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California Assembly to Vote on Vehicle Feebate Targeted at Greenhouse Gas Emissions

7 June 2007

California state legislators will vote on a bill (AB 493) that establishes a sliding feebate program (surcharges and incentives) based on the greenhouse gas emissions of new light- and medium-duty vehicles. The program would be administered by the California Air Resources Board (ARB), would take effect 1 July 2010 and would apply to motor vehicles beginning with the 2011 model year.

The Clean Vehicle Incentive Program is designed to be self-financing: the surcharges for higher-emitting vehicles would fund the rebates for the more-efficient vehicles. The bill was sponsored by the Union of Concerned Scientists, which says that it is seeking to establish a program that reduces vehicle emissions while protecting consumer choice.

The bill, authored by Assemblyman Ira Ruskin (D-Redwood City), requires ARB to develop regulations to implement the program. ARB will have to calculate, using a linear scale, the rebate or surcharge based on the vehicle’s emissions of greenhouse gases, compared to the emissions of all vehicles of the same model year that are subject to the Program.

The program will have a zero-band that reflects 20-25% of a fleet of a given model that will neither receive a rebate nor a surcharge. The zero-band is to be adjusted to ensure that buyers have a variety of vehicles among various types, including light trucks, that are not assessed a surcharge. ARB will consider sales-weighted data in determining the placement of the zero-band.

The maximum amount of the rebates and surcharges is not to be less than $2,250 or more than $2,500. The minimum amount is $100. Any vehicle with an estimated surcharge or rebate of less than $100 is to be placed in the zero-band.

ARB will need to make annual adjustments to the applied rebates and surcharges to ensure that the surcharges are sufficient to cover the cost of implementing the program, including administrative costs incurred by any state agency.

The bill directs ARB to determine how to account for alternative fueled vehicles in the surcharge and rebate calculations, and authorizes ARB to develop procedures for surcharge refunds if an approved alternative fuel conversion device is installed on the vehicle within six months of purchase.

The bill also requires ARB to consider upstream greenhouse gas emissions that occur during the production of the fuels.

Certain categories of vehicles (such as emergency vehicles and vanpooling vans) and diesel-powered vehicles are exempted from the legislation, as are very-low-income buyers and very small businesses.

The California Motor Car Dealers Association and the Alliance of Automobile Manufacturers are in opposition.

...there is no recognition that a large vehicle may be driven very few miles while a smaller vehicle may be driven very many miles. There is no effort to correlate actual emissions with the surcharge or rebates.

—Alliance of Automobile Manufacturers

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June 7, 2007 in Climate Change, Emissions, Policy | Permalink | Comments (15) | TrackBack (0)

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So is this kind of like harper's plan to put an extra $4,000 on big trucks and SUV's, and give a $2,000 rebate on fuel efficient cars?

Very similar in concept. There are some basic implementation differences--Canada uses thresholds based on fuel consumption to assign the fee or rebate, while California appears to be considering a sliding scale based on GHG emissions, and somehow factoring in the upstream emissions. But if the CA bill passes, and it gets signed, then ARB gets to figure out the mechanism and the rule.

The first time I heard the term Feebate was reading a paper from the Rocky Mountain Institute (www.rmi.org) titled
Winning the Oil Endgame. It seemed like a good idea then and still does now.

A good way for califonia to partially get around the EPA issue should the federal governemnt get in the way of the waiver. use incentives and heavilly penalize the worst polluters.

How are they going to stop people from buying in a different state? Or will they be required to pay upon registration? 2010 seems like a long ways away, Harper implemented ours almost immediately. I hope to cash in on it next year.

I like this idea, the sliding scale is better than our stepped approch. But there are two problems that jump out at me;#1 - as mentioned you will be waiting until 2010, and #2 - read the line "The maximum amount of the rebates and surcharges is not to be less than $2,250 or more than $2,500." If I'm reading that right (and I know I could be wrong) these sums are too small. The worst emmitters are those big SUVs are high proformance sports cars. They can cost 50,000 - 100,000 easy any anyone buying one wont miss $2,500.

I would suggest a sliding scale tied to price AND emmissions. So those with the most money to spend on the worst offenders pay the most fees.

I can see it now: the next big thing in California.
Pimp my Prius

Of course they put it off until 2010 -
It's always best to plan your crusades so someone else has to pay for them. (Both politically and financially in this case.)

Scheduling it to start immediately would require the political dedication of one who truly believes in a cause rather than one who is merely seeking political gain with platitudes, nice press releases and photo-ops.

Now we're talkin'. One of the few policy prescriptions I've seen lately that actually make sense. As far as the AAM, lame objection as usual. We have a good remedy for their objection. Place a higher gasoline tax, which will obviously increase with miles driven. Or, would they like a smart meter on the car which would charge more per mile driven for those cars with worse gas mileage. Or, even smarter, a meter which actually measures gas consumed and charges the driver accordingly.

Two pitfalls of the feebate system.

1. I currently drive a bicycle instead of a car, mostly due to finances. I could afford a car, but it would wipe out most of my now disposable income.

Lower the price of a Prius by a few thousand bucks, and now I might buy one. End result: more fossil fuels burned, more carbon emissions.

2. I'm trying to decide between a sedan and a small SUV. The sedan gets 26 mpg, the SUV 23. Since the sedan gets low fuel mileage for its class, there's a surcharge. Since the SUV gets high mileage for its class, there's a rebate. That's a few thousand dollars differential to encourage me to buy the SUV instead of the sedan.


Those are two very real scenarios that get bad behavior from the perspective of the goals of the plan. Why? Because the "bate" part -- the rebate -- induces people to choose that product. The problem is that the system assumes that people won't change classes of vehicles, either from "no" vehicle to a [now cheaper due to rebate] vehicle, or from a class that's more efficient to one that's less fuel efficient due to a combination of fee and rebate.

Personally, I think you make it revenue positive, and reduce the rebates. Yank up the fees. Take the net revenue in California and roll it into their high speed rail line proposed from LA to SF and other major cities.

That's my two bits. P.S. Scenario (1) really is my scenario. A rebate might push me over the edge to buy a Prius or Civic hybrid, and the net result is more gasoline consumed. Huzzah!

Looks like this feebate will only be due once, at the time of initial purchase or registration in CA.

It's worth asking if a one-time flat fee is the most efficient policy instrument to encourage buyers to switch to vehicles with higher fuel economy. First, if it succeeds the self-financing aspect will require higher penalties for gas guzzlers and lower subsidies for frugal cars - politically, a tricky concept.

Second, the actual amount of CO2 emitted by any given vehicle is (roughly) the product of its certified average emissions per mile and, the number of miles it is driven. If CA wants to bring actual emissions down, it needs to raise state taxes for on-road fuels. The extra revenue can be used to lower other costs, e.g. vehicle license fees and/or incentives to scrap old, polluting vehicles owned by those under a certain income level.

I understand that CA already features the highest gas prices in the lower 48. That, however, is mostly a consequence of ultra-strict air quality standards and decades of unbridled urban sprawl in the Los Angeles basin. Only CA refineries have the equipment to produce the required fuel grades and, lack of competition drives up prices.

Each of these steps adds awareness to the consumer base. As people start thinking about incentives to change vehicle classes and purchase lower emission products with rebates - the overall awareness increases. A net positive for any concerned with environment.

Stomy's scenario is curious. At what point does the necessity of fueled transportation outweigh the environmental concern? Many people must drive cars because they are physically unable to pedal bikes and have no mass transit options.

Participation in real world economies requires transportation - not always the greenest or most socially acceptable to some. The purpose of hybrids, bio-fuels, incentives etc. is to build the bridge to transportation systems with the least damaging impact to the earth. Not to eliminate the potential to live a productive, contributory life.

Helping middle income people get out of their gas guzzlers is a great idea,having gas guzzler buyers pay for it is even better!Most of the vehicles paying a penalty cost more than $30,000 so $2,000 is not gonna hurt that much.Saving $2,000 on a $10,000 aveo is a big deal.The feebate should use a pure co2 emmision scale,not broken up by vehicle type,a small suv should end up in the feebate free zone instead of getting a small rebate.Connecticut is looking at a similar bill,and would like support from new england states,if you live there email your congresspeople.

Economics, economics, economics!

Helping middle and low income people out of their gas guzzlers? Incentives to scrap old polluting vehicles?

Among chemical engineers I knew several years ago, it was common knowledge that fuel reformulation was expensive and a pain for the refineries, and that it was consequently expensive for the consumers as weel. Many of those chemical engineers pointes out that a greater reduction in pollution could be achieved by allowing refineries to spend the same amount of money purchasing older high polluting cars and junking them.

Of course, though they knew the chemistry and math, they struck out on the economics. That kind of action in the auto market creates a perverse incentive: high polluting old cars are then more valuable than low polluting old cars. Though this would act to remove high polluters from the market, it is far easier to tune an engine to have more emissions than to have less.

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