Feebate
Encyclopedia
"Feebate" is a portmanteau of "fee" and "rebate". In general, a feebate program is a self-financing system of fees and rebates that are used to shift the costs of externalities produced by the private expropriation, fraudulent abstraction, or outright destruction of public goods onto those market actors responsible for the taking of the public goods in question. Originally coined in the 1990s, feebate programs have typically been used to shift buying habits in the transportation and energy sectors.
For example, California's proposed "Clean Car Discount" program (AB493-Ruskin) is designed to help reduce the state's global warming
/greenhouse gas emissions by imposing a fee of up to $2,500 on new, high carbon emitting vehicles (starts with 2011 models), and then rebating the fee to buyers of new low emission vehicle
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
es, vehicle registration fees, congestion charging, and road pricing
.
Detractors view feebates as unnatural intrusion into the free market by the state
that can have broad, unpredicted and undesirable consequences.
Supporters claim 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
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.
Supporters also claim feebates are more efficient than quotas and standards such as CAFÉ
. Standards have effectively improved the efficiency and performance in a wide variety of products, including passenger vehicles. But feebates are a more economically efficient, promote even better performance (as opposed to just beating standards), and are less “gameable” or dependent on politics. Some might argue that a government could create marketing programs and incentives for rideshare, but as governments are so reliant on sales taxes from automobiles, there is no money for the government in carpool or rideshare. In a time when governments have increasing debt and spending, feebates allow the public to encourage responsible environmental stewardship and require that the theft of public and private property through environmental destruction does not go without consequences.
Another example of a feebate is proposed in the Rocky Mountain Institute
’s 2004 publication, “Winning the Oil Endgame”.(http://www.oilendgame.com) 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.
For example, California's proposed "Clean Car Discount" program (AB493-Ruskin) is designed to help reduce the state's global warming
Global warming
Global warming refers to the rising average temperature of Earth's atmosphere and oceans and its projected continuation. In the last 100 years, Earth's average surface temperature increased by about with about two thirds of the increase occurring over just the last three decades...
/greenhouse gas emissions by imposing a fee of up to $2,500 on new, high carbon emitting vehicles (starts with 2011 models), and then rebating the fee to buyers of new low emission vehicle
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 statues....
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
Externality
In economics, an externality is a cost or benefit, not transmitted through prices, incurred by a party who did not agree to the action causing the cost or benefit...
that they impose upon society. In the case of personal cars, feebates share some of the same aims as fuel tax
Fuel tax
A fuel tax 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...
es, vehicle registration fees, congestion charging, and road pricing
Road pricing
Road pricing is an economic concept regarding the various direct charges applied for the use of roads. The road charges includes fuel taxes, licence fees, parking taxes, tolls, and congestion charges, including those which may vary by time of day, by the specific road, or by the specific vehicle...
.
Detractors view feebates as unnatural intrusion into the free market by the state
Sovereign state
A sovereign state, or simply, state, is a state with a defined territory on which it exercises internal and external sovereignty, a permanent population, a government, and the capacity to enter into relations with other sovereign states. It is also normally understood to be a state which is neither...
that can have broad, unpredicted and undesirable consequences.
Supporters claim 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
Price signal
A price signal is a message sent to consumers and producers in the form of a price charged for a commodity; this is seen as indicating a signal for producers to increase supplies and/or consumers to reduce demand.- Free price system :...
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.
Supporters also claim feebates are more efficient than quotas and standards such as CAFÉ
Café
A café , also spelled cafe, in most countries refers to an establishment which focuses on serving coffee, like an American coffeehouse. In the United States, it may refer to an informal restaurant, offering a range of hot meals and made-to-order sandwiches...
. Standards have effectively improved the efficiency and performance in a wide variety of products, including passenger vehicles. But feebates are a more economically efficient, promote even better performance (as opposed to just beating standards), and are less “gameable” or dependent on politics. Some might argue that a government could create marketing programs and incentives for rideshare, but as governments are so reliant on sales taxes from automobiles, there is no money for the government in carpool or rideshare. In a time when governments have increasing debt and spending, feebates allow the public to encourage responsible environmental stewardship and require that the theft of public and private property through environmental destruction does not go without consequences.
Another example of a feebate is proposed in the Rocky Mountain Institute
Rocky Mountain Institute
Rocky Mountain Institute is an organization in the United States dedicated to research, publication, consulting, and lecturing in the general field of sustainability, with a special focus on profitable innovations for energy and resource efficiency. RMI was established in 1982 and has grown into a...
’s 2004 publication, “Winning the Oil Endgame”.(http://www.oilendgame.com) 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
- Green tax shift
- "Natural Capitalism" pg. 93. Paul Hawken, Amory Lovins, and L. Hunter Lovins