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Unintended Consequences from Nested State & Federal Regulations: The Case of the Pavley Greenhouse-Gas-per-Mile Limits

Author

Listed:
  • Lawrence Goulder

    (Stanford Environmental and Energy Policy Analysis Center, Stanford University)

  • Mark Jacobsen

    (University of California San Diego)

  • Arthur van Benthem

    (Department of Economics, Stanford University)

Abstract

Fourteen U.S. states recently pledged to adopt limits on greenhouse gases (GHGs) per mile of light-duty automobiles. Previous analyses predicted that these limits will yield significant reductions in GHGs. However, these studies did not consider critical factors that imply different results. This paper develops a multi-period numerical simulation model that accounts for these factors in assessing the impact of the proposed GHG-per-mile standards on U.S. gasoline consumption and GHG emissions. We find that while the state-level initiative would reduce significantly the emissions associated with new cars in the adopting states, it would give rise to very significant offsetting increases (“leakage”) elsewhere, in both new and used car markets. Because of interactions with the federal CAFE standard, technology spillovers mitigate leakage only slightly. In the most plausible scenarios considered, the leakage is around 70 percent. Correspondingly, the cost per gallon saved under the GHG-per-mile limits is about 72 percent higher than for an equivalent increase in the federal CAFE standard. Creation Date: 2009-08 Revision Date:

Suggested Citation

  • Lawrence Goulder & Mark Jacobsen & Arthur van Benthem, "undated". "Unintended Consequences from Nested State & Federal Regulations: The Case of the Pavley Greenhouse-Gas-per-Mile Limits," Discussion Papers 08-049, Stanford Institute for Economic Policy Research.
    • Handle: RePEc:sip:dpaper:08-049
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    References listed on IDEAS

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    Cited by:

    1. Lawrence H. Goulder & Robert N. Stavins, 2011. "Challenges from State-Federal Interactions in US Climate Change Policy," American Economic Review, American Economic Association, vol. 101(3), pages 253-257, May.
    2. Lawrence H. Goulder & Robert N. Stavins, 2011. "Interactions between State and Federal Climate Change Policies," NBER Chapters, in: The Design and Implementation of US Climate Policy, pages 109-121, National Bureau of Economic Research, Inc.
    3. James M. Sallee, 2011. "The Taxation of Fuel Economy," Tax Policy and the Economy, University of Chicago Press, vol. 25(1), pages 1-38.
    4. Klier, Thomas & Linn, Joshua, 2013. "Fuel prices and new vehicle fuel economy—Comparing the United States and Western Europe," Journal of Environmental Economics and Management, Elsevier, vol. 66(2), pages 280-300.
    5. Soren T. Anderson & Ian W. H. Parry & James M. Sallee & Carolyn Fischer, 2011. "Automobile Fuel Economy Standards: Impacts, Efficiency, and Alternatives," Review of Environmental Economics and Policy, Association of Environmental and Resource Economists, vol. 5(1), pages 89-108, Winter.
    6. Parry, Ian W.H. & Evans, David & Oates, Wallace E., 2014. "Are energy efficiency standards justified?," Journal of Environmental Economics and Management, Elsevier, vol. 67(2), pages 104-125.
    7. Klier, Thomas & Linn, Joshua, 2011. "Fuel Prices and New Vehicle Fuel Economy in Europe," RFF Working Paper Series dp-11-37, Resources for the Future.
    8. Williams, Roberton C., 2012. "Growing state–federal conflicts in environmental policy: The role of market-based regulation," Journal of Public Economics, Elsevier, vol. 96(11), pages 1092-1099.
    9. Lucas W. Davis & Matthew E. Kahn, 2010. "International Trade in Used Vehicles: The Environmental Consequences of NAFTA," American Economic Journal: Economic Policy, American Economic Association, vol. 2(4), pages 58-82, November.

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    More about this item

    Keywords

    greenhouse gases; environmental regulations; renewable energy; cars;
    All these keywords.

    JEL classification:

    • Q38 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Government Policy (includes OPEC Policy)

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