Mobile Source Air Pollution

1. Mobile Source Air Pollution Benefit from increased control is a public good and therefore, cannot be appropriated exclusively by the new-car purchases.

2. No. of vehicles – role of automobiles in the modern lifestyle – mobile source of pollution • Not possible to tailor make emission rates for local pollution patterns – vehicle may be anywhere in its life • Stationary sources run by professionals & automobiles by amateurs • Without maintenance emission will get worse –each one is miniscule part of the problem – ozone, carbon monoxide & nitrogen monoxide • Producer & user can reduce pollution • Easier to control small no. of producers than a large no. of users

3. Automobiles are durables – new vehicles a small % of total pollution controlled cars replace old vehicles slowly • Pollution cannot be always controlled at production point – as choices made by owners/drivers • Many types of mobiles on road - Changing mix of vehicles affects different type/ amount of emissions • Driving in urban > damage than in rural area • Cluster emissions during peak hours – 2 peaks 2 rush hours • Timing of emission -High concentration dangerous than low – spreading over 24 hour period could help

4. Economics of Mobile-Source Pollution • Vehicles emit an inefficiently high level of pollution - Owners/drivers don’t bear full cost of pollution – inefficiently low cost has 2 sources: A. Implicit subsidies for road transport: many types of social costs • Road construction & maintenance costs • Building & maintaining parking space B. A failure to internalise external costs - externalities • Social costs of accidents • Congestion - time for travel • Pollution inside the car

5. At Vo marginal benefits (dd) = marginal social costs - drivers don’t internalise the cost of their presence when traffic is high – Vp - efficiency loss is ∆ ACD Marginal social cost $ units • Congestion inefficiency Marginal private cost D Demand A C B 0 Vo Vp Traffic volume to road capacity As traffic ↑ the flow ↓ - takes more time to travel – at this point marginal private & marginal social costs begin to diverge – impose the presence on others is the externality

6. Consequences • Perverse incentives due to understated road transport costs – too many vehicles – too many miles driven – too many trips transport energy use high – excessive pollution • Competitive modes suffer from inefficiently low demand – • Most destructive effect of understated transport cost is its effect on land use - low cost - find people residing away from work place & shopping – more transport is inevitable – high density travel corridors

7. Policy towardsMobile Sources • Smog in Southern California, Delhi, Ulaanbaatar, …. • Clean Air Act • Laws in many countries – shift to CNG • In Finland? Other countries? • Car sharing clubs – in Switzerland & Germany – started in 1980s • Emission standards – PUC certificates • 1989: European community of 12 countries imposed emission standards – banned leaded gasoline in 2000

8. Differentiated Regulation • New sources punished by raising their costs –used car more attractive for buyers • New cars cleaner – less & delayed emission – old cars increase consumption of oil • Policy makers need to find a suitable policy • Clean Air Act – same emission standards for all cars – high emissions due to poor maintenance – timing maladjustment • Benefits of repairs are externalities – motorists have little / no incentive to comply with requirements – ∴ enforcement

9. In addition to Inspection & Maintenance programmes, Clean Air Act – amendment of 1990 required to use alternative fuels, that are cleaner - viz. oxygenated fuels in winter & reformulated gasoline round the year • 2 additives widely used: ethanol & methyl Tertiary Butyl ether (MTEB) • Another problem: seepage – contaminating ground water & drinking water

10. Possible Reforms • Use of uniform standard – more than needed in rural area & less than needed in urban area • At production point - emissions controlled – improved cars • Fuel taxes: turning to user – drivers have little incentive to ↓ emissions – to internalise social cost ↑ taxes – these taxes don’t consider when & where emissions occur • Congestion pricing – under consideration in India Singapore: option to buy peak-off car with red licence plate & lower registration taxes - limiting number of new vehicles Bangkok: transport of goods to metro prohibited India: no trucks to metro during restricted time Finland/US: reserved bus lanes – Italy, Oslo….

11. Private toll roads: user’s pay the cost of maintenance of highways rather than shifting that cost to all tax-payers – recover the cost • CAFE studies:1975: more fuel for efficient vehicles • Fleet average! • Parking cash-outs: is it free? Should it be charged? • Feebates: targeted to consumer buying new vehicles – tax for high-emitting, subsidy for low-emitting taxes subsidies • PAYD insurance • Accelerated Retirement Strategies for older polluting vehicles – “cash for clunkers” – vehicles identified through inspection & maintenance programme or remote sensing

12. Increasingly common strategy involves limiting the days a particular vehicle can be on the road – limit the travel miles – can back fire • Mexico: banned each car from being on the road depending on the last 2 digits of the licence plate – in short-run effective – in LR the regulation was not only ineffective but also counterproductive – bought additional car • Beijing, China: even & odd number licence plates – banned half of all private vehicles from the road on week-days – ban heavy trucks form entering city during the day – many city buses run on CNG - rebates of $440 & $880 for cars & trucks for trading for the new

13. Currently… • Current policy: Emissions controlled at point-of-production & at-point-of use - Uniform emissions standards – Gram-per-mile approach in Us & Europe – have achieved but less effective in ↓ aggregate emissions & cost-effective reduction • Little control in highly polluted areas • Mixes success for inspection & maintenance strategies and accelerated retirement schemes – taxies in India – recent agitation: traffic closed for a day – too old is out now – CNG in Delhi • To ensure that the social costs are borne by those making residential & mode-of-travel choices – will move in right direction

14. Important Insights • Belief: tougher laws produce more environmental results: sanctions were so severe that authorities were unwilling to impose them • Belief: simply applying the technical fix can solve the environmental problem - can have unintended effects – MTEB’s effect on ground water has dwarfed its positive effects

15. Future Control • Future of mobile source air pollution – 2 new emphases are emerging : • Encouraging the development & commercialisation of new cleaner automotive techniques • Focus on influencing driver choices – bringing private marginal cost closer to social marginal cost through congestion pricing, PAYD insurance, parking pay-out • Its more than simply controlling emissions – vehicle purchases, driving behaviour, fuel choice & residential and employment choices must be affected – these will transpire only if economic incentives associated with those choices are structured correctly