FOR RELEASE: August 4, 1998
Contact: Blaine P. Friedlander, Jr. Office: (607) 255-3290 E-Mail: [email protected] Compuserve: Bill Steele, 72650,565 http://www.news.cornell.edu
ITHACA, N.Y. -- As economic models go, this one from Cornell University could please most political palates: It offers great mileage and moderate taxes. One of the measures the U.S. Senate will consider when it takes up the environmental changes called for in an international treaty aimed at reducing global warming will be the reduction of greenhouse gas emissions to 7 percent below 1990 levels by the period 2008-2012. Of the six greenhouse gas emissions that are targeted for reduction, carbon dioxide is considered by some researchers to be the main culprit in predicted global temperature increases. The Clinton administration approved the emission-reducing accords, signed by 174 nations, at the Kyoto Climate Change Conference last December in Japan.
Jean Agras, Cornell doctoral graduate in environmental economics, and her adviser Duane Chapman, Cornell professor of environmental economics, have developed a computer model indicating that by using a moderate combination of higher fuel taxes and lower gasoline consumption Washington could make a large contribution to meeting the terms of the accord by reducing U.S. transportation emissions to 93 percent of 1990 levels by 2010.
The researchers say that transportation is a major consideration in any attempt to meet greenhouse gas goals, whether in the United States, other wealthy nations or in poorer countries. Currently, the transportation sector accounts for one-third of total U.S. carbon dioxide emissions. The other two-thirds of the emissions come from industrial, commercial and residential sectors.
Faced with two choices, the researchers say, the United States will either have to triple gasoline taxes to reduce gasoline usage or require vehicle manufacturers to decrease fuel consumption by raising miles-per-gallon (mpg) standards to impossibly high levels.
But Agras and Chapman say their model indicates that the needed reductions can be achieved by using a little of each policy, instead of implementing one or the other exclusively. "Gasoline taxes and increased miles per gallon complement each other, and you need less of each policy," says Agras. "This way less than 50 percent of each policy is necessary, and we get transportation emission reductions through reduced gasoline consumption."
Reducing transportation emissions, she says, will require raising federal gasoline taxes and the congressionally mandated standards for fuel economy that manufacturers are required to meet for passenger cars and light trucks. The standards are known as CAFE, for Corporate Average Fuel Economy.
"Manufacturers can increase miles per gallon, but unless people actually buy these more fuel-efficient cars, it doesn't matter," Agras says. "So if Congress slightly increases gasoline taxes each year, it will encourage people to demand more fuel-efficient cars. At the same time, CAFE also encourages car makers to continue to make passenger cars and light trucks more fuel efficient."
Currently, more than 50 percent of carbon emissions from personal vehicles come from passenger cars. However, Agras's model finds that around 2005, emissions from light trucks and passenger cars will be equal. The CAFE standards for light trucks, a classification that includes sport-utility vehicles, are less-rigorous, and as a result light trucks are less fuel- efficient and more polluting than passenger cars. Agras says that without stricter policies, by 2005 light trucks will be adding more carbon dioxide to the atmosphere than passenger cars.
Today's CAFE standard for new passenger cars is 27.5 mpg, the same level it has been since 1990, and 20.7 mpg for new light trucks. Without increasing gasoline taxes, new passenger cars will have to achieve 56 mpg and light trucks 49 mpg by 2010 in order get the carbon dioxide reductions in the transportation sector, a level of fuel efficiency that might not be technologically feasible.
Federal and state gasoline taxes currently are 41 cents per gallon on average. Without increasing CAFE standards, gasoline will have to be taxed an additional 73 cents per gallon by 2010, in order to reach the Kyoto goal. Agras thinks American drivers will rebel at such high gasoline prices. But Agras' model finds that when both gasoline taxes and CAFE standards are gradually increased in parallel over time, the fuel-efficiency standard needs to grow to only 40 mpg for passenger cars (33 mpg for light trucks), and the additional fuel tax is a much smaller 31 cents a gallon by 2010, increasing by 2.6 cents a gallon each year for 12 years.
"Using both policies together, we can painlessly achieve the appropriate reductions in transportation emissions," says Agras.
Agras and Chapman are in the Department of Agricultural, Resource and Managerial Economics, part of Cornell's New York State College of Agriculture and Life Science.
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