Vehicle Efficiency Incentives

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Vehicle Efficiency Incentives

• Stakeholders Meeting
• 22 January 2004
• Prepared by Harold Ward
• Based on work by Will Space and Nick Bianco
• Center for Environmental Studies
• Brown University

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VEI Where we left off

• Fees and rebates were proportional to fuel
  economy
• VEI applied to new and used cars (for ten years)
• Fees and rebates were capped
• Program would be close to revenue neutral
• No emissions reduction goal was set

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VEI What has happened since

• No traction in the legislature in 2003
• Dan Meszler joined as consultant, and pointed out
  that fees/rebates should be proportional to
  carbon emissions, that is should be based on
  fuel consumption, not fuel economy
• Working Group has met twice, and recommends a
  consumption-based program

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Goals for RI VEI Program

• NE Gov. and EC Prem. goal for 2020 is 90 of 1990
  emissions
• Requires reduction of 2002 sales of gasoline by
  17 if transportation is to contribute only its
  share of reductions
• Meeting this goal will reduce tax revenues from
  gasoline sales by 17 (as will any vehicle
  efficiency strategies that meet the goal).

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Adjustable VEI Parameters

• Zero point the combined fuel economy in mpg at
  which there is no fee or rebate, e.g. 24.5 mpg
• Slope the dollar amount for each gallons/100mi
  difference from the zero point, e.g. 500/gal/100
  mi.
• This combination of zero point and slope gives
  fees and rebates comparable to those accepted by
  the stakeholders in Phase II.
• Unclear whether this zero point provides
  sufficient financial cushion.

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Procedures for VEIP Administration

• DEM sets zero-point and rate each year,
  calculates fees and credits for all new models
  and notifies DMV and dealers
• Dealers post fees and credits on vehicles
• Applies only to new vehicle registrations
• Offset against sales tax at the time of first
  registration for administrative efficiency

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Calculated for 24.5 mpg and 500/gal/100 miles
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Calculated for a zero-point of 24 mpg and a slope
of 500/gal/100mi
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Comparisons - Smaller Cars













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Comparison SUVs











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Comparisons Pickup Trucks











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Revenue Projection
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Learning from Experience

• DEM would track balance between fees and rebates
  and adjusts zero point and slope to stay on track
  to the goal and to maintain a positive financial
  balance
• If a weak response, increase slope
• If a strong response, increase zero point,
  perhaps reduce slope

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What about unrated vehicles?

• Vehicles over 8500 lbs GVWR are not rated by EPA
• Suburban Hummer H2 8600 lbs GVWR
• Hummer H1 10,300 lbs GVWR
• What fees for non-rated vehicles?

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Points for Discussion

• Starting zero point and slope?
• Limits to rate of change of zero point and slope?
• Compensate for revenues from lower gasoline
  taxes?
• Fees for unrated vehicles?
• Apply only to new vehicles?
• DRAFT VEIA
• Others?

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Website for Spreadsheets

• http//envstudies.brown.edu/veia

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E-mail from Greg Dana13 January 2004

• In response to the question The question
  arose of whether, if Rhode Island residents
  decided to buy more fuel efficient cars, would RI
  dealers be able to obtain these cars.
• Greg replied We make available a wide range of
  cars for the dealers to sell and they sell
  whatever people are demanding.

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