Infrastructure finance: findings of a synthesis on mileage-based user fees, road usage charges, vehicle miles traveled (VMT) fees, or per-mile taxes

The National Cooperative Highway Research Program published a synthesis on mileage-based user fees, road usage charges (RUC), vehicle miles traveled (VMT) fees, or per-mile taxes.

In recent years, the real value of fuel tax revenues has declined significantly as a result of increasing vehicle fuel efficiency, failure to adjust tax rates to keep up with inflation, and fewer miles driven. This decline in the purchasing power of the revenues collected has led to ongoing funding challenges for transportation infrastructure and increased uncertainty about future funding options. In the face of these challenges, interest has grown in the potential for replacing the current fuel tax with a new road usage charge assessed on miles traveled. This revenue option is referred to as a mileage-based user fee (MBUF), road usage charge (RUC), vehicle miles traveled (VMT) fee, or per-mile tax.

As of April 2015, 26 U.S. states were exploring MBUFs in some way, whether finalizing plans for a small-scale program (Oregon), designing a pilot (California), conducting a study, or through membership in the Western Road-Usage Charge Consortium or Mileage-Based User Fee Alliance.

To help fill the gaps in knowledge about public opinion of MBUFs, this synthesis study was designed to address the following questions:

1. What research has been conducted that identifies U.S. public opinion on MBUFs, including surveys and focus groups?
2. What is public opinion about mileage fees?
3. How does public opinion vary according to such factors as geography, respondent demographics, time, and common themes, trends, and factors that influence public acceptance or rejection?
4. What additional research is needed to address gaps in the current understanding of public opinion regarding MBUFs?

To answer these questions, this report analyzes three sources of information on public opinion about mileage fees: (1) qualitative research studies, such as focus groups; (2) quantitative public opinion surveys; and (3) media stories covering mileage fees.First, the data show that the majority of the public does not yet support an MBUF system. For example, across the 33 poll questions that asked about support for an MBUF (without specifying that the fee would replace the gas tax), mean support was only 24%, with a range from 8% to 50%. The qualitative research supports the more generalizable survey findings that most participants did not support the MBUF concept. All the qualitative studies reported in depth on many respondent concerns about MBUFs, whereas the studies discussed far fewer positive opinions.

Related to the question of whether people support the general concept of an MBUF is the question of whether they support replacing the gas tax with an MBUF. Both the survey and qualitative studies found that participants saw no compelling reason to replace the gas tax.  The average support across the 23 survey questions that addressed replacing the gasoline tax with an MBUF system (which was presented as a hypothetical scenario) was 23%. Support ranged from 8% to 42%. Complementing this finding, the authors of many of the qualitative
studies concluded that the public saw no reason to replace the gas tax with an MBUF.

The study results provide tentative evidence that MBUF support might rise over time, especially if new pilot programs or other activities familiarize people with the MBUF concept. The meta-analysis of survey data shows that mean support for replacing the gas tax with an MBUF has increased slightly over time, and surveys of participants in two MBUF
pilot programs found relatively high support levels, suggesting that direct experience with an MBUF noticeably increases support for these fees. Also, the media story analysis found that the percentage of stories taking a positive tone toward MBUFs gradually increased from 2010 to 2014. These various pieces of evidence suggesting that MBUF support could increase over time align with evidence from social psychology research that message repetition is a key factor in changing public opinion and attitudes toward an issue.

The qualitative studies and media story analyses provide a rich and detailed picture of the factors that most likely influence the lack of public support for MBUFs, and in a few cases,
survey evidence indicates that these factors matter to the public at large. Privacy and fairness were two of the themes discussed most often.

Privacy was a prominent theme in both the focus group studies and media stories. The topic was discussed in virtually all the qualitative studies evaluated, and the authors of several of these studies highlighted privacy as one of the main objections to an MBUF system. Participants were most alarmed by technology that collected data on the location or time of travel, but even simple odometer-based systems raised concern. The media coverage analysis supports the notion that privacy is a common concern; half of the media stories discussed privacy issues in some way. As for the survey data, responses to seven of the 10 privacy questions showed that at least half of the respondents believed that privacy was a concern.

A second prominent theme in the qualitative studies and media stories was fairness, with the MBUF system framed as both fair and unfair. For example, many focus group participants were concerned that fuel-efficient vehicle owners would pay comparatively more in MBUFs than they pay under the gas tax system, while owners of less fuel-efficient vehicles would pay comparatively less. These people thought it was unfair that a switch from the gas tax to an MBUF would penalize those who were “doing their part” to protect the environment and reduce greenhouse gas emissions. On the other hand, some people thought an MBUF was fairer than the gas tax because with an MBUF all drivers, including drivers of fuel-efficient and alternative-fuel vehicles, would pay similar amounts of tax to maintain roads. Yet other fairness discussions centered on the impact MBUFs would have on lower-income drivers, rural drivers, truckers, and commuters, and whether an MBUF system would allow some unethical drivers to cheat the system by avoiding payment altogether. The survey data do not provide clear evidence about which fairness issues are most important to individuals, but the data do support the notion that fairness is a serious concern.
Concerns about administering MBUFs were widespread in the qualitative studies. The most common worries centered on distrust of either the technology to be used or the ability of government to administer an MBUF program. Respondents predicted that both factors would cause billing errors. To a lesser extent, study participants also expressed concern about the cost of the program and the logistics associated with billing in-state drivers who drive out-of-state miles or charging out-of-state drivers who drive in the MBUF state. The media stories and qualitative research revealed additional concerns as well, although these were not as widespread as privacy and fairness. One of these concerns focused on the loss of the gas tax as a policy tool to incentivize the purchase of fuel-efficient vehicles.

Another concern was the challenge a household would face in paying the MBUF if it were charged periodically in large amounts (compared with gas taxes, which drivers pay frequently in small amounts). Further, MBUFs with a congestion pricing component were often viewed as unfairly expensive for people with inflexible work hours. Finally, the relative complexity of a mileage fee also emerged as an issue in the media stories and focus groups; if there is going to be an MBUF, people would prefer a simple structure.

Woven throughout the discussion of these concerns was a general preference for raising the gas tax instead of implementing an MBUF. Not only did many participants believe that the gas tax still performed adequately, they believed that it avoided many disadvantages of an MBUF, from high administrative costs to privacy concerns to charging hard-to-pay lump sum amounts to preserving cost savings for drivers of fuel-efficient vehicles. People also appreciated the simplicity of a gas tax compared with the complexity of even the most straightforward MBUF system.

While the focus groups, media stories, and surveys highlighted a number of concerns in implementing a mileage fee system, potential benefits of an MBUF emerged as well. In particular, the qualitative studies and media stories suggested a few reasons why the public might support transitioning to a mileage-based system. Some people liked that MBUFs could ensure that drivers of electric and fuel-efficient vehicles pay their fair share of road maintenance costs. Further, in the media stories some people described the MBUF system as a possible “solution” to the problem of funding transportation infrastructure into the future and others described MBUFs as a “sustainable” or “innovative” revenue source. 

When considering the findings described previously, it is important to take two contextual factors into account. One is a point raised by the authors of almost all the qualitative studies: members of the public know virtually nothing about current sources of transportation revenue. Most study participants had no idea what fuel tax rates might be or how much Americans pay per year in fuel taxes. Thus, people do not form their opinions about MBUFs with a good understanding of how that revenue option might compare with a fuel tax option.  The second contextual point to keep in mind is that, especially in the surveys, respondents are stating their preference regarding a concept they likely do not understand well at all.

The MBUF concept is complex, and the survey questionnaires do not provide respondents with a highly detailed explanation of how the MBUF would function. Further, because most
people have not experienced an MBUF before, they do not have prior knowledge to help them understand the survey questions about MBUFs. The findings from this synthesis study point to a number of useful avenues for future research, including the following:

1. The specific perceptions of populations of special concern, as defined by federal civil rights regulations and guidance documents, should be the focus of new qualitative and survey research. The groups in question are typically low-income and minority residents.  Very little existing research documents MBUF opinions among these groups.

2. New survey research is required to thoroughly explore many issues identified in the qualitative research studies and media stories, such as concerns about privacy and the difficulty people might face in paying large, infrequent MBUF bills. These topics have been studied inadequately in generalizable surveys.

3. Survey and qualitative research is needed to explore how additional factors known to influence support for other transportation revenue options might influence MBUF support. These factors include a respondent’s prior knowledge about existing transportation revenue options, educating respondents about current revenue sources and trends, and telling respondents that MBUF revenues would be dedicated to specific types of transportation programs. The results of this study will help policymakers design and explain MBUFs in ways that do not generate unnecessary opposition.

4. Multivariate analysis of survey results is required to better understand how factors such as demographic characteristics, travel behavior, vehicle type owned, and attitudes toward public policy issues influence public opinion on MBUFs. Most existing survey research studies present only descriptive statistics or simple, bivariate analyses that cannot capture the joint influence of multiple factors on public opinion regarding MBUFs.

5. There is a need for a large-sample-size, longitudinal, state or national survey that delves in detail into public opinions about mileage fees. Such a survey would reveal how specific population subgroups (e.g., low-income, minority, rural) perceive MBUFs and would permit thorough exploration of a wide range of topics related to MBUFs. A longitudinal survey would also reveal how public opinion about MBUFs changes in response to changes in the economy, vehicle technology, and transportation funding policy.

6. To help agencies that wish to gather survey data on how the public perceives mileage fees, it would be useful to conduct the research needed to develop a brief guidance document that offers advice on how to design a survey questionnaire, sampling plan, and data analysis plan.

7. Research is needed to identify an appropriate design and management model for an online resource through which all MBUF public opinion research could be made publicly available. Future researchers would benefit greatly from having a single location where all surveys and qualitative studies on public opinion of MBUFs are located.

8. More pilot programs would provide valuable survey and qualitative research opportunities.  The survey research reviewed in this report shows that participating in an MBUF pilot changes participants’ opinions; additional pilot studies could confirm whether personal exposure to an MBUF increases support. Thus, additional pilot programs would help policymakers better predict how the public would react if an MBUF were implemented.

9. Additional media story analysis is needed for states that have tested MBUFs, such as Oregon and Minnesota. Culling media stories directly from the archives of relevant local periodicals or websites would result in a more thorough collection of relevant media stories than was possible for this study.

10. There is potential value in analyzing social media commentary about mileage fees.  This data source, which could prove useful as a complement to other research methods, has not been used to understand public perception of MBUFs.

From TRB Special Report 307 – Policy Options for Reducing GHGs from US Transportation (2011)

Pricing road use
An often-cited dilemma of policies aimed at reducing solo driving is that the resulting reductions in traffic congestion could reduce the cost of driving and thus induce some additional vehicle travel. This effect, termed “latent demand” by transportation analysts, is conceptually similar to the rebound effect of reducing the fuel cost of driving through improvements in vehicle fuel economy. Some of the policies discussed above, such as raising fuel taxes and pricing parking, can help counter this effect by making driving more costly. A related option is to price road use directly, such as by charging higher tolls and even assessing a fee on each mile of vehicle travel, known as VMT charging. Although the concept of charging directly for road use through tolling
is not new, interest in using tolls to relieve traffic congestion has been growing in the United States and worldwide. The focus has been on the use of tolls that vary on the basis of traffic levels.

Nearly 100 variable tolling facilities are in operation, are in development, or are being planned around the world.23 Implementation of variable tolls in the United States has typically been confined to newly constructed facilities because of the resistance that would be encountered in charging motorists for the use of existing facilities that were previously unpriced. Whether variable tolls reduce overall VMT is unclear, since some of the motorists affected by the tolls will shift their driving to other roads or other times of the day when tolls are lower. Systemwide congestion pricing has not been tried in any U.S. community. Thus, while facility-specific charges can yield congestion benefits in individual highway corridors, the narrow scope of most applications is likely to limit their overall potential to reduce vehicle use, fuel consumption, and emissions at the metropolitan level.

For road pricing initiatives to have a broader effect on VMT and energy use would presumably require the use of more universal forms of road pricing, such as charging motorists per mile of travel anywhere on the highway system. Gasoline taxes already increase the per mile cost of driving. For example, a $0.50 tax per gallon adds $0.02 to the per mile cost of driving a car that averages 25 mpg. However, in light of the difficulties encountered over the past two decades in raising fuel taxes, VMT charges are viewed by some as potentially viable options for both raising revenues to finance transportation infrastructure and helping curb growth in vehicle use. For this reason, a TRB (2006) report, The Fuel Tax and Alternatives for Transportation Funding, recommended the pilot testing of road use metering and mileage charging. Subsequently, a report by the congressionally mandated National Surface Transportation Infrastructure Financing Commission (2009) urged the creation of a new transportation finance system that would use targeted tolling and more direct user fees based on miles driven. The commission concluded that to generate the same revenue as current federal, state, and local taxes on gasoline, the fee would need to average about $0.025 per mile. To have a significant impact on the total amount of driving, however, mileage-based charges would presumably need to be much higher than $0.025 per mile. VMT charges have been used in the United States and abroad to a limited extent. Oregon, for example, has instituted a pilot program in which participants agree to pay a fee based on miles driven, as derived from odometer readings. Oregon also collects weight–distance taxes from motor carriers
in lieu of diesel taxes. Germany has instituted a system of charging trucks tolls on the basis of miles traveled, exhaust emissions, and number of axles.

In this program, the charges are calculated by using onboard Global Positioning System equipment and wireless communication devices.  A concept related to VMT fees is “pay-as-you-drive” automobile insurance. These programs charge insurance on the basis of miles driven, 168 Policy Options for Reducing Energy Use and Greenhouse Gas Emissions from U.S. Transportation
with payments made at each vehicle refueling. These incremental fees are intended to provide drivers with a direct signal about the effect of each additional mile driven on the risk of having an accident. Such a mileage-based means of paying for accident insurance would likewise cause motorists to have increased awareness of the costs inherent in driving an additional mile and thus greater monetary incentive to conserve on mileage. Pay-as-you-drive insurance is being tested in Oregon and used in a number of places, including locations in Israel, the Netherlands,
and the United Kingdom (Greenberg 2009). A Brookings Institution study (Bordoff and Noel 2008) estimates that if motorists paid for accident insurance through such a program, they would average $0.07 per mile in insurance fees and reduce their total driving by about 8 percent.

Measures Targeted to Freight and Passenger Service
Medium- and heavy-duty trucks account for about 20 percent of the energy used in the transportation sector, which makes trucking the sector’s second-largest user of energy and contributor of GHG emissions. Airlines carrying passengers and cargo account for nearly 10 percent of transportation energy use. Many of the policies already examined in this chapter, such as transportation fuel taxes and vehicle efficiency standards, could be applied to trucks and conceivably to aircraft. Indeed, Congress has required the development of fuel efficiency standards for trucks, and
EPA is likely to institute GHG efficiency standards for these vehicles and perhaps other large transportation vehicles at a future date. Some of the challenges associated with designing and administering vehicle efficiency standards for trucks and aircraft have already been noted. Because of the sensitivity of motor carriers and airlines to fuel costs, higher taxes on diesel and jet fuels appear to hold the greatest potential for prompting reductions in energy use and emissions in these modes. In the absence of such energy pricing, the various incremental measures described below may be helpful in achieving marginal reductions in trucking and aviation energy use and emissions. However, the measures are not likely to spur fundamental changes in the energy use
and emissions patterns of these freight and passenger modes.

23 For more information on these projects and their rationale, see the special issue on congestion pricing in the July–August 2009 TR News (

from p. 167.

from p. 171:

Since each mile per hour increase in speed above 55 mph increases fuel use by more than 1.5 percent, government-mandated use of road speed limiters and aggressive enforcement of speed limits may represent an early means by which public policies can help reduce truck fuel use. Whether such speed limits would be useful would depend on the implications for traffic flow and safety. Nevertheless, this is an area in which early actions could further the goal of reducing transportation energy use and emissions.  There may be other opportunities to increase system energy efficiency. For example, long-haul trucks operating at lower speeds and in longer combinations may function more efficiently and with greater safety in dedicated truck lanes, especially when they travel through transportation corridors with heavy traffic. In deciding on the merits of such infrastructure investments, the implications for transportation system energy use and emissions would deserve attention. Truck operations are already a focus area for state and federal investments in the many advanced technologies and automated systems that make up intelligent transportation
systems (ITS). Compared with building new physical infrastructure, ITS has been viewed as an inexpensive means of increasing highway capacity and operating efficiency. Investments in real-time traffic information, integrated traffic control systems, and automated toll collection, for example, can reduce congestion and make truck operations more energy efficient in the process.

public investments to shift traffic to less
energy-intensive modes
Many of the opportunities discussed above to improve the operating efficiency
of the highway and aviation systems would probably also make these
modes more appealing for passenger and freight service. In this respect,
the improvements could increase the competitive advantage of trucks and
airlines over other modes that are more energy efficient for long-distance
passenger and freight service. The main competitors of airlines for intercity
passengers are cars and light trucks, as well as motor coaches and rail
to a much more limited degree. In these intercity passenger markets, any
improvements to aviation infrastructure and operations could lead to
modal diversion away from driving, which may or may not lead to more
energy-efficient travel. For trucks, however, the main competitor for longdistance
freight hauling is railroads, which are very energy efficient. Thus,
any diversion from rail to trucking could lead to increased energy use on
a systemwide basis. The effect of public highway investments on the competitive
advantage of trucking over rail has been an issue in transportation
investment policy making for decades (TRB 1996).
Ensuring that transportation infrastructure policies do not inadvertently
favor the more energy-intensive modes may require that special
attention be given to opportunities for improving the efficiency of the
entire freight system. For example, railroads and trucks increasingly
share in the movement of some freight, as railroads provide the line-haul
service for intermodal containers and “piggybacked” trailers while trucks
move these containers and trailers locally. To aid in providing such services,
railroads have made significant capital investments in their mainline
capacity and in building support facilities for containers and trailers.
However, in practice, government assistance is often needed to facilitate
these large and complex intermodal projects, since they often require
coordinated improvements to private rail facilities and public waterways
and highways, including local access roads and streets (TRB 2009a).
Even a relatively small diversion of truck freight to rail could have major
implications for railroad capacity and operations. For example, the higher
value commonly moved by truck requires much more timely movement
than is typical for freight moved by rail. Serving this time-sensitive freight
could put more stress on railroads because of the need to dedicate tracks
Policy Options 173
and trains. Hence, railroads have sought government incentives and
assistance in meeting certain capital needs, such as increasing tunnel and
bridge clearances for double-stacked containers and eliminating railroad–
highway grade crossings. A number of public–private funding partnership
programs already exist for such projects, such as credit assistance
programs and private activity bond financing, and railroads have advocated
tax credits to help pay for some capacity-enhancing infrastructure.
Additional government support of this type would probably be required
to accommodate much larger shifts of truck traffic to rail.
Summary Assessment
Six general types of policy approaches are considered in this chapter as
options for reducing transportation’s use of energy and emissions of GHGs:
• Transportation fuel taxes,
• Vehicle efficiency standards,
• Feebates and other financial incentives to motivate interest in efficiency,
• Low-carbon standards for transportation fuels,
• Measures to curb private vehicle use, and
• Measures targeted to the other main passenger and freight modes.
Fuel taxes are a long-standing source of government revenue for the
construction, maintenance, and operation of the nation’s transportation
infrastructure. Raising fuel taxes would generate responses comparable
with those of carbon pricing. The higher-priced fuel would encourage the
use of more energy-efficient vehicles and adoption of more energy-efficient
operating practices. It would also temper demand for energy-intensive
transportation activities. If the tax is structured to favor low-carbon fuels, it
could also assist in lowering the carbon contribution from the transportation
fuel supply. However, there is much uncertainty about how consumers
and businesses would respond to higher fuel prices.
At least among private motorists, there is evidence that responsiveness
to changes in fuel costs may be decreasing as household income and the
value of time rise (favoring faster automobile travel over other modes).
Findings that VMT, in particular, is becoming less sensitive to higher fuel
174 Policy Options for Reducing Energy Use and Greenhouse Gas Emissions from U.S. Transportation
costs suggest that fuel tax increases will need to be high to affect overall
energy demand—rising by $5.00 per gallon to reduce gasoline consumption
on the order of 25 percent over the next two decades. How sustained
higher fuel prices would affect energy use by the other energy-intensive
modes of freight and passenger transportation, trucking and aviation, is
also unclear because of limited experience with such high prices. Nevertheless,
because these modes are highly competitive and sensitive to
costs, they have tended to be responsive to changing energy prices.
A number of practical issues warrant consideration in assessing fuel
taxes as a policy candidate for reducing energy use and GHG emissions.
Perhaps the most important one is the long-standing reluctance of elected
officials at all levels to raise fuel taxes even marginally. To many observers,
this experience suggests that raising fuel taxes substantially to curtail
energy demand and emissions would be a nearly insurmountable challenge.
However, sustained higher fuel taxes would generate substantial
government revenues that could be used to replace other taxes or provide
other government services. Indeed, it is difficult to envision a scenario in
which policy makers could generate public support for higher fuel taxes
without offering a compelling plan for use of the revenues.
At least in recent years, raising vehicle efficiency standards has proved
to be more practical than raising fuel taxes to any substantial degree.
Efficiency standards have long been the principal means by which the
federal government has sought to reduce oil use by cars and light trucks
and, more recently, to control emissions of GHGs. Such standards are
likely to be applied in other transportation modes. Recent increases in
automobile fuel economy standards, coupled with GHG performance
standards, are likely to contribute significantly to stabilizing petroleum
use and emissions from the light-duty vehicle fleet over the next decade
or more. Vehicles with much higher fuel economy will cost less to drive
(in terms of fuel expenses), which may prompt an increase in VMT, especially
if fuel prices do not increase significantly.
If vehicle energy efficiency goes up faster than fuel prices, motorist
demand for energy savings may weaken further, complicating efforts to
raise the efficiency standards over time. Preventing such an outcome may
prove crucial in sustaining public support for efficiency standards. Financial
incentives such as feebate programs may motivate greater interest
Policy Options 175
in energy and emissions efficiency, among both buyers and suppliers of
vehicles and energy. LCFS programs and others that encourage energy
providers to innovate and develop new fuels to diversify the fuel supply
may prove helpful in achieving the much longer-term goal of a fuel supply
having limited impacts on the carbon cycle.
To temper growth in VMT may require policies that work hand-inhand
with energy pricing and vehicle efficiency standards, such as land
use planning and transportation investments that emphasize compact
development and alternative modes of travel. In this area, however, many
of the relevant policy levers are held by local governments.
Coordinating the decisions of the dozens of local governments that
make up each metropolitan area complicates VMT reduction through
these means. Whether incentives for regionwide VMT targets can be created
by the financial and regulatory programs of federal and state government
is now being explored in California. Similar experiments in other
jurisdictions will be vital in assessing whether these policy actions can
have a complementary role in reducing transportation energy use and
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p. 180:

However, limiting growth in petroleum use will not be enough to yield
deep emissions reductions by the middle of the century. To achieve much
more from transportation will likely require not only larger gains in the
energy efficiency of vehicles and their operations but also the emergence
of a more diverse lower-carbon energy supply and changes in how the
transportation system evolves and is used. In other words, increases in
vehicle efficiency will need to be accompanied by other systemic measures
that are economically efficient, acceptable to the public, and capable
of producing reductions in fuel use and emissions that grow over time.

Current policies that regulate vehicles and fuels, such as fuel economy
standards and renewable fuel mandates, seek to reduce transportation
Informing the Choices Ahead 181
petroleum use and associated emissions through changes in the performance
and mix of the products sold by vehicle and energy suppliers. First
adopted in the 1970s, federal regulations requiring automobile manufacturers
to increase vehicle fuel economy have been accepted by consumers,
elected officials, and industry, despite long periods in which the standards
remained unchanged. Three decades later, supplier-targeted regulations,
which now include GHG performance standards for new cars and light
trucks, remain the primary approach by which the federal government
seeks to curb energy use and emissions from the light-duty fleet. Planned
fuel efficiency standards for medium- and heavy-duty trucks and the
recent adoption of renewable fuel standards, which mandate that a certain
percentage of the fuel supply consist of lower-carbon fuels, represent a
continuation of the supplier-focused approach to policy making.
Programs that compel suppliers to make more efficient vehicles and
to diversify the fuel supply may yield even larger savings in energy use
and emissions from the transportation sector. However, supplier mandates
can exploit only some of the opportunities for achieving energy and
emissions savings. For reasons explained in the report, extending vehicle
efficiency standards to the other commercial modes such as trucking and
aviation may be more challenging to administer and require longer time
frames to exert fleetwide influence than experienced in the automotive
sector. Even for cars and light trucks, a plan for continual tightening of
standards could prove difficult to sustain if consumers do not place a high
value on the additional energy and emissions savings that will ensue.
Broader and deeper reductions in transportation petroleum use and
emissions over the longer term will probably require actions that motivate
households and commercial carriers to demand greater savings in fuel
and emissions. They will also necessitate flexibility and innovation on the
part of vehicle and fuel suppliers in responding to regulatory mandates
and consumer demands. Several policy options examined in this report
exemplify approaches that can begin to motivate this combination of
consumer and supplier interest. Efficiency-oriented “feebate” programs,
which increase the price of lower-performing products while reducing the
price of higher-performing products, offer a way to stimulate interest in
efficiency by both users and suppliers of transportation vehicles and fuels.
182 Policy Options for Reducing Energy Use and Greenhouse Gas Emissions from U.S. Transportation
Similarly, provisions allowing suppliers to bank and trade performance
credits when they comply with efficiency and fuel standards can offer an
incentive to firms to innovate in ways that are more economically efficient
and responsive to consumer needs.

p. 206 of 228 in the .pdf

Over the past 40 years, the transportation sector as a whole has made significant progress in reducing its energy use per unit of transportation output. These gains are a result of many factors, including technological advances, changes in the economics of the transportation industry, and public policies and infrastructure investments. Many of these developments, including the role of new technologies, were not even anticipated a decade before they occurred, much less a half century in advance. The history of transportation also contains long periods in which the sector made little progress in reducing its energy demand, such as the period of declining fuel prices in the 1990s. A recognition of this history will help inform the development of energy and emissions policies that are realistic and responsive to changing conditions and circumstances.

Transportation’s future will undoubtedly differ from the projections offered in this report as information, communications, and other technologies advance and as individual preferences and household demographics change. A recent National Research Council report (NRC 2010) on strategies for limiting climate change advised that while policy approaches must be sustained for decades, they must also retain the ability to adapt and respond to changing conditions and technologies and to the uncertainties about climate change risks and mitigation needs. For decades, there have been ample reasons for the public to care a great deal about saving energy in transportation—from the need to improve air quality to concern over the world’s oil supplies. Climate change has added to and elevated this public interest. Although calls for a strategic alignment of public policies to meet these interests are not new, they are becoming more urgent.

NRC. 2010. Limiting the Magnitude of Future Climate Change. National Academies Press, Washington, D.C.
TRB. 2009. Special Report 299: A Transportation Research Program for Mitigating and Adapting to Climate Change and Conserving Energy. Transportation Research Board of the National Academies, Washington, D.C.