Feebate is a
portmanteau
A portmanteau word, or portmanteau (, ) is a blend of words[externalities
In economics, an externality or external cost is an indirect cost or benefit to an uninvolved third party that arises as an effect of another party's (or parties') activity. Externalities can be considered as unpriced goods involved in either c ...](_blank)
produced by the private expropriation, fraudulent abstraction, or outright destruction of public goods onto those market actors responsible. Originally coined in the 1970s by
Arthur H. Rosenfeld, feebate programs have typically been used to shift buying habits in the transportation and energy sectors.
Examples
California
California is a state in the Western United States, located along the Pacific Coast. With nearly 39.2million residents across a total area of approximately , it is the most populous U.S. state and the 3rd largest by area. It is also the m ...
's proposed "Clean Car Discount" program (AB493-Ruskin) was designed to help reduce the state's
global warming
In common usage, climate change describes global warming—the ongoing increase in global average temperature—and its effects on Earth's climate system. Climate change in a broader sense also includes previous long-term changes to ...
/
greenhouse gas emissions
Greenhouse gas emissions from human activities strengthen the greenhouse effect, contributing to climate change. Most is carbon dioxide from burning fossil fuels: coal, oil, and natural gas. The largest emitters include coal in China and ...
by imposing a fee of up to $2,500 on new, high carbon emitting vehicles (starting with 2011 models), and then rebating the fee to buyers of new
low emission vehicle
A low-emission vehicle is a motor vehicle that emits relatively low levels of motor vehicle emissions. The term may be used in a general sense, but in some countries it is defined in air quality statutes.
Different groups of people ("go greens", " ...
s, thereby theoretically shifting the social cost of the destruction of public goods by global warming onto those who contribute to global warming. This Bill failed to pass.
Supporters point towards what they feel are feebates' tendency to promote personal responsibility by having those responsible for the involuntary expropriation (by means of force and fraud) of public goods from the public—and each and every private individual—by destruction of the environment or other negligent behavior towards private and public property, by having polluters pay for the externalities that they impose upon society. In the case of personal cars, feebates share some of the same aims as
fuel tax
A fuel tax (also known as a petrol, gasoline or gas tax, or as a fuel duty) is an excise tax imposed on the sale of fuel. In most countries the fuel tax is imposed on fuels which are intended for transportation. Fuels used to power agricultural v ...
es,
vehicle registration fee
A vehicle (from la, vehiculum) is a machine that transports people or cargo. Vehicles include wagons, bicycles, motor vehicles (motorcycles, cars, trucks, buses, mobility scooters for disabled people), railed vehicles (trains, trams), water ...
s,
congestion charging, and road pricing.
It is claimed feebates are generally a more efficient way of promoting greater fuel efficiency and other socially-desirable outcomes than traditional taxes or quotas. Fuel taxes create important
price signal
A price signal is information conveyed to consumers and producers, via the prices offered or requested for, and the amount requested or offered of a product or service, which provides a signal to increase or decrease quantity supplied or quantit ...
s that can make consumers aware of the non-internalized costs of fuel consumption (
greenhouse gasses, other pollution)—and raise funds to offset this externality. But retail consumers have very high discount rates, meaning buyers do not take into account the additional cost high gasoline taxes or poor gas mileage when purchasing a car. A feebate internalizes that cost into the initial purchase price, thereby requiring the buyer to prepay for the taking of public and private environmental goods.
Another example of a feebate is proposed in the
Rocky Mountain Institute
RMI (Rocky Mountain Institute) is an organization in the United States co-founded by Amory Lovins dedicated to research, publication, consulting, and lecturing in the field of sustainability, with a focus on profitable innovations for energy an ...
's 2004 publication, "Winning the Oil Endgame".
For each class of car and light truck, a feebate mechanism is used to reward buyers of vehicles that are more fuel efficient than the average vehicle in that class and penalize buyers of less fuel efficient vehicles. This feebate is revenue-neutral, meaning that the amount of money collected through fees (surcharges) equals the amount paid out in rebates.
See also
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Cross subsidization Cross subsidization is the practice of charging higher prices to one type of consumers to artificially lower prices for another group. State trading enterprises with monopoly control over marketing agricultural exports are sometimes alleged to cro ...
*
Ecotax
An environmental tax, ecotax (short for ecological taxation), or green tax is a tax levied on activities which are considered to be harmful to the environment and is intended to promote environmentally friendly activities via economic incentives. ...
*
Green economy
A green economy is an economy that aims at reducing environmental risks and ecological scarcities, and that aims for sustainable development without degrading the environment. It is closely related with ecological economics, but has a more politi ...
*
Pigouvian tax
*
Tax shift Tax shift or Tax swap is a change in taxation that eliminates or reduces one or several taxes and establishes or increases others while keeping the overall revenue the same. The term can refer to desired shifts, such as towards Pigovian taxes (typic ...
References
{{Reflist
External links
Environment Canada-sponsored study on options for feebate programs in Canada
Vehicle taxes