Feebates: A Legislative Option to Encourage Continuous Improvements to Automobile Efficiency

A feebate is an incentive policy that encourages the continuous improvement to automobile fuel economy and greenhouse gas emissions by providing incentives for manufacturers to build more efficient vehicles and rewarding consumers who purchase more efficient vehicles.1 The feebate concept is simple in concept: inefficient vehicles receive a surcharge
(FEE-), and efficient vehicles are granted a rebate (–BATE). The fees on the inefficient vehicles pay for the rebates on the efficient vehicles. Thus, the feebate has the potential to accelerate the production and adoption of more efficient vehicles, ultimately reducing the United States’ transportation fossil fuel consumption.