State Incentives for Clean Air Vehicles (Feebates)

Assumptions

• There are 457,000 private vehicles in San Francisco.
• One in 10 vehicles is replaced each year
• Vehicles are driven on average 10,000 miles per year.
• Baseline fuel efficiency is 25 miles per gallon

Analysis

The proposed state “feebate” program, which would implement taxes on the sale of fuel-efficient vehicles and provide rebates for the purchase of efficient ones, could achieve a notable decrease in citywide emissions without costs to local government or industry. There would be no net cost to consumers, although consumers who prefer larger vehicles would either pay a fee or choose a non-preferred smaller vehicle. It is unclear how this program would interact with the Pavley Law. If implemented together, the feebate program would facilitate adoption of the fleet mix required by the Pavley Law, but would probably not further reduce CO2 emissions. Alternatively, a feebate program could be implemented sooner than the Pavley requirements, speeding the introduction of a lower-emissions fleet of passenger vehicles.

What we do now
Federal CAFE standards currently regulate miles-per-gallon for fleets of passenger cars sold in the United States, but there is no state or federal standard that explicitly regulates greenhouse gas emissions from private vehicles.

What we could do
The California Air Resources Board is considering a program of “feebates” to encourage the purchase of lower emissions vehicles. Feebates levy high fees on the purchase of fuel-inefficient vehicles, with equivalent rebates for purchasing fuel efficient vehicles. This strategy was developed by CARB as a potential alternative to the implementation of the Pavely Law, but may also be implemented in combination with that law.

Cost and cost components
The net impact on consumers will be neutral, as all fees are balanced by rebates. Industry incurs no added costs. The only public costs would be due to administrative overhead. Consumers would save an estimated 2.1 million per year on fuel.

Carbon savings potential
San Francisco’s Countywide Transportation Plan estimates that there are 457,000 private vehicles in the city. We estimate that one in 10 vehicles is replaced each year, and that vehicles are driven on average 10,000 miles per year. We assume a baseline fuel efficiency of 25 miles per galling. Using these assumptions and a methodology developed by the Center for Clean Air Policy, ¹we calculate the potential impact of a feebate program that sought to achieve a 4 percent improvement in fuel economy. Such a program would require an incentive of $1,000 per gallon/mile. It would reduce San Francisco's emissions by an estimated 6,240 metric tons per year.

Endnotes
¹ CCAP Guidebook Emissions Calculator, www.ccap.org/guidebook.