Toward Integration of Vehicle and Fuel Regulation

Governments around the world are attempting to reduce greenhouse gas (GHG) emissions with distinct fuel and vehicle policies. As alternative powertrains and fuels are introduced, vehicle-fuel interactions become more intense and policy design and effectiveness become more problematic. These interactions are analyzed for fuel providers complying with California's Low Carbon Fuel Standard program and automakers complying with the Pavley vehicle GHG emission standards. It is found that each program could significantly affect industry compliance in the other program once both programs are implemented. This analysis, in turn, indicates that continuing coevolving adjustments will be needed to ensure that rules directed at vehicle manufacturers and fuel providers result in the most cost-effective and efficient achievement of GHG and energy goals. Specific suggestions are offered for updating and upgrading the two regulatory programs. Although the findings are specific to California, they are also broadly generalizable since many countries (including the European Union and the United States) are moving toward similar regulatory regimes.