Suggested Citation:
Holland, Stephen P., Jonathan E. Hughes, Christopher R. Knittel, Nathan C. Parker (2014) Some Inconvenient Truths About Climate Change Policy: The Distributional Impacts of Transportation Policies. The Review of Economics and Statistics

Climate policy has favored costly measures that implicitly or explicitly subsidize low carbon fuels. We simulate four transportation-sector policies: cap & trade (CAT), ethanol subsidies, a renewable fuel standard (RFS), and a low carbon fuel standard. Our simulations confirm that alternatives to CAT are 2.5 to 4 times more costly, but are amenable to adoption due to right-skewed distributions of gains. We analyze voting on the Waxman-Markey (WM) CAT bill. Conditional on a district's CAT gains, a district's RFS gains are negatively correlated with the likelihood of voting for WM. Our analysis supports campaign contributions as a partial mechanism.