What is greener than a VMT tax? The case for an indexed energy user fee to finance us surface transportation

Charging highway users per mile has been proposed as a replacement for the US motor fuel tax. A miles traveled user fee, however, does not encourage energy efficiency in vehicle design, purchase and operation, as would a user fee levied on all forms of commercial energy used for transportation and indexed to the average efficiency of vehicles on the road. An indexed roadway user toll on energy would induce two to four times as much reduction in greenhouse gas emissions and petroleum use as a pure mileage fee. However, it is not a substitute for pricing greenhouse gas emissions and would make only a small but useful contribution to reducing petroleum dependence. An indexed energy user fee cannot adequately address the problems of traffic congestion and heavy vehicle cost responsibility but it could be a component of a system of financing surface transportation that would eventually also include time and place specific monitoring of miles traveled for congestion pricing, externality charges and heavy vehicle user fees.

► An alternative to direct vehicle miles traveled user fees in the US is a user fee on all commercial energy used for transportation, without exceptions, indexed to inflation and to the average energy efficiency of vehicle travel. ► The chief advantage of an indexed road user toll on energy is that it provides a market signal to encourage energy efficiency improvement while offering the same incentive to reduce VMT as a VMT user fee producing the same amount of revenue; the result is approximately three times the impact on GHG emissions and energy use. ► The indexed energy tax will not solve traffic congestion problems nor adequately address the cost responsibility of heavy vehicles.