Coordinated Policy Measures for Reducing the Fuel Consumption of the U.S. Light-Duty Vehicle Fleet

June 2004
Coordinated Policy Measures for Reducing the Fuel Consumption of the U.S. Light-Duty Vehicle Fleet

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Fuel consumption of cars and light-duty trucks is one of the most vigorously debated issues in the U.S. While impressive gains have been made in terms of both fuel efficiency and individual vehicle fuel economy in the past two decades, the overall fuel consumption of the U.S. light-duty vehicle fleet continues to grow. Concerns about the effect of emissions from the vehicles and a significant reliance on imported oil provide legitimate reasons for government action to manage fuel consumption. The economic and societal impacts of such intervention affect different stakeholders across multiple dimensions.

This research finds that there exists no silver bullet for reducing the fuel consumption of motor vehicles in the U.S. However, there are several different policy measures available to affect the production and purchase of more fuel efficient vehicles as well as reduce the amount of driving. Qualitative and quantitative analysis of individual of policy options reveals the potential for combination of policies. A fleet model helps understand the time delay between the introduction of new fuel efficient vehicles and the reduction in fuel consumption of the fleet. Analysis of political and institutional obstacles enables an evaluation of the feasibility of a comprehensive policy package.

A reinforcing combination of different policies can increase the overall effectiveness of the proposed strategy. Such an approach aims at exploiting synergies between different measures, remove perverse incentives, and increase political acceptability of the overall strategy by spreading the impact and responsibility. An integrated policy package that combines fuel economy standards, a fee and rebate scheme for vehicles, fuel taxes and increased renewable content in fuels is evaluated as an example. Such a coordinated set of policy actions might reduce the overall fuel consumption and greenhouse gas emissions of the light-duty vehicles by 32% up to 50% in 30 years.

MITEI Author

John Heywood Professor Emeritus

Department of Mechanical Engineering