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The Rebound Effect and the Proposed Rollback of U.S. Fuel Economy Standards

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  • Kenneth T. Gillingham

Abstract

The Trump administration’s August 2018 proposed rollback of the 2020–2026 fuel economy standards has been the subject of great controversy in the policy community. The justification for the rollback was based on an analysis indicating that the previous fuel economy standards would be associated with more than 12,000 additional fatalities over the lifetime of the vehicles affected by the standards. The largest contributor to these estimated fatalities is the rebound effect assumed in the analysis, which was increased from 10 percent in the previous rule to 20 percent in the proposed rule. This article summarizes the current state of knowledge about the rebound effect as it relates specifically to fuel economy standards. A careful review of the recent literature supports a central estimate closer to 10 percent, thus undermining a key argument that has been used to support the rollback of the standards. However, there are wide bounds of uncertainty around this central estimate as well as several poorly understood factors not accounted for in the central estimates, which further increase our uncertainty about the rebound effect. This highlights the importance of sensitivity analysis and further research on this policy-relevant topic.

Suggested Citation

  • Kenneth T. Gillingham, 2020. "The Rebound Effect and the Proposed Rollback of U.S. Fuel Economy Standards," Review of Environmental Economics and Policy, University of Chicago Press, vol. 14(1), pages 136-142.
    • Handle: RePEc:ucp:renvpo:doi:10.1093/reep/rez015
    DOI: 10.1093/reep/rez015
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    Cited by:

    1. Kellogg, Ryan, 2020. "Output and attribute-based carbon regulation under uncertainty," Journal of Public Economics, Elsevier, vol. 190(C).
    2. Lu, Tingmingke, 2023. "Response of new car buyers to alternative energy policies: The role of vehicle use heterogeneity," Economic Modelling, Elsevier, vol. 120(C).
    3. Huang, Robert & Kahn, Matthew E., 2024. "An economic analysis of United States public transit carbon emissions dynamics," Regional Science and Urban Economics, Elsevier, vol. 107(C).
    4. Matsushima, Hiroshi & Khanna, Madhu, 2022. "Estimating Medium-run Direct Rebound Effects of the Footprint-based CAFE Standard," 2022 Annual Meeting, July 31-August 2, Anaheim, California 322420, Agricultural and Applied Economics Association.
    5. Sakar Hasan Hamza & Qingna Li, 2023. "The Dynamics of US Gasoline Demand and Its Prediction: An Extended Dynamic Model Averaging Approach," Energies, MDPI, vol. 16(12), pages 1-13, June.
    6. Malmaeus, Mikael & Hasselström, Linus & Mellin, Anna & Nyblom, Åsa & Åkerman, Jonas, 2023. "Addressing rebound effects in transport policy – Insights from exploring five case studies," Transport Policy, Elsevier, vol. 131(C), pages 45-55.

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