Vehicle and Fuel Fees and Feebates

Along with performance standards, fees on fuel and inefficient new vehicles are among the best policies for reducing emissions from on-road vehicles, which make up 71 percent of emissions from the global transportation sector.1 Both fuel and vehicle fees have been widely used in the past, generating revenues for infrastructure projects such as road construction and public transit. With careful government investment of these revenues—targeting improvements such as urban mobility measures, efficiency, and research and development (R&D) for new clean energy and efficiency technologies—it is possible to magnify their impact and accelerate the transition to a zero-carbon future. Vehicle and fuel fees and feebates can provide about 1 percent of the reductions required in a two-degree warming scenario (Figure 7-1).