Regulation of Passenger Car Diesel Exhaust: Comparative Regulatory Regimes and Proposals for the Future

Beginning in the 1990s, the United States and the European Union imposed limits on emissions from diesel engines in passenger cars. The US and European regimes differ in certain key respects, contributing to two disparate outcomes. In the US, diesel cars went from being dirty and abundant to being clean and rare, constituting a mere 0.6% of the 2010 market. In the European Union, however, diesel cars are both clean and abundant, constituting 53% of the 2010 market. This result has several implications. First, we can examine the impact of the disparate regimes on two relatively comparable car markets to elucidate the impact of individual components of the regimes. Second, the outcome in the EU is “better” than that in the US, and thus certain components of the EU regime suggest possible future policies for the US. Third, the experiences of the US and the EU in regulating diesel may have implications for future US environmental policymaking. The broad conclusions of this analysis are that US standards, at times more stringent than their EU counterparts, may have prevented manufacturers from supplying diesel cars to the US. Above all else, however, differences in fuel prices and fuel taxation between the US and Europe massively impact consumers’ economic incentives to purchase diesel, and are likely the single biggest determinant of demand. Now that diesel technology has advanced to the stage where diesel emissions are as clean as gasoline emissions, the US should pursue policies that would increase its adoption. The primary ways to do so are to lower the cost of diesel fuel relative to gasoline, raise the price of both fuels (to the extent politically feasible), and potentially force US manufacturers to re-enter the diesel market by imposing fuel economy requirements that are unattainable without the use of diesel.