The abundance and low cost of petroleum over the past 150 years has enabled rapid economic growth and extraordinary mobility advancements. But dependence on petroleum fuels also has large downsides, including dependence on insecure supplies, volatile prices causing high economic costs, polluted and unhealthy air, climate change, and increasing threats to local environments as production moves into more fragile areas.

The transition to low-carbon alternative transportation fuels is becoming more urgent. But their introduction is inhibited by a long list of market conditions and failures. These include sunk investments and technology lock-in by the automotive and energy industries, other forms of technological and market inertia impeding investments in deployment and R&D, cartel pricing, and the failure of markets to assign a price to greenhouse gas (GHG) emissions. Various policies might be adopted to overcome these market conditions and barriers, ranging from pure market instruments such as carbon taxes to prescriptive mandates and voluntary actions. Each has different advantages and disadvantages. Some are easier to implement administratively, some are more economically efficient, and some are more effective in accelerating investments. None is perfect.