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Cost savings of using a marketable permit system for regulating light-duty vehicle emissions

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  • Wang, Michael Q

Abstract

In the USA, each individual vehicle is required to meet uniform per-mile emission standards. The uniform standard system does not allow vehicle manufacturers flexibility in achieving overall emission reduction goals for motor vehicles. The system provides manufacturers with little or no incentive to control vehicle emissions beyond what is required. In this paper, an incentive-based marketable permit system is proposed to replace the uniform standard system. Under the marketable permit system, vehicle manufacturers are required to meet corporate average emission standards; they are allowed to buy or sell vehicle emission reduction credits among themselves to meet corporate average standards; and they are allowed to bank vehicle emission reduction credits that are accumulated in earlier years and to use the credits for meeting average standards in later years. It is estimated in this study that relative to the current uniform standard system, the marketable permit system can reduce vehicle emission control costs by $150 to $400 million per year in California, or 13-30% of the costs currently spent on vehicle emission control.

Suggested Citation

  • Wang, Michael Q, 1994. "Cost savings of using a marketable permit system for regulating light-duty vehicle emissions," Transport Policy, Elsevier, vol. 1(4), pages 221-232, October.
  • Handle: RePEc:eee:trapol:v:1:y:1994:i:4:p:221-232
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    Cited by:

    1. Charles Raux, 2009. "Umweltzertifikate im Verkehrsbereich," Post-Print halshs-01735915, HAL.
    2. Fan, Wenbo & Jiang, Xinguo, 2013. "Tradable mobility permits in roadway capacity allocation: Review and appraisal," Transport Policy, Elsevier, vol. 30(C), pages 132-142.
    3. Charles Raux, 2011. "Downstream Emissions Trading for Transport," Transportation Research, Economics and Policy, in: Werner Rothengatter & Yoshitsugu Hayashi & Wolfgang Schade (ed.), Transport Moving to Climate Intelligence, chapter 0, pages 209-226, Springer.
    4. Raux, Charles & Marlot, Grégoire, 2005. "A system of tradable CO2 permits applied to fuel consumption by motorists," Transport Policy, Elsevier, vol. 12(3), pages 255-265, May.
    5. Ji, Xi & Chen, G.Q. & Chen, B. & Jiang, M.M., 2009. "Exergy-based assessment for waste gas emissions from Chinese transportation," Energy Policy, Elsevier, vol. 37(6), pages 2231-2240, June.
    6. Charles Raux, 2008. "Tradable driving rights in urban areas: their potential for tackling congestion and traffic-related pollution," Post-Print halshs-00185012, HAL.
    7. Charles Raux, 2002. "The Use of Transferable Permits in the Transport Sector," Post-Print halshs-00080454, HAL.
    8. Timilsina, Govinda R. & Dulal, Hari B., 2009. "Regulatory instruments to control environmental externalities from the transport sector," European Transport \ Trasporti Europei, ISTIEE, Institute for the Study of Transport within the European Economic Integration, issue 41, pages 80-112.

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