CIAO DATE: 07/2010
March 2010
Belfer Center for Science and International Affairs, Harvard University
BOTTOM LINES • Harder Than it Looks. Reducing oil consumption and carbon emissions from transportation is a much greater challenge than conventional wisdom assumes. It will require substantially higher fuel prices, ideally in combination with more stringent regulation. • Higher Gasoline Prices Essential. Reducing carbon dioxide (CO2) emissions from the transportation sector 14% below 2005 levels by 2020 may require gas prices greater than $7/gallon by 2020. • Tax Credits Expensive. While relying on subsidies for electric or hybrid vehicles is politically seductive, it is extremely expensive and an ineffective way to significantly reduce greenhouse gas emissions in the near term. • Climate and Economy Not a Zero Sum Game. Aggressive climate change policy need not bring the economy to a halt. Even under high-fuels-tax, high-carbon price scenarios, losses in annual GDP, relative to business-as-usual, are less than 1%, and the economy is still projected to grow at 2.1-3.7% per year assuming a portion of the revenues collected are recycled to taxpayers.
Resource link: Reducing the U.S. Transportation Sector's Oil Consumption and Greenhouse Gas Emissions [PDF] - 324K