“Models used in policy analysis typically do not capture both extensive passenger vehicle system detail and economic feedbacks in an integrated fashion,” says Valerie Karplus PhD ’11, a research scientist in the MIT Joint Program on the Science and Policy of Global Change. But assessing the costs and benefits of policies aimed at reducing gasoline use and emissions in passenger cars is best achieved with a model that combines both economics and technology. And they can use models with detailed descriptions of vehicles technologies and fuels to forecast, say, the energy-efficiency characteristics of plug-in hybrids or the composition of the vehicle stock over time. Policy and regulatory measures create constraints and incentives that can influence consumer behavior, but it can be difficult to assess in advance of how effective and costly such actions will be in reducing gasoline use and GHG emissions.Īnalysts can use macroeconomic models to predict, for example, how increases in gasoline prices will affect fuel use, incomes, and prices of other goods in energy and non-energy sectors as well as how changes in different sectors may interact. Passenger vehicles generate about 16% of total anthropogenic GHG emissions and consume about 40% of the total petroleum used in the United States-statistics that are troubling for both climate change and energy security reasons. Results thus far suggest that, in the case of passenger vehicles, the most politically feasible policies in the United States today also rank among the most costly-and that the challenge for policymakers is to find ways to address this trade-off over time. The model’s ability to track responses to specific policies at a detailed level yields useful insights for policymakers. Those findings come from a macroeconomic model with a novel transportation component: it includes detailed information on advanced vehicles and fuels, vehicle ownership and fleet characteristics in different countries or regions, and consumer investment in vehicle and fuel prices. And combining those passenger vehicle and fuel regulations with a cap-and-trade system would only increase the costs of cutting greenhouse gas (GHG) emissions. For instance, when regulations on vehicle efficiency and fuels are imposed at the same time, the costs are additive but the benefits are not. Other results of the analysis show that combining policies may actually reduce cost-effectiveness. But using a tax to reduce gasoline demand has never proven politically feasible in the United States. Indeed, a moderate tax on gasoline could elicit the same reduction at a sixth of the cost. ![]() A new MIT analysis shows that those regulations-which mandate increasing fuel economy in new cars and, more recently, the gradual phasing in of biofuels-are not the most cost-effective way to reduce gasoline use. Credit: Stuart Darschįor some years, the United States has had regulations in place to cut its growing consumption of gasoline in passenger cars. Her findings provide new insights into designing effective policies that will help the nation move toward its energy security and environmental goals. ![]() ![]() Using a specially formulated model based on empirical data about people’s vehicle purchase and travel behavior, advanced vehicle types (including plug-in hybrids), and more, they looked at the costs and impacts of imposing a gas tax, requiring higher fuel economy in new cars, and mandating the use of advanced biofuels. John Reilly, and others to examine different policy approaches to motivating drivers to consume less gasoline in their cars. Research Scientist Valerie Karplus has been working with Professor Henry Jacoby, Professor John Heywood, Dr.
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