducing costs for people who rely on large vehicles.

U.S. greenhouse gas emissions are high. A feebate program for cars and light-duty trucks would be a step forward towards reducing these emissions. It would improve pollution and mitigate the effects of climate change.

The feebate program will brighten the future of our planet.