Interactions between federal and state policies for reducing vehicle emissions

Currently, the US federal government sets fuel economy and greenhouse gas standards for passenger vehicles and promotes innovation for electric vehicles, including plug-in and fuel cell vehicles. Many states are considering their own transportation policies that would promote the adoption of electric vehicles. In principle, federal and state policies may interact in important ways, either positively or negatively. We examine federal subsidies for electric vehicles, and find that additional state policies that target only emissions of new vehicles and particularly electric vehicles are unlikely to decrease national greenhouse gas emissions in the short run, primarily due to interactions with federal regulations. We examine the conditions under which state and federal vehicle policies can have positive long-run social benefits, and suggest areas for future research to inform policy choices.