This policy brief is based on Belfer Center paper #2010-02 and an article published in Energy Policy, Vol. 38, No. 3.

Oil security and the threat of climate disruption have focused attention on the transportation sector, which consumes 70% of the oil used in the United States.
This study explores several policy scenarios for reducing oil imports and greenhouse gas emissions from transportation.

Even as the US debates an economy-wide CO2 cap-and-trade policy the transportation sector remains a significant oil security and climate change concern. Transportation alone consumes the majority of the US's imported oil and produces a third of total US Greenhouse-Gas (GHG) emissions. This study examines different sector-specific policy scenarios for reducing GHG emissions and oil consumption in the US transportation sector under economy-wide CO2 prices.

Reducing greenhouse gas emissions from transportation will be a much bigger challenge than conventional wisdom assumes — requiring substantially higher fuel prices combined with more stringent regulation. This paper finds that reducing carbon dioxide emissions from the transportation sector 14% below 2005 levels by 2020 may require gas prices greater than $7/gallon by 2020. It also finds that while relying on subsidies for electric or hybrid vehicles is politically seductive, it is ineffective and extremely expensive.