Projecting the fuel efficiency of conventional vehicles: The role of regulations, gasoline taxes and autonomous technical change

Ioannis Tikoudis, Rose Mba Mebiame and Walid Oueslati
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Rose Mba Mebiame: OECD

No 198, OECD Environment Working Papers from OECD Publishing

Abstract: The fuel efficiency of conventional private vehicles is a key input in the design of several economic and environmental policies. Reliable projections of the fuel efficiency variable can improve estimates on the future emission savings from policies promoting vehicle replacement, and on future revenues from fuel taxes. This paper examines the evolution of fuel efficiency using data on cars entering the US market from 1984 to 2020. It uses a series of new indexes for the gasoline cost in OECD countries and the stringency of fuel economy regulations. The paper shows that the effect of fuel prices and taxes is significant and robust. Doubling the user cost of gasoline with a stringent carbon tax will cause an irreversible increase in fuel efficiency by 6-11%. Increasing the stringency of the US CAFE standards by 10% raises average fuel efficiency by 2-3%. The impact of cross-market regulations is ambiguous.

Keywords: CAFE standards; conventional cars; EU regulations; fuel economy; fuel efficiency; fuel taxes; gasoline prices (search for similar items in EconPapers)
JEL-codes: H23 O31 Q48 Q55 R48 (search for similar items in EconPapers)
Date: 2022-09-15
New Economics Papers: this item is included in nep-eff, nep-ene, nep-env and nep-tre
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:oec:envaaa:198-en

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