Rep. Jared Huffman (D-CA) introduced a bill (H.R. 309) that would abolish the 1986 gas tax and replace it with a carbon tax on all highway transportation fuels. With funding for the Highway Trust Fund (HTF) set to expire in May and gas prices at a five-year low, lawmakers are finding the idea of a gas tax hike more palatable than in previous years. Recently, Senators Hatch (R-UT), Inhofe (R-OK) and Thune (R-SD) described the gas tax as a “user fee,” reflecting shifting attitudes about the gas tax among lawmakers.  H.R. 309, the “Gas Tax Replacement Act of 2015,” would remove the per-gallon tax and instead tax fuel refiners and importers “$50 per metric ton of total life-cycle emissions of carbon dioxide … [and] any other greenhouse gas determined on a ratio of the amount of such other greenhouse gas per metric ton” in both fossil-sourced fuels and methanol, ethanol, and biodiesel. Rep. Huffman claims the switch would make the HFT solvent, as well as spur innovation in renewable technology.

The gas tax, set at 18.3 cents a gallon for gasoline and 24.3 cents a gallon for diesel, funds the majority of the revenue for the Highway Trust Fund (HTF). The HFT in turn provides the bulk of federal dollars for surface transportation infrastructure; the American Society of Civil Engineers most recently graded roads in the United States at a D level.  The per-gallon fee has not been raised since 1993, and coupled with decreasing miles travelled and increasing fuel efficiency, the HTF is expected to be insolvent by May. If no action is taken, HFT will have a funding gap of $20 billion by 2023. Lawmakers have passed creative and somewhat contentious solutions in the past (such as pension smoothing), and Rep. Huffman’s bill is similar to language contained in a bill he floated last December.

According to the bill, the Environmental Protection Agency (EPA) would measure the life-cycle emissions of fuels, meaning the “emissions from all activities included in the production, transport, storage, and use of a fuel, including land use changes, means of resource extraction and production, transportation systems and leakages.” For biofuels, this includes emissions and/or carbon sequestration as well as impacts to land from the growing of biofuel crops. In his press release for the bill, Rep. Huffman’s office notes that California’s Air Resources Board (CARB) already conducts such “well-to-wheels” fuels assessments as part of their low carbon fuel standard. However, California’s method of measuring life-cycle emissions is not without its detractors.

U.S. ethanol producers claim that the California Low-Carbon Fuel Standard unfairly penalizes their product through a hefty indirect-land use (ILUC) penalty.  In California, each fuel type is assigned a carbon intensity (CI) score that is measured in grams of carbon dioxide (CO2) equivalent per megajoule (g/mj), and California Air Resources Board measures CI based on both direct and indirect emissions.  In the past five years, considerable debate and science has been dedicated to understanding the complicated science of indirect emissions. Currently, California is reassessing their ILUC calculation, and Oregon regulators did not include an ILUC penalty in their newly adopted low-carbon fuel standard. 

The EPA also conducts a carbon intensity calculation for fuels, as mandated by the Renewable Fuel Standard (RFS). Scientists at the Argonne National Lab are tasked with modelling the carbon intensity of transportation fuels, including biofuels. Since 2008, they have found decreasing energy use and increased outputs and efficiency at ethanol plants.  While these improvements have been incorporated into the model built by Argonne, the updated model has not yet been adopted by EPA or state regulators.  The result has been a distortion of the effects of ethanol production on land use and the environment, with ethanol production and use subsequently being labelled as bad as or worse than gasoline from a greenhouse gas perspective, because the more accurate, updated model has not been used. 

Rep. Huffman’s proposal of regulating fuels based on carbon intensity would be another step towards addressing the emissions from mobile sources, and would bring policy makers one step closer to regulating greenhouse gas emissions systems-wide, and not simply from the power sector.  While it may be unlikely that this bill will be the ultimate Highway Trust Fund fix, it raises important questions about how carbon intensity is modelled, the underlying science, and the importance of using the most up-to-date models available.  While regulating fuels from a carbon standpoint may seem like blue sky thinking today, it seems only a matter of time before greenhouse gases are regulated.  Therefore, it’s critically important to get right the science and modelling of emissions from transportation fuels.


For more information see: 

Issue Brief: Federal Funding for U.S. Transit and Roadway Infrastructure, EESI 

Gas Tax Hike Looking More Palatable to Republicans, National Journal 

Emission Accomplished: Jared Huffman proposes novel gas-tax bill, 

2013 Report Card for America’s Infrastructure, ASCE