Mr. Lovaas interpreted my earlier comment as reflecting skepticism that cap and trade or carbon taxes would reduce GHG. That is certainly not what I tried to say. Any change that increases the cost of carbon-based fuels or that restricts their supply will reduce consumption of carbon-based fuels and thus the production of man-made GHG gases. I was trying to make the point that the impacts of these policies could very easily be non-linear. I also worry that supporting policies, such as land use controls, may have negative impacts on the economy as well as the quality of our daily lives. Any policy built around a single objective (in this case to reduce GHG) runs the risk of creating side effects that generate their own set of serious problems.

Thanks, Andy, for your excellent post!

But why should politicians remove “politics” from Cap-and-Trade, when it serves the double purpose of raising money and increasing their power?

Many in Congress are not taken in by “Global warming”. Politicians really serious about “saving the planet” would be pushing for non-polluting (nuclear) power.

In Europe, the world’s leading emissions trading scheme commenced in 2005. The first phase of “ETS” ran two years, from 2005 to 2007. The result? Carbon dioxide emissions actually increased some 1.9 percent over that period.

Now, I’m not arguing that they went up due to the program, just that there is no evidence that the program worked to reduce them. And while we can try to address the many defects in the ETS as originally designed, unless and until we can remove all politics from their implementation (not something we as a body politic are particularly adept at – read: farm subsidies), such schemes are probably destined to fail here as well. Every jurisdiction will game the system to ensure its citizens pay the least price for it, following along the lines of what the German Chancellor, Angela Merkel, candidly told the EU late last year when asked about her position going into a summit : "It must not take decisions that would endanger jobs or investments in Germany. . . . I will make sure of that." http: //www.telegraph.co.uk/earth/greenpolitics/3703195/EU-lead-on-climate-change-under-threat.html

But let’s assume we could remove politics from the calculus. After all, we are in a post-partisan era. I still don’t believe that a trading scheme would work to reduce greenhouse gas emissions from transportation. To understand why, it’s helpful to identify the three conditions that are necessary to have an effective cap and trade system. First, the capital assets that are producing the pollutant in question should not be easily movable outside of the physical territory to which the cap applies. Otherwise, the caps could be easily evaded. (Of course, even factories can be moved, but usually at great expense). Second, the operators or users of the asset should have little incentive to change their behavior absent the regulatory requirement to purchase an emissions allowance; if they are already motivated to pollute less because of other market forces, a cap and trade system does little more than increase their costs. Third, there should be cost-effective alternatives to allow the operators to continue producing the goods and services that, presumably, the economy still needs.

In the case of transportation, one quickly sees that none of the prerequisites for a workable cap and trade system is present. I will take aviation as an example, because that is what I know best, but it seems to me that the conclusions are generally true for all modes of transportation. First, and perhaps more so than almost any other industry, aviation relies on mobile assets. The world’s big airlines have fleets comprised of a mix of newer, fuel-efficient aircraft and legacy, less-efficient aircraft. To the extent emissions trading drive up airline operating costs—the avowed goal of some ‘green’ groups—airlines will dedicate their older aircraft (or sell them to other airlines) for use on domestic and international routes where no permits are required or charges are levied. The net result would be to increase ticket prices without necessarily reducing emissions overall; after all, this is a global problem we are facing. (Of course, in today’s economic downturn, airlines are already retiring older aircraft in droves and emissions are falling; the debate, however, assumes that at some point an economic rebound occurs and traffic rises.)

Second, as many of the other commentators such as ATA chief Jim May have ably pointed out, the airlines don’t need any more market incentive to reduce greenhouse gas emissions. Here is the key point: because GHG’s correlate perfectly with fuel consumption, in a brutally competitive business where cost is king, airlines already have every reason in the world to cut their greenhouse gas emissions. That they would do so not to save the planet, but themselves, is beside the point.

Third, there is no alternative to the use of kerosene based fuels for air transportation. Pigs can’t fly, and aircraft can’t run on batteries. Given this fact, adopting a system that penalizes airlines (and their customers) for the continued use of such fuels is really just another way of telling them (and all of us) to fly less, not to fly in a more environmentally friendly way.

Rather than artificially raise the costs of transportation, we should strive to find ways to make it more efficient, and here governments have a large role to play, particularly in aviation where the various air navigation service providers (like the FAA) maintain a monopoly over air traffic management. The fact is, the basic methodology for controlling air traffic has not changed significantly in fifty years and is increasingly inefficient. We still use ground based radars, a system of beacons, analog radio, and human intervention to manage virtually every phase of flight. By many estimates up to 15 % of fuel is wasted on circuitous routings and other aspects of our outmoded ATC system. I would submit that, before we subject air transportation to a cap and trade scheme, the government should get its own house in order.

Public transportation is addressed in Section 841, Greenhouse Gas Emission Reductions Through Transportation Efficiencies, of the Waxman-Markey bill. However, as we all know, the section does not specify sources of funds to achieve these reductions. Considering the impact the transportation sector has on greenhouse gas emissions, the transportation community needs to be active and organized in its support for auction revenues being directed back to the transportation sector -- specifically for the planning and construction of environmentally friendly transportation projects, including public transportation, rail and bicycle and pedestrian infrastructure.

I have concerns that a failure to secure a portion of the revenue produced from cap-and-trade legislation could be more detrimental than we may think. The Highway Trust Fund has serious funding challenges. Despite the laudable efforts of Chairman Oberstar and others, SAFETEA-LU authorization will more than likely be delayed until 2010, and even then there seems to be no appetite for increasing revenues. If we fail to establish some dedicated source of funds, the transportation sector will soon be subject to the annual appropriations process -- a frightening proposition.

APTA released a letter yesterday to Chairman Waxman urging Congress to dedicate "no less than 10 percent of allowance revenues created under a cap-and-trade program to investment in public transportation and other transportation infrastructure that reduces emissions." APTA adds that the current public transportation system saves 4.2 billion gallons of fuel and prevents the emission of 37 million metric tons of carbon per year. Additional investment in public transportation will certainly augment this figure.

Securing revenue for transportation through cap-and-trade will not replace the need for a new authorization bill, but it can and should reduce the need to raise as much additional revenue to make the kinds of investments in transportation infrastructure that are so critical to the future of our economy. And lastly, to comment on the safety debate between my colleagues -- the benefits of public transportation are clear -- studies have shown that using public transportation is 25 times safer than travelling by car.

Deron’s flippancy on the issue highway fatalities typifies the approach of those — such as the people supporting the appalling Waxman-Markey bill — who seek to force us to incur heavy costs now in exchange for hypothetical benefits in the future. This approach is, of course, acceptable in dealing with one’s own costs and benefits, but possibly less so when dealing with those of others.

In choosing vehicles, safety is a factor many take into account. Some prefer to save fuel at the expense of safety. Others give more weight to safety. In my student days, I compromised by choosing an ex-London taxicab. We make our choices and usually have to accept the results.

But is it right for government to bias our choices by forcing vehicle manufacturers to make vehicles less safe than they would be if provided to meet the wishes of the buyers? Deron seems resigned not only to accept the 70,000 lives sacrificed to save fuel in the US since 1975, but also to regard as inevitable the prospects of more of the same.

Could he oblige and advise us how many tons of fossil fuel does the NRDC regard as an acceptable exchange for a fatal accident? And is the NRDC content with the Waxman-Markay treatment of transport safety?

In order to meet GHG reduction targets necessary to prevent the worst consequences of climate change an economy-wide cap must include transportation fuels in a cap, upstream. NRDC describes our preferred policy here. The contribution of the transportation sector to US emissions is significant - it has in recent history both the second largest and fastest growing source - and leaves consumers dependent on foreign oil producers and bound to volatile energy prices. The Waxman and Markey climate proposal not only includes fuels in the cap, but also lays out complementary performance standards and incentives.

The Waxman-Markey cap covers both the upstream emissions associated with fuel production and the downstream emissions from fuel use. Critically, the proposal drives innovation through performance standards. These include: 1) a Low Carbon Fuel Standard (LCFS) that encourages clean, sustainable, and low-carbon fuels 2) Vehicle Performance Standards that improve the fuel efficiency of light and heavy duty vehicles and 3) a Regional Planning Standard, which is designed to reduce GHG pollution from transportation and land-use patterns. The latter is an important addition, as the growth in driving rates or vehicle miles travelled (VMT) has the potential to negate the emissions reductions from improvements in fuel economy and quality.

The Waxman-Markey draft also includes incentives to overcome market barriers and create the next generation of clean-energy vehicles. Waxman-Markey has provisions for 1) Electric Vehicle Infrastructure 2) a large-scale Vehicle Electrification Program 3) Plug-in Drive Manufacturing and 4) the continued operation of EPA's SmartWay Program to promote energy efficient technologies in passenger transport and goods movement.

The key missing piece – and the bill is mute on this issue – is additional investment in fuel-efficient vehicle technology and infrastructure. Coupled with performance-based requirements for deploying these public investments, a climate bill will transform the transportation sector to better compete in an oil- and carbon-constrained 21st century.

Through low-carbon innovation and the increased use of clean technologies these policies will result in the reduction of GHG emissions, contrary to the concern of Richard Mudge. A price signal is necessary but insufficient for reducing the use of fossil fuel in transportation; complementary policies are needed to reduce market barriers to innovative investments in vehicles and infrastructure. As President Obama remarked on Earth Day "we have to create incentives for companies to develop the next generation of clean-energy vehicles -- and for Americans to drive them.

Oh, and I will steer clear of Gabe on the highway since I presume he would be driving an M1 Abrams tank or something equally heavy.

The bottom line is that nobody knows how transportation will be affected by a cap and trade proposal until we know how the emission caps will increase the cost of transportation and the revenue generated by it will be used. Since most estimates indicate a cap and trade scheme would increase the costs of fuel somewhere between $0.30 and $0.40 a gallon, the real question is will this money be reinvested in transportation?

If the answer is yes, then it comes down to where and how those new resources are invested. We must take every opportunity to strike a healthy balance between capacity-enhancing projects that relieve polluting traffic jams and new transit projects designed to cut fuel consumption and road use. We also need to make sure that we don’t undermine the expertise of thousands of transportation officials by moving planning responsibilities out of the U.S. Department of Transportation, as the Waxman-Markey proposal currently considers.

It’s also important to understand that cap and trade schemes will increase the cost of construction for all types of transportation projects. Despite the fact that the construction sector’s equipment emits less than one percent of all manmade greenhouse gasses in this country, cap and trade will inflate the costs of fuel for equipment and prices for concrete, steel, asphalt and most other construction materials. Since we can’t just wish for a cleaner future (we have to build it) we need to ask ourselves if we should make that greener future significantly more expensive.

If, however, the transportation portion of cap and trade revenue isn’t reinvested in the transportation system, then the bottom line is that the entire transportation system will suffer. That is because, if we keep asking commuters and shippers to pay for things that do little or nothing to improve transportation, they are going to feel cheated. If that happens, then there will be virtually zero opportunity to raise the additional revenue needed to repair, improve and green our aging transportation network.

We have an opportunity under Cap and Trade to find a new and effective way to finance the construction of a cleaner, more efficient transportation network. But if we squander that chance, then we’ll simply see more of the same polluting traffic tie ups and unrealized transit dreams we already see too much of now.

When discussing aviation and the environment a couple of facts need to be stated up front. Aviation produces less than 3 percent of the world’s CO2. Aviation has also improved its fuel efficiency without any government intervention by 70 percent over the past four decades.

However, we realize that despite a great track record, civil aviation needs to step up to the plate and do more. That is why we believe a strategy that includes new engine and aircraft technology, satellite-based navigation, aviation bio-fuels research and positive economic incentives is the best way to improve our industry’s environmental performance even further.

A cap and trade approach can only work for aviation if revenue is reinvested so the users ─ the airlines, general aviation, manufacturers and the FAA and NASA  can fund important technologies such as bio fuels and airframe and engine advancements. Reinvestment will allow airlines to buy newer, more efficient equipment and expedite transformation of our air traffic control system to NextGen. These are the game-changing measures that will truly reduce aviation’s contribution to climate change.

Aviation is a strong economic engine, and if not properly structured, a cap and trade regime will only drain needed revenue from the industry and lead to further job loss and a weakened industry. I do not think that is in anyone’s interest.

Finally, Congress and the administration need to take into account what is happening in Europe and other parts of the world. The Kyoto Treaty did not include aviation for a good reason: the International Civil Aviation Organization is the UN body tasked with creating guidelines and frameworks for international aviation. ICAO is currently over a year into special deliberations to come up with a global, consensus framework to reduce international aviation’s carbon output. Because many commercial and private flights emit CO2 over numerous countries in a single flight, piecemeal national and regional systems simply will not work. We do not need to follow Europe’s example, which is creating a patchwork of measures that contradict national sovereignty and are a nightmare to enforce.

Not yet mentioned is the likely effect of vehicle down-sizing on highway fatalities. Safety experts estimate that even the 1975 fuel efficiency standards increased fatalities on US roads by some 2,000 lives a year. "Blood for oil"?

The issue arises not only when heavier vehicles collide with lighter ones: Heavier vehicles are safer in single-vehicle accidents (e.g. when cars run off roads) and also when accidents involving only heavy vehicles are compared with accidents involving only light ones.

Traffic fatalities now exceed one million lives a year worldwide, and ten million serious injuries. Further reductions in vehicle weights are likely to increase this carnage. The Greens are silent about this, as they are about the millions of malaria deaths that DDT could have prevented.

America’s transportation infrastructure is obviously broken and increasing greenhouse gas emissions—and their long-term impact on public health, safety and welfare, and the environment—is one of the major consequences. In recent years we have seen commute times increase dramatically, leaving more and more cars idling in traffic, yet according to the American Public Transportation Association, only 25 percent of Americans have what they consider to be a ‘good’ transit option. And, in the American Society of Civil Engineers’ most recent Report Card for America’s Infrastructure, roads (D-), transit (D) and aviation (D) all received lower grades than in previous reports, while bridges (C) and rail (C-) received the same below average grades.

No matter what direction the path forward may take, the nation’s transportation behavior is going to have to change in multiple ways, shapes and forms. Some of those changes will have to happen directly with the users themselves, some will be broader industry changes. Cap and trade may be a start, but it will not be the sole solution. We didn’t get ourselves into this situation as the result of a single decision, so why should we expect the solution to be anything less than multifaceted?

ASCE supports a solution that includes a number of public and private sector strategies and efforts, like authorizing the allocation—under existing federal infrastructure programs—of revenue from credits for infrastructure projects that will reduce greenhouse gas emissions, as well as establishing clear and reasonable targets and time frames for that reduction and including credits for early action. And of course, we also recommend establishing a comprehensive, long-term infrastructure development and maintenance plan, one that supports sustainable development through a substantial reduction of greenhouse gas emissions and timely adaptation to the effects of climate change, while maintaining and/or enhancing environmental quality.

It can’t all be about credits and timetables though. We cannot forget about encouraging the use of non-greenhouse gas emitting energy-generating sources. Add to that improving the energy efficiency of, and the reduction of emissions from, infrastructure systems over their entire life cycles by making cost-effective use of existing technologies. And of course, we also have to research and begin implementing new technologies and materials to further improve energy efficiency and reduce greenhouse gas emissions. Private investment in such technologies can be stimulated by establishing a market value for emissions over the long term and incorporating additional incentives for the short term development and implementation of such technologies and cost-effective carbon capture and storage.

Certainly, cap and trade will have varying degrees of impact on each mode of transportation, some more serious than others. So will any solution we devise. But, the fact of the matter is that if we don’t find a way to start seriously reducing greenhouse gases the only loser in this scenario will be the American people.

The answer to the modal impacts of a cap and trade system is “it depends.” A cap and trade system should act like a tax increase on carbon and thus on fuel use. My personal preference is for a carbon tax since this will be simpler to understand and, perhaps, less subject to special rules suggested by Congress.

First, the impact depends on the ability of each mode to pass on higher costs to their customers. That is, how price elastic is each mode? This, in turn, varies by type of trip. Vacations and leisure trips will be affected more than business trips. In general group travel should do well – vanpools, carpools, and commercial buses. One would expect public transit to do well, but most transit fares reflect a political process more than shifts in costs.

Second, what time frame are we considering? That is, how easy is it for each mode to implement more efficient engines or ways to operate? I suspect that automobile fuel economy can be improved more aggressively than can that of heavy trucks, rail freight, buses, and passenger rail. More stringent CAFE standards are already in place. Thus, in time, the private passenger car may face relatively limited impacts.

Third, how good are close substitutes? Individuals located near transit lines with excess peak-hour capacity or whose employers permit telecommuting may switch modes. Those located further from a transit operation or whose work requires irregular hours will be more likely to continue to use the private auto.

Finally, will cap and trade stand alone as the only policy tool? Many advocates for reduced greenhouse gas emissions also seek changes in land use or increased use of bio-fuels (generally higher in cost). While cap and trade is generally viewed as equivalent to a tax increase, since it involves physical limits, it could result in short-term supply reductions. Also, a number of states have called for limits on vehicle miles travelled (VMT). This represents policy objectives to punish particular modes, rather than focusing on the direct problem of how to reduce GHG emissions – or how to reduce use of fossil fuels. Many of these other policy tools are likely to have a larger negative impact on the economy than a ‘simple” increase in the price of fuel.

While the Air Transport Association (ATA) and our airlines are strong supporters of improved greenhouse gas (GHG) efficiency and have an exceptional track record to back that up, we have grave concerns about the application of one-size-fits-all cap-and-trade legislation to airlines. Such legislation – including that proposed in the Waxman-Markey Discussion Draft – would operate as an additional tax on aviation, siphoning away the very funds that the airlines need to invest in new aircraft and other advances that have allowed the U.S. airlines to improve their fuel and GHG efficiency by 110 percent since 1978.

The purpose behind “market-based mechanisms” like emissions trading is to use economic regulation to send a “price signal” to motivate behavior not already occurring in the market. But a regulatory price signal is not needed in aviation. Even before the jet fuel price spikes in 2008, fuel already was the airlines’ largest cost center. We have every incentive to minimize our fuel burn and emissions, and have committed to an additional 30 percent fuel efficiency improvement through 2025 and are driving the move to sustainable alternative jet fuel through our Commercial Aviation Alternative Fuels Initiative (CAAFI).

Instead of working against our efforts through punitive economic regulation, Congress should work in support of them. For example, studies show that the much-needed modernization of the nation’s air traffic management (ATM) system would save an additional 10-15 percent in emissions, currently caused by the inefficiencies and limitations of today’s radar-based system. And yet Congress has not authorized full implementation of this important program.

Although cap-and-trade is the wrong answer for aviation, should Congress decide to proceed with such legislation, it should carefully calibrate it to minimize the harm it will cause. For example, Congress should directly provide allowances to the airlines up front, to take into account the airlines’ tremendous fuel efficiency record to date and not interfere with our ability to invest in new aircraft technology and operational innovations. To the extent a cap-and-trade program will include the auctioning of emissions allowances, proceeds from such auctioning should be reinvested into aviation. Further, any such legislation should include sector-specific price relief (commonly referred to as a “safety valve”) that takes into account not only carbon allowance prices, but the prospect for further fuel price spikes. Moreover, because aviation is global, climate change legislation affecting international aviation should be in conformity with principles agreed by the international community at the UN’s International Civil Aviation Organization (ICAO). Within the United States, climate change provisions must be federal in nature; aviation cannot function within a patchwork of rules in different states and regions.

The ATA airlines are committed to Connecting and Protecting Our Planet; we call on Congress and other stakeholders to pursue policies that complement our efforts.

The first and perhaps last consideration is the complexity of the problem. For better or worse, our society, and that includes much of the developing world, has evolved in ways that make the movement of both people and goods key to the existing economic order. One might argue that moving goods in production over vast distances provides direct cost advantages but has significant hidden environmental costs that have, thus far, been unpaid. But unwinding that well-established supply chain is a monumental task with lots of implications for those in the current system. Similarly, the globe's largest industry is travel and tourism. Environmentalists are telling people not to fly due to the carbon footprint. I suspect that the artist in Guatamala or the tour guide in Bangkok sees things quite differently and perceives a direct threat to his or her one shot at economic improvement.

Similarly, grandma might not have been happy to see her kids move cross country but knew that reasonably priced travel would make that separation far more palatable. And the grower of strawberries in California's central valley prospers because the market for the produce is minimally national and perhaps international. Even with compelling reasons for change, these are realities that exist and alteration will have real and monumental effects on people's lives. Like the effects of carbon buildup, these behavioral changes will take generations to achieve.

I very much support efforts to mitigate and/or reverse our cumulative effect on the planet and realize that social and unrest and political instability are looming outcomes of continued profligacy. Unfortunately, they may also be a byproduct of the cure. We would be well asvised to move thoughttfully and deliberately in implementing solutions.

Bill Graves and Bob Poole detail reasonable concerns about implementation of a downstream cap and trade system. I think we all agree that it is the outcomes that are most important. Toward that end, the transportation industry should endeavor as Jim Burnley (sort of) suggests to figure out the best way to reduce its 28% contribution to domestic GHG emissions (presumably by the goals identified by the President in the FY 2010 budget--let's also remember that Senator McCain called for large reductions during the campaign as well).

The legislative process will be a challenging one and ideas on the best way to implement cap and trade system and possibly a carbon tax can be suggested. In fact, there is no reason why the system for transportation cannot be unique -- a cap and trade system can be applied to industrial processes and a carbon tax to transportation (for example). We should also remember that it is the light duty vehicles (cars and trucks) that are 60% of transportation's share. Dramatic progress can be made by converting the automobile fleet and incentivizing higher MPG in vehicles.

Greg Principato's point about aviation is correct: great progress has been made and decisions on engine standards will not be made domestically. The real challenge for aviation, however notwithstanding the recent drop in traffic, is that long-term growth projections could overwhelm the efficiency gains. Air traffic modernization would help, but is not the sole answer. Therefore, costs may go up and air carriers will have to utilize their fleets in different ways--much as they have with the rise in jet fuel.

We should remember that many studies and a TRB report document the threat to transportation infrastructure by climate change. Coastal infrastructure including many of the nation's most important airports are at risk with even a modest rise in sea levels. While DOE Secretary Chu has recently put geo-engineering on the table as a way to help protect assets, those measures have a cost as well. In sum, transportation is vital to our society, is part of a very severe problem, and needs to be part of the solution. We are better off if we help shape what policymakers legislate and regulate.

Steve Van Beek

If done properly a cap-and-trade system would benefit transportation builders and users of every mode.

Making it more costly to emit carbon pollution will push people to find carbon neutral modes of transportation. Not only will this increase the demand for energy efficient mass transit and for fuel efficient cars, it will focus urgency on improving our transportation network to eliminate waste caused by insufficient capacity.

The American Society of Civil Engineers estimates that “Americans spend 4.2 billion hours a year stuck in traffic at a cost of $78.2 billion.” That’s a lot of wasted time and money but it is also a lot carbon emission that harms our environment. Building America’s roads will reduce the amount of time and money lost to traffic while reducing carbon emissions and increasing vehicle fuel efficiency.

A cap-and-trade system will highlight some of the transportation deficiencies that stand in the way of a greener country. For example, Americans are increasingly looking for mass-transit alternatives but the American Public Transportation Association estimates that half of Americans are without access. Cap-and-trade will further show that we need to build America’s mass-transit and other transportation basics to keep up with a changing economy and user demand.

Finally, a cap-and-trade system can and should help close the transportation funding gap. Revenues from cap-and-trade should be directed to the highway trust fund or some similar source of investment dedicated to building America’s transportation system.

The trucking industry has a deep commitment to our country, delivering nearly 100 percent of all consumer goods and 69 percent of all freight tonnage. This is a responsibility that begins by presenting freight shippers with strong transportation options that are not only environmentally friendly, but also economically sound.

Trucking companies respond to the fluctuating demand for goods movement, resulting in irregular movements which seamlessly cross jurisdictional boundaries. While a cap-and-trade program continues to be the primary mechanism being discussed to promote carbon reductions, such an approach is more effectively applied to stationary sources and not extremely diversified mobile sources such as trucking.

Actively seeking to improve emissions standards and reduce greenhouse gases through new vehicle technologies and more stringent operating policies provides a far more sustainable solution than simply relying on a mechanism for reducing carbon emissions. Under our nation’s current fuel economy standards, implementing the recommendations by ATA’s Sustainability Task Force will reduce fuel consumption by 86 billion gallons and CO2 emissions by 900 million tons for all vehicles over the next 10 years. Setting more stringent fuel economy regulations, as recommended by ATA, will provide an even greater ability to reduce carbon emissions. The program’s goal of reducing the industry’s carbon footprint also addresses the economic need to reduce fuel consumption and gain greater energy independence for our country.

We must also consider increasing the federal fuel tax to help fund the expansion of highway infrastructure. Each year traffic congestion costs the U.S. economy $78 billion in the form of 4.2 billion "lost hours" and 2.9 billion gallons of wasted fuel. If key congestion bottlenecks were eliminated, the trucking industry alone could save 4.1 billion gallons of fuel over 10 years, and 45.2 million tons of CO2 emissions. Increasing the fuel tax is a critical carbon-reducing strategy, so long as the revenue collected from the tax is dedicated solely to highway infrastructure projects.

A cap-and-trade regulatory approach will economically affect trucking fleets by increasing fuel costs and we’re extremely concerned that increased energy costs under a cap-and-trade approach will significantly impair the ability of trucking companies to stay in business. We’re also concerned that a cap-and-trade program will further drive up the price of our equipment due to the increased costs of energy-intensive materials such as steel.

Increasing these costs sets up financial hurdles and if they’re too high to overcome, it will quash the ability of companies to grow and even continue to survive. Inhibiting the ability of the nation’s fleets to keep up with business and consumer demands for products will impede the movement of freight and stifle the very core of the nation’s economy. Without trucks, America stops. Throughout the trucking industry we believe these possibilities remain very real under a cap-and-trade program.

According to the U.S. Department of Transportation, nearly 580,000 interstate motor carriers operate across the country. Given this large number, establishing company-specific carbon caps and accounting for greenhouse gas emissions would be impractical, exceptionally difficult, and an extremely onerous burden on the 96 percent of the nation's trucking companies categorized as small businesses.

Reducing Carbon Cost-Effectively

The idea of using market mechanisms such as cap-and-trade or a carbon tax is a good one, in principle. Instead of government attempting to micromanage all sources of carbon emissions—and inevitably attempting to pick winners and losers—the market approach is to put a price on carbon and allow competitive market forces to sort out the least-cost way to reduce the output of carbon throughout our economy.

Alas, that simple and efficient approach seems increasingly unlikely to be implemented. Congress and the Administration are moving steadily toward a version of cap-and-trade that combines the worst of micromanagement and pork-barrel politics. If implemented, it would make this country poorer while reshaping transportation in undesirable ways.

For evidence, take a look at the cap-and-trade bill introduced recently by Reps. Ed Markey and Henry Waxman. Its 648 pages spell out in excruciating detail an enormous number of regulations, subsidies, and other interventions. Instead of letting the market sort things out via trading of emission allowances, the bill would also try to micro-manage everything, on the assumption that Congress “just knows” that certain outcomes are the right ones. That regulatory complexity is an open invitation to interest groups to lobby for changes, and gain access for their pleas via campaign contributions, etc. Adding to this pressure is the issue of how many emission allowances will be handed out for free, and to which carbon emitters. This kind of cap-and-trade approach offers more opportunities for congressional fund-raising than the U.S. tax code—and that’s really saying something.

As Steve van Beek points out, an upstream cap-and-trade system would be far simpler and could, in principle, be designed to substitute for the massive micromanagement approach proposed by Markey and Waxman. But that still leaves open the possibility of horse-trading among energy producers for free allowances at the starting point. Far cleaner would be a straightforward carbon tax, with the same rate applying to all emitters from day one—no exemptions. A recent report from the Congressional Research Service (Feb. 23, 2009) details the advantage of that approach.

Because either a carbon tax or a cap-and-trade system would likely impose huge costs on U.S. households (due to the increased cost of energy), the best use of the revenues would be to rebate them entirely to households. The relatively higher prices for some kinds of energy would still cause changes in behavior, as individuals and businesses shifted their energy uses to minimize their costs, but the blow to the economy from lost purchasing power would be offset by per-household rebates.

Finally, whatever approach is taken to reducing the carbon-intensity of the US economy, it’s vital that we pay attention to the cost-effectiveness of various control measures. Both the Intergovernmental Panel on Climate Change and the well-respected McKinsey study (December 2007) use $50/ton as a benchmark for cost-effective measures. McKinsey found that CO2 emissions could be drastically reduced by 2030 by using only “low-hanging fruit” measures costing no more than $50/ton. In surface transportation, a forthcoming Reason Foundation study will assess about a dozen proposed CO2-reduction proposals against this standard. You may be surprised at how few pass this test.

Cap and trade, as envisioned by the Obama Administration and Congressmen Waxman and Markey, will do grave damage to all transportation sectors. While the Administration proposed a 14% reduction in greenhouse gas levels by 2020 from 2005, the Waxman/Markey draft bill mandates a 20% reduction, going to a 42% reduction by 2030.

Cap and trade really is cap and tax, and, yes, it's a floating carbon tax. Since the emissions caps are hard, the psuedo market created by government edict has to yield prices that force various sectors of our economy to reduce emissions by the required amount. Transportation is accused of being responsible for 30% of greenhouse gas emissions, so it will have to alter its activities to generate at least 30% of the required reductions. Presumably, if that isn't occurring, then the government agency controlling the "market" in emission allowances will manipulate the rules to force further reductions.

Thus, the prices of transportation that are in any way carbon fueled will be forced sharply upwards over relatively short periods of time. That is precisely the point of such a system. Cap and trade cannot repeal the laws of supply and demand in the real world, so demand for transportation services will be suppressed, unless and until carbon is no longer a significant transportation fuel.

The Waxman/Markey bill contains another dagger pointed at the heart of the maritime, railroad and trucking industries: carbon tariffs. To combat what is being styled "carbon leakage" (i.e., production moves to countries that don't similiarly reduce emissions), the bill would give the President standby authority to impose tariffs based on the carbon content of imported goods. Thus, if China and India stick to their current positions that they won't impede their economic growth by agreeing to such reductions in emissions, imports from those countries will be penalized accordingly. I haven't yet seen an explanation of how this is permissible under GATT.

Finally, if such a massive carbon tax ($650 billion to $1.9 trillion over ten years) is imposed, I can't imagine a political scenario that also results in increases in direct fuel taxes dedicated to the Highway Trust Fund. While proponents of cap and trade have suggested a variety of ways to spend this massive influx of revenue, virtually none of them have endorsed depositing to the Highway Trust Fund the revenues generated by transportation activities. While there is an overwhelming consensus that we need to invest heavily in the renewal and expansion of our transportation infrastructure, we seem to be headed toward a scenario in which carbon taxes ultimately paid by transportation users are diverted to nontransportation uses.

Airports recognize that aviation’s contribution to climate change is an important issue that can only be tackled through the joint cooperation of the entire industry at a global level. While airports are not opposed to the concept of a cap-and-trade system, we do believe it must be global in scope and recognize the industry’s existing accomplishments to reduce greenhouse gas emissions.

A cap-and-trade system, however, must be viewed as only one part of a comprehensive solution that includes other measures to reduce greenhouse gas emissions such as airport infrastructure improvements, a modernized air traffic system, and technology to improve aircraft fuel efficiency. Any revenues generated from the imposition of cap-and-trade or any other system on the transportation sector should be returned to the industry to help further those other measures.

Airports cannot control the aviation industry’s largest contributor to its carbon footprint - aircraft. Still, they have worked to identify where they can play a role in helping to reducing aircraft emissions, often through the development of greenhouse gas emissions inventories. The recently-released Airport Cooperative Research Program methodology for conducting such inventories provides a useful tool for airports working to identify greenhouse gas emission reduction opportunities.

While airports contribute only a small fraction of transportation’s greenhouse gas emissions, they have already taken a proactive role in reducing those emissions through such measures as reducing their energy usage, converting to low emission vehicles, and recycling. In fact, in February, Airports Council International- North America members adopted a comprehensive slate of goals that will further the industry’s commitment to reducing its environmental impacts, including several goals related to climate change.

The American Bus Association has no official policy on cap & trade regime for reducing greenhouse gases (GHG). But the status of motorcoaches as the undisputed greenest way to travel make would make buses the winners in such a hypothetical scenario.

Motorcoaches are always the most eco-friendly mode of transportation choice. But don’t take our word for it. Look what scientists and academics have said about the role of buses in reducing our carbon footprints, cutting energy use and saving fuel.

The Union of Concerned Scientists, an activist group known for its environmental advocacy, recently released a report titled “Getting There Greener: The Guide To Your Lower Carbon Vacation” in which they recommended going by bus. “A couple traveling on a motorcoach will generate nearly 50 percent less global warming pollution than they would driving a hybrid car,” the scientists concurred.

A recently updated study from DePaul University found that more bus travel cuts CO2. “The growth of new bus operators … over the past year has reduced the carbon dioxide emissions by an estimated 36,000 tons,” DePaul researchers reported, citing “… the proportional shift in travel from less fuel-efficient modes” to more efficient bus travel.

Motorcoaches lead every other travel mode in terms of their fuel efficiency on a per-passenger basis, averaging more than 200 passenger miles per gallon, according to an updated study by MJ Bradley & Associates, “Updated Comparison of Energy Use & Emissions From Different Transportation Modes,” which looked at 14 travel modes.

Independent scientific and academic third parties are corroborating that buses are the greenest way to travel. Motorcoaches are part of America's energy solution.

Find out more about how independent bus operators -- who run everything from charter & tour services to scheduled intercity service -- are the greenest way to go by logging on to http://www.buses.org.

Great question. The honest answer is that we do not know. Cap and trade has been used effectively to address acid rain in the U.S. and is a work in progress in the European Union. The former, while successful, has a limited scope compared to an economy-wide cap and trade system to address climate policy. The latter has gone through a bit of an evolution that is worth understanding more thoroughly.

Matt Rose is concerned about one particular model--a downstream cap and trade system imposed on transportation users. An alternative is an upstream cap and trade regime that would focus on a much more limited set of refiners and/or energy producers and could operate more similar to a carbon tax for downstream transportation users (albeit an indirect as opposed to a direct tax). Modal impacts would presumably range from those that are highly dependent on carbon intensive fuels (high) to those less dependent (low). Because costs would change, passenger and goods movements would both be significantly impacted (just look at the impacts when gas hit $4 a gallon).

2007 data document that transportation produces approximately 28% of GHG emissions, second only to the industrial sector. Given the President's appointments, FY2010 budget and his policy pronouncements, as well as the focus of the House Energy and Commerce Committee, the prospect of a cap and trade system is a real one that needs to be understood by the sector and each of the modes so improvements can be made to accommodate the realities of our sector as the proposals work their way through the legislative process.

EPA's proposed regulatory finding that GHG emissions pose a potential threat to public health under the Clean Air Act gives the Administration a potential regulatory tool to wield if Congress is incapable of acting on cap and trade, or another alternative, this year. The Administration would obviously like to show progress when they meet with the other 190 nations to negotiate a post-2012 climate regime to replace the Kyoto Protocol.

The issue should be thought of in two stages: the first is transition, which is the next ten years 2010-2020). Here the President has called for a 14% reduction in 2005 emissions by 2020--the hope with a cap and trade system is that it would introduce incentives to encourage a shift to available alternatives and innovations to develop cleaner energy fuels and vehicles. The second is conversion, which covers the period between 2020 and 2050. By 2050, the President--reflecting what is expected to be a more aggressive goal to be set in the Copenhagen round of climate negotiations--has set a goal of an 83% reduction in 2005 emissions. This would be a wholesale shift in how transportation and the rest of the U.S. economy is fueled.

The politics and economics of this issue are quite complex and our industry is only beginning to recognize and understand the issue. It is imperative over the next few months that transportation leaders pay at least as much as attention to this issue as they are the surface and aviation authorizations. The playing field is vastly different and is made up of players who are not nearly as familiar with transportation as are the congressional and industry players on authorizations.

One additional thought: aviation and maritime are divided between domestic moves which are part of U.S. policy (and would fall under a national target) and international moves which are "bunkered" and are part of a process directed by the International Civil Aviation Organization and the International Maritime Organization. That decision, and how a U.S. cap and trade system would "plug-in" to an international system, will be part of the Copehagen deliberations.

Steve Van Beek

Virtually any mechanism for reducing carbon emissions (without allowing for the development of enabling technology) will have a severe impact on the U.S. economy and thus transportation as an industry. Beyond that, I am concerned that anyone would try to apply a cap and trade system to the transportation sector. It is virtually impossible to comprehend how such a system could be equitably applied to the many tens of millions of mobile sources in this Nation. If despite the cost we really want to consider reducing carbon emissions from transportation, then instead of cap and trade we need to seriously look at a carbon tax or fuel based tax.

While customers, suppliers and different modes of transportation would have to fight for position under cap and trade, a carbon tax approach would allow the market to find the most efficient and effective solution. Under a carbon tax, raising fuel costs will encourage shippers to find the most efficient transportation mix to move their goods, with the ultimate result of reducing carbon emissions.