Costs and Benefits of CAFE December 17, 2013 Mark Jacobsen UC San - - PowerPoint PPT Presentation

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Costs and Benefits of CAFE December 17, 2013 Mark Jacobsen UC San - - PowerPoint PPT Presentation

Sep 26, 2022 453 likes •729 views

Costs and Benefits of CAFE December 17, 2013 Mark Jacobsen UC San Diego and NBER Externalities Related to gasoline use per mile Climate change Oil dependence, security Related to miles driven Congestion Accidents

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Costs and Benefits of CAFE

December 17, 2013 Mark Jacobsen UC San Diego and NBER

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Externalities

  • Related to gasoline use per mile
  • Climate change
  • Oil dependence, security
  • Related to miles driven
  • Congestion
  • Accidents
  • Local air pollution
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SLIDE 3

Externalities

  • Related to gasoline use per mile
  • Climate change
  • Oil dependence, security
  • Related to miles driven
  • Congestion
  • Accidents
  • Local air pollution

Unintended consequences?

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Externalities

  • Related to gasoline use per mile
  • Climate change
  • Oil dependence, security
  • Related to miles driven
  • Congestion
  • Accidents
  • Local air pollution

Unintended consequences? Co-benefits?

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CAFE in the used fleet

  • Mandates reduced gasoline use (per mile) for new vehicles
  • Propagates to the used fleet over time?
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CAFE in the used fleet

  • Mandates reduced gasoline use (per mile) for new vehicles
  • Propagates to the used fleet over time?
  • Yes, but only partly
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SLIDE 7

CAFE in the used fleet

  • Mandates reduced gasoline use (per mile) for new vehicles
  • Propagates to the used fleet over time?
  • Yes, but only partly
  • So do the welfare costs
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SLIDE 8

CAFE in the used fleet

  • Mandates reduced gasoline use (per mile) for new vehicles
  • Propagates to the used fleet over time?
  • Yes, but only partly
  • So do the welfare costs
  • Also influences the other externalities?
  • Changes criteria pollutants per mile (improvement)
  • Changes accident risks per mile (countervailing effects)
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SLIDE 9

CAFE in the used fleet

  • Mandates reduced gasoline use (per mile) for new vehicles
  • Propagates to the used fleet over time?
  • Yes, but only partly
  • So do the welfare costs
  • Also influences the other externalities?
  • Changes criteria pollutants per mile (improvement)
  • Changes accident risks per mile (countervailing effects)
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CAFE in the used fleet

  • New cars become used cars
  • But, many get scrapped along the way!
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CAFE in the used fleet

  • New cars become used cars
  • But, many get scrapped along the way!
  • How does this margin, the “scrappage elasticity,” relate to CAFE?
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CAFE in the used fleet

  • New cars become used cars
  • But, many get scrapped along the way!
  • How does this margin, the “scrappage elasticity,” relate to CAFE?
  • Most vehicles become more expensive to replace under CAFE
  • Advanced technologies and materials
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CAFE in the used fleet

  • New cars become used cars
  • But, many get scrapped along the way!
  • How does this margin, the “scrappage elasticity,” relate to CAFE?
  • Most vehicles become more expensive to replace under CAFE
  • Advanced technologies and materials
  • Heavy, powerful vehicles are affected even more
  • These include the most new technologies and materials
  • Their prices may also embed extra markups or fines
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Scrap Rates by Age and Make

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The “Gruenspecht effect”

  • Like the rebound effect, its importance is an empirical question
  • Jacobsen and van Benthem (working paper)
  • Scrap elasticity (% change in scrap / % change in price) ≈ -0.7
  • Lost gasoline savings: 12-17%
  • These losses are in addition to the rebound effect
  • The two effects seem to be fairly separable (more work needed on

potential interactions)

  • Influence on local air pollutants?
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Vehicle lifetimes: survival to 17

.2 .4 .6 .8 1 Percentage left when 17 years old 10 20 30 40 50 Miles per gallon

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Safety and CAFE

  • Large engineering and economics literature on safety
  • Two countervailing effects emerge:
  • Protection small vs. large vehicles offer their occupants
  • The arms race in vehicle choice
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Safety and CAFE

  • Large engineering and economics literature on safety
  • Two countervailing effects emerge:
  • Protection small vs. large vehicles offer their occupants
  • The arms race in vehicle choice
  • Overarching empirical problem: selection
  • Urban-rural divide in vehicle choice correlated with highway safety
  • Other observable and unobservable effects (age, education, income,

substance abuse, etc.) also correlated with car choice

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Safety and CAFE

Gasoline tax Single fuel economy standard Original CAFE standards New footprint- based CAFE

Summary of results in Jacobsen (2013)

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Safety and CAFE

Gasoline tax Single fuel economy standard Original CAFE standards New footprint- based CAFE Costs in car markets Lowest Highest Fewer Neutral Increased Neutral

Summary of results in Jacobsen (2013)

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Safety and CAFE

Gasoline tax Single fuel economy standard Original CAFE standards New footprint- based CAFE Costs in car markets Lowest Highest Effect on accident fatalities Fewer

(neutral on composition, with benefits through reduction in miles driven)

Neutral

(cars become smaller, but effects on risk cancel each

  • ther out)

Increased

(mismatched and single-car accident risks are worsened)

Neutral

(new standards keep vehicle sizes about the same)

Summary of results in Jacobsen (2013)

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Spillovers, leakage, unintended consequences, and co-benefits

  • Much more work is needed to see how CAFE influences other

externalities and markets

  • How are local air pollution and fuel economy related? Spatial

distribution of vehicles before and after CAFE?

  • Transition effects?
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Spillovers, leakage, unintended consequences, and co-benefits

  • Much more work is needed to see how CAFE influences other

externalities and markets

  • How are local air pollution and fuel economy related? Spatial

distribution of vehicles before and after CAFE?

  • Transition effects?
  • Endogenous, evolving regulation
  • Can we anticipate and prevent unintended consequences?
  • Strengthen per-mile pollution limits in tandem with CAFE
  • Increase tolling and mileage-based insurance charges
  • Etc.
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Research on core effects of CAFE

  • Divide the elasticity of gasoline use into two parts
  • Vehicle choice
  • VMT choice
  • Both of these decisions have short and long run components
  • Split of the total elasticity between parts is critical to understanding the

efficiency of CAFE

  • 50-50? 10-90? 90-10?
  • Knowing this is even more important for attempted parallel regulation

(i.e. how strict should we make new incentives to limit VMT?)

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Research on core effects of CAFE

  • EVs and PEVs
  • Gaining ground rapidly
  • Large transfers across pollution types and locations
  • New frameworks for looking at co-benefits, life-cycle costs?
  • Possible to revisit the CAFE credits granted for EVs?
  • How best to tax EV VMT?
  • An electric fleet as option value on climate?
  • Much easier to make a complete transition than if stuck with a long-

lived gasoline fleet

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Research on core effects of CAFE

  • Incentives to innovate
  • Positive
  • Understanding the (shadow) price signal
  • Strength and consistency of signal?
  • Negative
  • Loopholes and footprints