What is a “feebate” in the context of emissions and vehicle sales?

In the context of emissions and vehicle sales, a “feebate” refers to a financial mechanism designed to influence consumer behavior towards purchasing more environmentally friendly vehicles. The correct interpretation describes a system where those who buy low-emission vehicles receive a financial incentive, such as a rebate or tax credit. This mechanism encourages consumers to opt for vehicles that produce fewer emissions, thereby contributing to overall reductions in greenhouse gases and promoting cleaner air.

In practice, the feebate system may be structured such that the revenue generated from fees levied on higher-emission vehicles is used to fund the rebates for low-emission vehicle purchases. By creating this economic incentive, the feebate aligns consumer interests with environmental goals, promoting sustainability within the automotive market.

The other options generally do not capture the dual nature of a feebate where financial penalties and incentives are balanced to stimulate environmentally friendly decisions among consumers.