Low-price elasticity in transport sector
A carbon tax wouldn't induce drivers to switch to low-carbon alternative fuels because virtually none are available.
Drivers would not respond to a $25-a-ton tax. A CO2 tax of $25 a ton would raise the price of gasoline only about 20 cents a gallon. This would not induce drivers to switch to low-carbon alternative fuels because virtually none are available. In fact, it would barely reduce their consumption. In the transport sector, a carbon tax would have to be huge to induce change.
By Daniel Sperling, director of the Institute of Transportation Studies at UC Davis, and co-leader of the University of California study of the proposed low-carbon fuel standard.