New Markets for Credit Trading under US Automobile Greenhouse Gas and Fuel Economy Standards
Crediting provisions are key for reducing the costs of meeting regulations to reduce greenhouse gas emissions and fuel use from the light-duty vehicle fleet in the United States. We assess how well the credit markets are working and discuss options to improve efficiency.
- Manufacturers currently hold a large number of banked credits, which may indicate an attempt to spread costs and ensure compliance with stricter standards in the future.
- Credit trading between companies started slowly with few trades, but it appears to be becoming more robust in recent years.
- There are ways government can facilitate the market, via policies that reduce uncertainty about the price of credits and the stringency of future regulations, for example.
- The two separate rules and credit markets, one for fuel economy and one for GHG emissions complicate compliance for the manufacturers and drive up the cost of meeting the joint goals of reducing oil use and GHG emissions.
Common Resources — May 19, 2015
A Look at New Markets for Credit Trading under US Standards for Automobile Emissions and Fuel Economy
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New Markets under US Vehicle Fuel Efficiency and Greenhouse Gas Standards: Credit Trading
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