Potential Design, Implementation, and Benefits of a Feebate Program for New Passenger Vehicles in California

Document Date: 
Tue, 2011-02-01
Number of pages: 
290

A team of researchers from the University of California completed a comprehensive study to assess the potential design, implementation, and benefits of a feebate program for new light‐duty vehicles in California as well as possible stakeholder responses. The study’s research plan applied a variety of methodologies, including: case studies of existing policies, quantitative modeling of market responses by manufacturers and consumers, focus groups, stakeholder interviews, and a large‐scalesurvey of California households.
The study finds that feebate policies can be used in California to achieve additional reductions in greenhouse gases from new passenger vehicles beyond those projected from emission standards alone at a net negative social cost. Different feebate program configurations could lead to greater reductions, but require tradeoffs. Factors beyond California’s direct control also determine the effectiveness of feebates. Because California is roughly 10% of the domestic new vehicle market, a California‐only feebate would lack the leverage to induce major vehicle design changes, with most of the emissions reductions coming instead from sales‐mix shifts. Additionally, feebates are observed to interact with the stringency of national emissions standards. If standards become very stringent, feebates offer reduced incremental benefits because only relatively expensive technology will be available for adoption in response to feebates.
With regard to stakeholders, the statewide survey of 3,000 households indicates that consumers are generally concerned about climate change and energy independence, and that, based on an initial understanding, three‐fourths would be supportive of feebate programs. As for industry, modeling results suggest that new vehicle sales levels would decline under all feebate programs, resulting in industry revenues falling on the order of 1 percent (or several hundred million dollars per year). Interviews with automakers indicates that their views on feebates are mixed, with details of program design being a key determinant.

 

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