The Congressional Budget Office has an interesting analysis showing that a carbon pricing plan like cap-and-trade would not primarily exert pressure by dissuading people from taking a drive. Which is largely to be expected. Folks tend to wildly overestimate how much of our fossil fuels problem is a result of driving. In part, that's a simple availability bias: The main place where we consciously interface with fossil fuels is at the gas pump, and so we assume that that activity, being carried out countless times a day by endless numbers of people, is responsible for the problem. But it's really not:
Now, that chart slightly understates the role of transportation in carbon emissions, as it also tracks gases like methane which aren't emitted by SUVs, but nevertheless. And of these various emission sources, vehicles are among the least sensitive to carbon pricing. "CBO has estimated that a price of $28 per metric ton of CO2 in 2012 would lead to a reduction of about 10 percent in total U.S. emissions compared with a no-action scenario. Vehicle emissions, though, would remain relatively constant in the short run, and even over time they would decline only by around 2.5 percent — much less than the 10 percent reduction in overall emissions." Indeed, even as carbon pricing is mildly raising the relative price of gas, CAFE standards and consumer choices are going to be pushing towards cars whose increased fuel efficiency is enough to basically wipe out the price hike at the pump. Add in that driving has a heavy cultural and geographical and historical elements, and can only really be lessened with a large increase in alternative transportation infrastructure, and it's hard to see how it cuts down in the near future (Ryan Avent disagrees with this, but the CBO is evaluating a limited universe of legislation here, and so the possible impacts of stringent congestion pricing -- which has not seen much political success -- isn't really part of their analysis).But that doesn't mean cap-and-trade won't be effective. Rather, carbon pricing will force sharp efficiencies in more price-sensitive sectors: Electricity, and construction, and industrial processes and so forth. Efficiencies, in other words, that will be much less obvious, and painful, for consumers than rising gas prices would be.
Now, that chart slightly understates the role of transportation in carbon emissions, as it also tracks gases like methane which aren't emitted by SUVs, but nevertheless. And of these various emission sources, vehicles are among the least sensitive to carbon pricing. "CBO has estimated that a price of $28 per metric ton of CO2 in 2012 would lead to a reduction of about 10 percent in total U.S. emissions compared with a no-action scenario. Vehicle emissions, though, would remain relatively constant in the short run, and even over time they would decline only by around 2.5 percent — much less than the 10 percent reduction in overall emissions." Indeed, even as carbon pricing is mildly raising the relative price of gas, CAFE standards and consumer choices are going to be pushing towards cars whose increased fuel efficiency is enough to basically wipe out the price hike at the pump. Add in that driving has a heavy cultural and geographical and historical elements, and can only really be lessened with a large increase in alternative transportation infrastructure, and it's hard to see how it cuts down in the near future (Ryan Avent disagrees with this, but the CBO is evaluating a limited universe of legislation here, and so the possible impacts of stringent congestion pricing -- which has not seen much political success -- isn't really part of their analysis).But that doesn't mean cap-and-trade won't be effective. Rather, carbon pricing will force sharp efficiencies in more price-sensitive sectors: Electricity, and construction, and industrial processes and so forth. Efficiencies, in other words, that will be much less obvious, and painful, for consumers than rising gas prices would be. 
