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Topic Brief

Funding Options for Low-Carbon Transportation

April 29, 2021
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The federal gas tax is a major source of transportation funding in the United States. Due to improvements in fuel economy and rising construction costs for transportation infrastructure, the purchasing power of this tax has decreased over time. Additionally, as the United States transitions to hybrid and electric vehicles, the gas tax will not be a feasible long-term funding source. Given bold targets for GHG emission reductions and the large share of emissions that come from the transportation sector, we must ensure adequate funding for investment in low-carbon transportation. This topic brief outlines the current system of federal transportation funding, the imminent insolvency of the Highway Trust Fund, and alternative and supplemental funding mechanisms. We explore the funding options cities and states have enacted—from congestion pricing to cap-and-trade programs—and present policymakers with options for re-orienting funding streams to support efficient forms of transportation.

 

 

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Tax Policy Federal Funding Transportation System Efficiency
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