Should California Include Motor Vehicle Fuel Emissions in a Greenhouse Gas Cap-and-Trade Program?

Abstract

California should include vehicle fuels as part of a greenhouse gas reduction cap-and-trade program. Numerous political, administrative and economic reasons that suggest otherwise are considered. They include compliance and enforcement concerns, other regulatory programs for transportation, belief that gains from inclusion would be small, jurisdictional linkage issues, and both political skepticism and agency inexperience with market-based regulation. However, consideration of most of these strongly favors inclusion. Inclusion also creates an important competition between the electricity sector and other vehicle fuels to shrink emissions over time as they vie to see which can most successfully replace ordinary gasoline and diesel.