Michael Greenstone, Sam Ori

Problem
Fuel efficiency standards aim to reduce vehicle emissions, but current standards are incomplete in several respects. Current standards regulate new vehicle fuel efficiency rather than total emissions, so they cannot ensure continued progress in reducing emissions. Even among new vehicles, gains in fuel efficiency have stalled in recent years as consumers increase their purchases of sport utility vehicles (SUVs) and pickup trucks. Current policy also focuses on fuel consumption per mile traveled rather than lifetime vehicle emissions, and lack of a well-functioning market for emissions permits reduces potential benefits from credit trading among vehicle manufacturers.

Proposal
The authors propose two major steps towards simplifying fuel efficiency standards and refocusing the program on achieving guaranteed emissions reductions at lower cost to automakers. These are: (1) target greenhouse gas (GHG) emissions directly, without differentiating by vehicle types and sizes, using data to project a given vehicle’s lifetime greenhouse gas emissions; and (2) establish a robust cap-and-trade market to reduce compliance costs for automakers while providing considerably more certainty about the future path of carbon dioxide (CO2) emissions.

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.