Impacts of pending federal greenhouse gas legislation on the Texas transportation sector.

Boske, Leigh B.; Woodward, James T. · 2010 · ROSA P / Southwest Region University Transportation Center (U.S.)

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Summary

This 2010 study by Boske and Woodward assesses the potential economic impacts of pending federal greenhouse gas (GHG) legislation on the Texas transportation sector. Motivated by the passage of the American Clean Energy and Security Act in the U.S. House of Representatives and growing international pressure to mitigate climate change, the paper addresses the need to evaluate how national carbon reduction policies would affect a state heavily reliant on fossil fuels. Texas, which leads the nation in petroleum consumption and possesses a vast multimodal transportation network, has historically opposed mandatory carbon controls due to its carbon-intensive energy industry and concerns that such regulations would elevate fuel prices and hinder residential and commercial activities. The authors analyze various policy instruments for addressing fossil fuel emission externalities, including command-and-control regulation, cap-and-trade programs, and carbon taxes. The study argues that while cap-and-trade is suitable for the electricity sector, it is less applicable to transportation due to the distributed nature of mobile emission sources and the difficulty of quantifying emissions at the vehicle tailpipe. Consequently, the paper identifies a carbon tax levied on upstream refiners as the most promising market-based alternative for reducing carbon emissions within the transportation sector. The analysis focuses on the financial implications of such a tax on both residential vehicular activity and commercial operations, including railroad and trucking freight, within Texas. Key findings indicate that comprehensive climate legislation would impose disparate financial impacts on Texas stakeholders. Because Texas consumes nearly 50 percent more petroleum than the second-highest state, California, a carbon tax would significantly increase fuel costs, thereby raising expenses for transportation-dependent residential and commercial activities. The paper highlights that while the electricity sector accounts for approximately 40 percent of U.S. carbon emissions and is easier to regulate through point-source controls, the transportation sector accounts for roughly one-third of all GHG emissions. The study suggests that constraining these mobile sources requires different policy mechanisms than those used for stationary power plants. Furthermore, the authors note that Texas business leaders and lawmakers have consistently voiced disapproval of national carbon controls, driven by the state’s dominant role in the fossil-fuel-based energy industry. The significance of this research lies in its articulation of the economic trade-offs associated with federal climate policy in a major energy-producing state. The authors conclude by suggesting ways energy and environmental policymakers can build consensus within Texas to address carbon externalities. They argue that understanding the specific financial costs and potential investment opportunities arising from a clearer regulatory landscape is essential for stakeholders. The study underscores that while Texas opposes mandatory national controls, the inevitability of federal action necessitates a strategic approach to mitigate economic disruption and foster sustainable transportation practices within the Lone Star State.

Key finding

A carbon tax levied upon upstream refiners is identified as the most promising market-based alternative to reduce carbon emissions within the United States's transportation sector.

Methodology

review

Provenance

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• regulatory evaluation