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Volpe Center Highlights - September 1999

Director's Notes

Director's Notes | Focus | Safety | Mobility | Human and Natural Environment |
Economic Growth and Trade | National Security

On September 22, the Volpe National Transportation Systems Center (Volpe Center) hosted a Department of Transportation (DOT) Seminar on Transportation and Global Climate Change to review recent research on basic issues related to emissions trading and credit for voluntary early action. Speakers included Transportation Deputy Secretary Mortimer L. Downey, Treasury Deputy Assistant Secretary for Economic Policy Robert Cumby, and representatives of Van Ness Feldman, Massachusetts Institute of Technology, the Center for Clean Air Policy, and the Environmental Defense Fund. Approximately 20 participants from key stakeholder groups - including representatives of fuel providers, vehicle manufacturers, vehicle owners and operators, the Department of State, the Commonwealth of Massachusetts, and the State of Illinois discussed areas that may benefit from further study.

This meeting was part of a response to an October 1997 plan proposed by the Administration to address the challenges of climate change. Among other things, the plan called for the use of market-based mechanisms such as emissions trading, and for a means to ensure that companies receive credit for voluntary, early reductions of greenhouse gases to help meet this challenge.

The concept of credit for early emission reductions is relatively new to many transportation interests, as is the concept of emissions trading. On the other hand, many researchers are confident that market-based mechanisms could significantly reduce the cost to society of reducing greenhouse gas emissions. For example, the Administration's analysis of the economic impacts of greenhouse gas reduction predicts that, under an intersectoral and international trading regime, the market price of permits to emit greenhouse gases would likely be equivalent to about 4 to 6 cents per gallon of gasoline - much less expensive than many transportation emission reduction strategies.

Electric utilities in the United States have solid experience with emissions trading, having applied it successfully to the management of sulfur dioxide emissions. This emissions trading program is viewed as a possible model for managing carbon dioxide emissions. The sulfur permit trading program is, however, a domestic program with only one sector. Important issues may arise if and when such a program crosses national and sectoral boundaries. For example, might the emissions trading be handled by upstream fuel suppliers, or downstream fuel users, or perhaps by vehicle manufacturers?

Information gained from this conference will help shape the Department's work in these areas over the next few years, and will be a foundation for future exchanges with the range of stakeholders interested in transportation and global climate change. Later this year, Volpe Center staff will prepare separate white papers on emission trading and credit for voluntary early action.

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