Developing a California Feebate Program to Support Transition to Zero Emission Vehicles

Research Team: Alan Jenn (lead), Daniel Sperling

UC Campus(es): UC Davis

Problem Statement: The tightening of Corporate Average Fuel Economy (CAFE), greenhouse gas emission, and zero emission standards for light duty vehicles are becoming increasingly stringent. As these standards are tightened, they are getting out of alignment with market forces and price signals, especially with low gasoline prices. At the same time, California faces challenges to continually fund the Clean Vehicle Rebate Project (CVRP), which provides incentives for customers purchasing electric vehicles in California. In 2016, funding for the CVRP ran out. While the program eventually received renewed funding, its future remains uncertain, particularly as higher volumes of electric vehicles are adopted. One solution to both challenges is the feebate: a program that levies a fee against high-carbon vehicles and provides a rebate for low-carbon vehicles. A feebate aligns pricing signals with the regulations, and for the CVRP it provides a sustainable source of continuous funding for low-carbon vehicles.

Project Description: This project builds upon current work at the Institute of Transportation Studies at UC Davis to design and analyze a California feebate program. Researchers have performed a comprehensive review of feebate studies and developed a model to understand the effects of a feebate program in California. The model incorporates a number of design options of a feebate program, including rate structures, choice of pivot points (i.e., when a fee switches to a rebate), segmentation (i.e., dividing the feebate into multiple vehicle categories), and implementation choices. In addition, the model is able to investigate the effects a feebate may have on affected stakeholders using market data of vehicles sales in California. This includes affordability for lower income car buyers across all available vehicle classes and car manufacturers (i.e., which vehicles are affected and consequently how different manufacturers have vehicles that have fees levied against them or rebates provided for them).

Status: Completed

Budget: $80,000

Policy Brief(s):