The Review of Economics and Statistics, Volume 100 , No. 2

Summary:

  • Fuel economy standards can be effective in reducing oil consumption and greenhouse gas emissions to achieve energy security, climate and pollution goals.
  • As countries, including the United States, reevaluate fuel economy standards, they should reconsider the unintended consequence of a size-based approach such as footprint- or weight-based standards.
  • The authors study weight-based fuel economy standards in Japan, which offer a unique platform to evaluate real life changes because they have existed for more than three decades and seen several policy reforms.
  • The weight-based standard incentivizes automakers to increase vehicle weight as a means to achieve compliance without significantly improving fuel economy.
  • A flat standard that allows for compliance trading, by which those who achieve the standard can sell credits to those who do not, is the most effective policy design. This more efficient policy would achieve the fuel economy target for less than half the cost of size-based regulations.
Areas of Focus: Energy Markets
Definition
Energy Markets
Well-functioning markets are essential for providing access to reliable, affordable energy. EPIC research is uncovering the policies, prices and information needed to help energy markets work efficiently.
Transportation
Definition
Transportation
Mobility is central to economic activity. Yet, a lack of fuel diversity and continued demand growth have made the transportation industry a major contributor to global pollution and carbon emissions....
Climate Law & Policy
Definition
Climate Law & Policy
As countries around the world implement policies to confront climate change, EPIC research is calculating which policies will have the most impact for the least cost.
Fuel Economy Standards
Definition
Fuel Economy Standards
Fuel economy standards are the United States’ cornerstone transportation policy aimed at reducing both oil consumption and greenhouse gas emissions. EPIC research is exploring whether these standards are structured optimally...