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

This policy brief by RMI advocates for the implementation of 'feebates' in the United States to reduce oil dependence and accelerate the adoption of efficient vehicles. It defines the feebate mechanism, proposes specific design goals based on a 2007 expert forum, and analyzes the success of France's 'bonus-malus' program as a case study.

• A feebate is a policy mechanism where buyers of inefficient vehicles pay a surcharge (a "fee") and buyers of efficient vehicles receive a rebate (a "bate"). This approach addresses the primary obstacle to efficient vehicle adoption by reflecting the life-cycle value of efficiency in the sticker price, countering consumers' high implicit real discount rates which often lead them to ignore long-term fuel savings.
• RMI's recommended design for a U.S. feebate program, developed during a 2007 forum of 27 experts, includes five core goals: using fuel efficiency or GHG emissions as metrics; maintaining size-neutrality to reward efficiency within a chosen vehicle size; implementing the program at the manufacturer level to ensure revenue neutrality and avoid taxpayer funding; adjusting the "pivot point" annually to incentivize continuous innovation; and ensuring compatibility with existing carbon or efficiency standards.
• France's 'bonus-malus' feebate program significantly reduced carbon emissions for new light-duty vehicles. Between 2007 and 2009, the annual emissions decrease tripled from an average of 2.25 grams of CO2 per kilometer per year (1995-2007) to 8 grams per kilometer. Additionally, the market share of efficient 'bonus' vehicles rose from 30 to 56 percent, while inefficient 'malus' vehicles dropped from 24 to 8 percent.
• Unlike RMI's proposed size-neutral model, the French program shifted buyers toward smaller economy cars, with their market share increasing from 44 percent in 2007 to 57 percent in 2009. The French program was also government-administered rather than manufacturer-led, resulting in a taxpayer cost of 214 million in 2007 and 2008.
• Legislative efforts to implement feebates in the U.S. have faced hurdles. A similar 'Drive+' law was vetoed by Governor George Deukmejian in California in 1980. More recently, the Efficient Vehicle Leadership Act, proposed in August 2009 by Senators John Kerry, Jeff Bingaman, and Olympia Snowe, remained stuck in committee.

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} }