Interpreting Tradable Credit Prices in Overlapping Vehicle Regulations

Prices of tradable credits in environmental regulations reveal information about abatement costs. This information guides regulatory assessments and future changes to the regulations. When regulations overlap, however, simple interpretations of credit prices no longer hold. The authors derive formulas for interpreting the value of credit prices for three overlapping regulations for passenger vehicles: corporate average fuel economy (CAFE) standards, greenhouse gas (GHG) standards, and zero emissions vehicle (ZEV) programs. The assessment reveals that the marginal costs of reducing GHGs from conventional gasoline vehicles are virtually equal to the sum of CAFE and GHG credit prices, since each policy regulates emissions in nearly the same way. The authors estimate that these costs range between $40 and $120 per ton of carbon. In contrast, marginal costs of selling one additional ZEV are $9,000 to $20,000, which are higher than the ZEV credit price. This is due to the compliance value of selling a ZEV achieved under the CAFE and GHG programs.

Language

  • English

Media Info

  • Media Type: Digital/other
  • Features: References; Tables;
  • Pagination: 21p

Subject/Index Terms

Filing Info

  • Accession Number: 01743399
  • Record Type: Publication
  • Files: TRIS
  • Created Date: May 18 2020 11:52AM