Vehicle Efficiency Incentives

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Vehicle Efficiency Incentives

• Transportation Working Group Meeting
• 19 December 2003
• Prepared by Harold Ward
• Based on work by Will Space and Nick Bianco
• Center for Environmental Studies
• Brown University

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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

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Goals for RI VEI Program

• NE Gov. and EC Prem. goal for 2020 is 90 of 1990
  emissions
• Assess by taxable sales of gasoline
• Requires reduction of 2002 sales of gasoline by
  17
• Meeting this goal will reduce tax revenues from
  gasoline sales (as will any vehicle efficiency
  measures).

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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. 26 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.
• Expected to give an adequate financial cushion

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Comparison Smaller Cars
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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?
• Caps on fees and/or rebates?
• Fees for unrated vehicles?
• What VMT in 2020?
• Others?