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Pollution Control and Energy Conservation: Complements or Antagonists? A Study of Gasoline Taxes and Automobile Fuel Economy

Energy conservation regulations, such as fuel taxes and fuel economy mandates for automobiles, are often assumed to reduce air pollution in lock step with the reduction in fuel consumption. Under the current system of tailpipe emissions regulations in the United States, this is not necessarily true. This paper uses a simple graphical analysis to illustrate the relative impact of fuel taxes and fuel economy standards on pollution levels given the current tailpipe emissions standards and an alternative emissions standard. Under current tailpipe emissions standards, increases in fuel economy would actually raise emissions, and significantly larger fuel taxes would be required to achieve the same level ftollution reduction as under the proposed alternative standard. These results confirm earlier findings that used mathematical and stochastic simulation methods to address this issue.

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Energy Specializations: Energy Efficiency; Energy and the Environment – Climate Change and Greenhouse Gases; Energy and the Environment – Air Emissions (other than greenhouse gases); Energy and the Environment – Policy and Regulation

JEL Codes:
Q55 - Environmental Economics: Technological Innovation
Q54 - Climate; Natural Disasters and Their Management; Global Warming
Q52 - Pollution Control Adoption and Costs; Distributional Effects; Employment Effects
E60 - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook: General

Keywords: Energy planning and policy, gasoline taxes, pollution control, energy conservation, US, CAFÉ

DOI: 10.5547/ISSN0195-6574-EJ-Vol18-No2-2

Published in Volume18, Number 2 of The Quarterly Journal of the IAEE's Energy Economics Education Foundation.