161021-1 Report Abstract

Impacts of Pending Federal Greenhouse Gas Legislation on the Texas Transportation Sector

Leigh B. Boske and James T. Woodward, University of Texas at Austin, May 2010, 55 pp. (161021-1)

This 2010 study, funded by the Southwest Region University Transportation Center, assesses current regulatory attempts to mitigate climate change and how such proposed action would impact the Texas transportation sector economically.  Social and political trends suggest the United States may soon join other United Nations Framework Convention on Climate Change (UNFCCC) countries in drafting substantive, national climate change policy.  After providing a brief overview of past and present climate efforts taken both nationally and internationally, this paper explores different economic solutions to address the externalities of fossil fuel emissions.  Alternatives include command-and-control regulation, a carbon tax, and a cap-and-trade program.  Several factors, including the difficulty of quantifying and constraining greenhouse gas emissions downstream at the vehicle tailpipe, suggest a carbon tax levied upon upstream refiners is the most promising market-based alternative to reduce carbon emissions within the United States’s transportation sector.  Texas business leaders and lawmakers have repeatedly voiced their disapproval of mandatory national carbon controls over the past decade.  A crucial factor why much of the Lone Star State’s populace remains opposed to climate change action is Texas leads the nation’s energy industry, which is decidedly fossil-fuel based and therefore carbon intensive.  Prevailing thought is a carbon tax would only elevate fuel prices increasing the cost of residential and commercial activity heavily dependent on motor vehicles.  This paper articulates how greenhouse gas legislation may financially impact transportation within the Lone Star State and concludes with ways energy and environmental policymakers can build consensus within Texas to address the carbon externality.

Keywords: Climate Change, Greenhouse Gas, Carbon Tax, Transportation, Railroad, Truck, Texas

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