Taking Climate Change into Account in U.S. Transportation
Taking Climate into Account
Greenhouse gas emissions consequences are now unaccounted for in public as well as private transportation decisions. In order to affect private decisions, travelers and transporters would need to see climate damages reflected in the cost of transportation services. In order to affect public decisions, the relevant policies—including statutes, regulations, funding mechanisms, disbursement formulas, and transportation plans—would need to be changed to take GHG emissions into account.
At present, some external costs of transportation, such as toxic air pollution and congestion, are addressed by non-price policies such as emissions and fuel economy standards and traffic controls. Since the current $0.45 per gallon motor fuel tax discourages travel by increasing travel cost, it could be argued that the tax already internalizes some of the environmental impacts of motor fuel use, but much remains unaddressed. A 10 percent increase in fuel price could result in a 5 to 6 percent reduction in fuel consumption and emissions in the long run.
Policy options for internalizing the environmental cost of greenhouse gas emissions include:
- A greenhouse gas cap-and-trade program. Such a program would set an absolute limit on the amount of greenhouse gas emissions. GHG "allowances" would be issued or auctioned to entities such as oil refiners and importers to correspond to allowable emissions under the cap. These allowances could be traded so that those who could more cost-effectively reduce emissions—for example, by blending ethanol in gasoline—could sell allowances to those with higher emission reduction costs.
- Shifting costs of driving from "fixed" to "per gallon of gasoline." Shifting fixed costs to variable costs would discourage some driving, leading to lower GHG emissions from transportation, without increasing the overall cost of driving. For example, if a minimum amount of insurance were paid through a surcharge at the pump, insurance would be more closely tied to miles traveled, and motorists would have an incentive to use less fuel. Motorists would still sign up with an insurance carrier and would pay additional insurance premiums for increased liability, collision, or if their risk classification required it.
Policy options for institutionalizing consideration of GHG impacts include:
- Incorporating climate change as a consideration in federal transportation project funding. Climate change considerations could be incorporated throughout existing grant programs, including the Surface Transportation, National Highway, and Congestion Mitigation and Air Quality (CMAQ) programs, or through new funding mechanisms focused on energy and climate change benefits.
- Building state and local capacity to address climate change. Options include providing federal funds to states to promote integration of energy, environmental and transportation planning at the state and metropolitan levels; developing methodology10 and evaluating the GHG and energy impacts of transportation plans and projects; and allowing states greater flexibility to use federal, state and local funds to address these issues.
- Incorporating climate change considerations into federal transportation research and development. One option is to increase funding for climate-friendly technology development and demonstration through DOE’s, DOD’s, NASA’s and DOT’s R&D programs. In addition, it is important for DOT to increase climate-relevant evaluation of transportation programs and projects.
NEXT: Conclusions
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