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Marketable Credits for Light-Duty Vehicle Emission Control in California


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Wang, Michael Q., Catherine Kling, Daniel Sperling (1992) Marketable Credits for Light-Duty Vehicle Emission Control in California. Institute of Transportation Studies, University of California, Davis, Presentation Series UCD-ITS-RP-92-02

Presented at the A&WMA 85th Annual Meeting & Exhibition, Kansas City, MO, June 21 - 26, 1992

Recent data indicate that many U.S. areas still fail to meet national ambient air quality standards (NAAQS) for one or more criteria pollutants. In 1990, ninety-six U.S. metropolitan areas violated the federal ambient ozone standard, and forty-one areas violated the standard for carbon monoxide (CO), affecting over 100 million people. The federal Clean Air Act (CAA) Amendments of 1990 established more stringent control measures to further reduce air pollutants in an effort to attain air quality standards.

Motor vehicles emit the following criteria pollutants: hydrocarbon (HC), carbon monoxide (CO), nitrogen oxides (NOx), sulfur oxides (SOx), and particulate matters (PM). Since the beginning of vehicle emission regulation in the late 1960s, extensive efforts have been made to reduce vehicle emissions. Consequently, it is estimated that HC and CO emissions from the transportation sector have been reduced by over 40% during the last twenty years. However, nationwide, motor vehicles still generate 33% of the total volatile organic gas (VOC), 67% of the CO, 41% of the NOx, 4% of the SOx, and 20% of the PM emissions. To attain NAAQS in U.S. urban areas, motor vehicle emissions, as well emissions from stationary sources, must be reduced further. Accordingly, the 1990 CAA enacts more stringent vehicle emission standards, requires clean-burning transportation fuels (alternative fuels and/or reformulated gasoline) to reduce per-mile vehicle emissions, and promotes transportation control measures to reduce VMT (vehicle miles traveled).

Motor vehicle emissions are currently regulated on a per-mile basis. For the purpose of emission regulation, motor vehicles are classified into passenger cars, light-duty trucks (LDTs), and heavy-duty trucks (HDTs). Per-mile emission standards are established for individual vehicle classes. Vehicles within each class must meet the same emission standards. Vehicle manufacturers are responsible for complying with vehicle emission standards. Under the current vehicle emission regulation system, each and every vehicle within a vehicle class must meet the uniform emission standards, regardless of differences in vehicle emission performance and emission control cost among vehicles. Vehicle manufacturers are allowed very little flexibility in meeting uniform emission standards.

Consequently, the current vehicle emission regulation system results in several problems. First, the current system causes unnecessarily high control costs for meeting overall motor vehicle emission reduction goals. Second, the current regulation system may delay vehicle emission reductions, because manufacturers do not have any incentive to actively invest in the research and development of vehicle emission control technologies. Third, within the current regulation system, it is technically difficult to incorporate alternative-fueled vehicles (AFVs) for the purpose of emission reductions. To ensure emission reductions from AFVs under the current regulation system, both emission standards and sales requirements of different types of AFVs are needed. The sales requirement of AFVs means further governmental intervention into manufacturers' sales strategies, as well as into their production strategy (through the current emission regulations).

As increasingly stringent vehicle emission standards are adopted in the future, these problems will become more severe. As an alternative to current regulation, we propose to use a marketable permit system for light-duty vehicle emission control. Such a system would provide manufacturers with flexibility and incentives to meet emission requirements. In this paper, we have designed a marketable permit system applicable to vehicle emission control and we have estimated the cost savings of vehicle emission control through the marketable permit system, relative to the current vehicle emission regulation system.
Air and Waste Management Association, Paper Number 92-117.03

This paper is a summary of the Ph.D. dissertation of Quanlu Wang. Details of literature review, data collection, data analysis, and simulation results are presented in the dissertation (Reference RR-92-03; PubID 897).