The Next Generation of Transportation Policy

26 Pages Posted: 4 Apr 2017 Last revised: 17 Nov 2017

See all articles by Michael Greenstone

Michael Greenstone

University of Chicago - Department of Economics; Becker Friedman Institute for Economics; National Bureau of Economic Research (NBER)

Cass R. Sunstein

Harvard Law School; Harvard University - Harvard Kennedy School (HKS)

Sam Ori

University of Chicago - Energy Policy Institute

Date Written: March 29, 2017

Abstract

Motor vehicle fuel-economy standards have long been a cornerstone of U.S. policy to reduce fuel consumption in the light-duty vehicle fleet. In 2011 and 2012 these standards were significantly expanded in an effort to achieve steep reductions in oil demand and greenhouse gas emissions through 2025, consistent with long-term U.S. policy goals. As a policy approach, however, standards that focus on efficiency alone, as opposed to lifetime consumption, impose unnecessarily high costs and do not deliver guaranteed petroleum savings. On the basis of a commitment to cost-benefit analysis, defining U.S. regulatory policy for more than 30 years, we propose a novel policy solution that would implement a cap-and-trade system in transportation. Acknowledging that the very idea of cap and trade has become controversial, we show that this approach would increase the certainty of reductions in fuel consumption in transportation and do so at a far lower cost per gallon avoided. Such an approach is consistent with the regulatory authority existing at key federal agencies.

Suggested Citation

Greenstone, Michael and Sunstein, Cass R. and Ori, Sam, The Next Generation of Transportation Policy (March 29, 2017). Harvard Public Law Working Paper No. 17-27. Available at SSRN: https://ssrn.com/abstract=2943551 or http://dx.doi.org/10.2139/ssrn.2943551

Michael Greenstone

University of Chicago - Department of Economics

1126 East 59th Street
Chicago, IL 60637
United States

Becker Friedman Institute for Economics ( email )

Chicago, IL 60637
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Cass R. Sunstein (Contact Author)

Harvard Law School ( email )

1575 Massachusetts Ave
Areeda Hall 225
Cambridge, MA 02138
United States
617-496-2291 (Phone)

Harvard University - Harvard Kennedy School (HKS) ( email )

79 John F. Kennedy Street
Cambridge, MA 02138
United States

Sam Ori

University of Chicago - Energy Policy Institute ( email )

Saieh Hall for Economics
5757 S. University Avenue
Chicago, IL 60637
United States

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