Feebates: A Key to Breaking U.S. Oil Addiction

The policy brief proposes a 'feebate' system—where inefficient vehicles are surcharged and efficient ones are rebated—to overcome consumer discounting of long-term fuel savings. It outlines design recommendations from an RMI-hosted expert forum, including size-neutrality and manufacturer-level implementation. The brief cites France's 'bonus-malus' program as a successful example that significantly reduced new vehicle CO2 emissions, while noting that a U.S. version should prioritize technological innovation across all vehicle sizes rather than just shifting buyers to smaller cars.

• Feebates address the primary barrier to efficient vehicle adoption by reflecting the life-cycle value of efficiency in the sticker price, countering the high implicit real discount rates of consumers (up to 60-plus percent per year) who often ignore long-term fuel savings.
• RMI's design recommendations for a U.S. feebate include using fuel efficiency or GHG metrics, maintaining size-neutrality to avoid forcing consumers into smaller cars, implementing the program at the manufacturer level to ensure revenue neutrality, and adjusting the 'pivot point' annually to incentivize continuous innovation.
• France's 'bonus-malus' feebate program significantly reduced carbon emissions in new light-duty vehicles; the annual emissions decrease more than tripled from an average of 2.25 grams of CO2 per kilometer per year (1995-2007) to 8 grams per kilometer during the first two years of the program.
• The French program's success was partly driven by a shift toward smaller vehicles, with the market share of economy cars increasing from 44 percent in 2007 to 57 percent in 2009, a result RMI suggests avoiding in the U.S. through a size-neutral design.

APA

Cohen, B., & Lowe, C. (2010). Feebates: A Key to Breaking U.S. Oil Addiction. RMI. https://rmi.org/resources/feebates-key-breaking-u-s-oil-addiction/

Chicago

Cohen, Bennett, and Cory Lowe. Feebates: A Key to Breaking U.S. Oil Addiction. RMI, 2010. https://rmi.org/resources/feebates-key-breaking-u-s-oil-addiction/.

Wikipedia

{{cite report |last1=Cohen |first1=Bennett |last2=Lowe |first2=Cory |title=Feebates: A Key to Breaking U.S. Oil Addiction |publisher=RMI |date=20 August 2010 |url=https://rmi.org/resources/feebates-key-breaking-u-s-oil-addiction/ |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{cohen2010feebates, author = {Cohen, Bennett and Lowe, Cory}, title = {{Feebates: A Key to Breaking U.S. Oil Addiction}}, institution = {RMI}, year = {2010}, month = aug, url = {https://rmi.org/resources/feebates-key-breaking-u-s-oil-addiction/}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }