. "7 Alternative Approaches to Reducing Fuel Consumption in Medium- and Heavy-Duty Vehicles." Technologies and Approaches to Reducing the Fuel Consumption of Medium- and Heavy-Duty Vehicles. Washington, DC: The National Academies Press, 2010.
The following HTML text is provided to enhance online
readability. Many aspects of typography translate only awkwardly to HTML.
Please use the page image
as the authoritative form to ensure accuracy.
Technologies and Approaches to Reducing the Fuel Consumption of Medium- and Heavy-Duty Vehicles
expected to reduce fuel consumption by 3 to 5 percent. The European truck fleet also uses more aerodynamic fairings, relies more on driver-training for fuel-saving operations, and uses almost exclusively diesel engines, except in the lower range of Class 1. Finally, higher fuel costs would be passed on in the form of higher truck shipping rates, reducing the demand for shipping by truck and the diversion of truck shipments to other modes, particularly rail, leading to additional fuel savings.
A tax affects the incentives associated with all of the elements in the freight transportation system. It provides incentives for technology adoption and operational efficiencies (such as reduced idling, improved driver education, etc.). These actions, in many cases, offer significant fuel savings. In addition, a tax affects the utilization of vehicles already on the road, while fuel consumption standards typically affect only new vehicles and can be implemented only slowly over time as the vehicle fleet transitions to the more fuel-efficient vehicles.
Fuel taxes would contribute toward achieving more efficient outcomes in additional ways. To the degree that demand for transportation is elastic, as discussed in Chapter 6, a fuel tax, by raising the cost of shipping, will tend to lower miles driven, thereby reducing congestion, accidents, and other driving-related negative externalities. Furthermore, increased fuel taxes would augment the highway trust fund, permitting the construction of improved transportation options, or at least offsetting the decline in revenues from reduced fuel consumption by more efficient vehicles.
Most importantly, a fuel tax economizes on the information needed by regulators. Maximizing economic efficiency requires that the marginal cost of reducing fuel consumption be the same for all vehicle manufacturers and be equal to the marginal cost of actions that vehicle operators can take to reduce fuel use. In this way, the low-cost means of reducing fuel consumption are exploited before utilizing higher-cost reduction technologies or techniques. The information needed to find the lowest-cost pattern of fuel consumption reductions places large demands on regulators when the manufacturing cost of a technology varies among manufacturers, the in-use cost varies depending on the specific use, and other measures such as driving and truck-routing procedures exist that can reduce energy consumption. A fuel tax provides incentives for private firms to take action and relies on the individual knowledge and incentives manufacturers and shippers have to reduce costs. The trucking industry is a competitive one, and the committee has found that the companies are very focused on reducing fuel costs, subject to the requirements of delivering the freight or accomplishing the particular work requirements. Furthermore, the industry is highly varied, with trucks utilized in very different tasks from long-haul freight operations to postal delivery to electric utility trucks to trash removal. Given a higher fuel price because of the tax, firms will optimize their operations to realize the greatest fuel savings while still performing the required tasks. Setting standards instead requires that regulators consider, in addition to technology options, the complexity of tasks to be accomplished, the variety of conditions under which trucks will be operated, and the changing uses over the life of the truck. A mandated fuel efficiency standard, rather than a market-based solution such as a tax, has a higher probability of counterproductive unintended consequences because of this complexity.
Finally, a fuel tax is a clear statement of the additional costs being imposed on the truck sector to accomplish societal aims, fostering transparency in the public policy process. In contrast, fuel efficiency standards can often obscure the costs to the public.
Taxes involve setting a price signal and letting industry choose the most efficient means of reducing fuel consumption. In the transportation sector, setting taxes is complicated because all fuels must be appropriately priced to avoid distortions across fuel markets, for example between diesel and gasoline. The response to the tax, however, is uncertain and empirical estimates of elasticities are not precise enough to predict the resultant fuel savings. However, setting standards also involves uncertainties as to fuel savings and operational costs due to indirect effects, as discussed in Chapter 6.
In addition, a fuel tax may not provide sufficient incentive for technology development, particularly given the political difficulties associated with implementing a tax large enough to have significant incentive effects. Last, a fuel tax, while leading to immediate savings from utilization in the existing fleet, will impose costs on the fleet that were not anticipated when the investments in technology and vehicles were put in place and is likely to raise issues of equity. These issues could be accommodated by a scheduled phase-in of taxes.
A variable fuel tax could be used to reduce the volatility in prices faced by trucking firms and manufacturers. For instance, a fuel tax could be implemented in a manner that would provide a price “floor” for fuel. This would reduce uncertainty and allow a clearer signal for investment in fuel-saving technologies. However, such a variable tax would create an uncertainty in the amount of dollars flowing to the highway trust fund, thus jeopardizing federal, state, and local highway construction projects. Last, a fuel tax aimed at reducing fuel consumption of heavy-duty vehicles needs to be considered in light of its impacts on the light-duty vehicle and non-road sectors.