Abstract:Marketable emission permits represent a promising policy tool for addressing greenhouse gas emissions in the transportation sector. Market-based approaches have been applied in the past to limit tailpipe emissions of criteria pollutants. More recently, the California Air Resources Board (CARB) adopted similar regulations to reduce greenhouse gas emissions from motor vehicles. The CARB regulation represents an important step in addressing the problem of greenhouse gas emissions in the transportation sector. However, the implementation of an efficient marketable greenhouse gas emission permit system for vehicles and transportation fuels faces a number of political, economic and technological challenges. These challenges are amplified when one considers the application of a trading system to future technologies such as hydrogen fuel cell vehicles.

Hydrogen fuel cell vehicles represent perhaps the most promising longterm option for reducing greenhouse gas emissions in the transportation sector. Hydrogen can be produced from a wide variety of energy resources, including renewable resources, using a variety of production technologies. A viable greenhouse gas emission permit system must recognize and quantify the emissions characteristics of each of these hydrogen pathways in a way that allows market forces to reinforce desirable technologies. The creation of such a system may help pave the way for the adoption of hydrogen fuel cell vehicles and lead to significant reductions in transportation related greenhouse gas emissions.