Wednesday, August 12, 2009

Mr. Meter on America's "Cash for Clunkers"

If matters of climate, sustainable transportation and careful use of scarce resources are close to your heart, and you happen to be European, you may have some reserves about your country's ecologically billed, and energetically buttressed "Cash for Clunkers" (in more polite Euro language of course) program. Let a couple of Americans energy policy experts help you feel a bit less embarrassed.

Before you dig in, a summary:
Schipper's real concerns in this article published earlier this week in the Washingtom Post are these: First, the CO2 saved come principally because the cars bought under C4C are slightly more fuel economic than others bought. But the CO2 saved over the lifetime of the new car is extremely expensive, hundreds of dollars per tonne. If Americans are whining over cap-and-trade or a carbon tax in the tens of dollars per tonne, why embrace something so much more expensive for the taxpayer. And at the end of the day C4C doesn't fix transport, it only fixes a tiny bit of CO2. Schipper is worried that Americans will now set back and breath a sigh of relief, when the real work lies ahead.

And as to our European friends, the situation is no less (I choose my word) stupid. See the Associated Press piece below summarizing the state of play of C4C in eleven European cities. Stupidity is clearly viral.


When It Comes to Being Green, Cash for Clunkers Is a Lemon

If you think the Cash for Clunkers program is confusing for dealers and buyers, you should try figuring out its impact on fuel use or carbon emissions. Despite the environmental accolades showered on the program, its environmental effects will be negligible.

How much will we save? Not much.

United States Energy Information Administration 's projections put CO2 emissions from gasoline powered vehicles at more than 16,000 million metric tons for 2010 -- 2019. The Obama administration recently proposed tighter fuel economy standards that, when implemented, should reduce emissions by 220 million metric tons, about a 1.3% drop.

Initial data from the Department of Transportation indicate that vehicles purchased under cash for clunkers are 69% more fuel-efficient than the vehicles they have replaced. So, according to our calculations, at best, the program will save about 7 million metric tons of CO2, or 0.04% -- less than two days worth -- of total emissions during that decade. By 2015, most of the clunkers scrapped under the program would have been retired anyway, and the environmental impact of removing them will vanish.

But it does not end there because, unlike clunkers, new cars are fun to drive.

Supporters of the Cash for Clunkers points to the fuel savings that the program is supposed to achieve. Unfortunately, programs that merely substitute older vehicles for newer, higher miles per gallon vehicles do not account for a critical piece of the vehicle emissions puzzle. We are cars are driven more than older cars. On average people drive their new cars and trucks about 25% more than they do with their 10-year-old vehicles. A new vehicles are driven as much as 3 to 5 times farther than genuine clunkers. Thus, new vehicles may have significantly better MPG ratings in the vehicles they replace, but since they are driven more CO2 savings will be further offset by increased use.

And the cars we're buying under the program do not have great mileage.

First the good news. The cars being turned in are bona fide clunkers. They get worse gas mileage than the average 13-year-old car.

But the bad news is that the average miles per gallon of the vehicles being fought under Cash for Clunkers barely beats the average of all vehicles currently sold in the United States. So the main impact of the program is to remove clunkers that were being driven much anyway, while drivers acquire vehicles that they will drive a lot and that are only slightly more fuel-efficient than the average new car. Is that worth $4500?

If the program returns such marginal savings, why do it? One reason is that it appears to be accelerating the sale of cars, although Edmunds, which tracks car-buying trends, reports that many Cash for clunkers buyers just delayed their purchases in anticipation of this bonanza. A better program would have pinned the rewards to a calculation of fuel savings based on the remaining life of the clunker in the miles per gallon of the clunker and the new car the math is simple, but Congress is run by lawyers!

# # #

SOURCES: Energy Information Administration, WRITET, Oak Ridge Transportation Energy Data Book, National Household Transportation Survey, U.S. Dept. of Transportation | GRAPHIC: Lee Schipper, Joel Mehler, Brian Gould, Chris Ganson

SOURCE of original article: Washington Post, undated.

AUTHORS: Lee Schipper, Global Metropolitan Studies, University of California Berkeley, and the Precourt Energy Efficiency Center, Stanford University. Joel Mehler, Stanford University. Brian Gould, GMS. Chris Ganson, WORLD RESOURCES INSTITUTE

Dr. Schipper manages to be simultaneously Senior Scientist with the Global Metropolitan Studies of the University of California Berkeley, and of Precourt Energy Efficiency Center of Stanford University. He has long been a voice calling for more balanced approaches in the world energy policy sector. He has impeccable new mobility qualifications since he has long commuted to work daily by bicycle. Lee leads a jazz quintet which plays on demand and is still remembered for their first international hit recording of “The Phunky Physicist” in Sweden in 1973.


And now, a glance at Europe's 'cash-for-clunkers' programs

By The Associated Press (AP) – 8 Aug. 2009

The popular "cash-for-clunkers" program that has encouraged consumers in Europe and the U.S. to trade in their old cars for newer and more efficient models was born in December 2008 when French President Nicolas Sarkozy unveiled a Euro 26 billion ($37.36 billion) stimulus plan to help the country ward off a recession.

To date, 11 countries in Europe offer similar plans.

* Germany offers Euro 2,500 to buyers of new or almost new cars who own cars that are nine years or older.

* France offers Euro 1,000 to scrap an older car that's at least 10 years old.

* Italy offers Euro 1,500 for a car and Euro 2,500 for a light commercial vehicle for buyers who agree to scrap a car that is at least 10 years old.

* Spain offers Euro 2,000 on a purchase price of up to Euro 30,000; old car must be at least 10 years old.

* Portugal offers Euro 1,250 for scrapping a car that is 8 to 12 years old, or Euro 1,500 for a car that is older than 12 years.

* The Netherlands pays between Euro 750 to Euro 1,750 to scrap a car that is 9, 13 or 19-years-old.

* Austria offers Euro 1,500; car must be at least 12 years old.

* Romania offers Euro 900 to scrap a car that is at least 10 years old but limited the program to just 60,000 units.

* Slovakia offers Euro 1,100 toward a purchase price of up to Euro 18,800.

* Serbia offers Euro 1,000 on any new locally built Fiat Punto if a buyer trades in a 9-year-old car.

Source: Various governments, IHS Global Insight. -

Copyright © 2009 The Associated Press. All rights reserved.

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  1. Cap-and-trade is clearly the better way for saving the climate, but C4C is superb at what it was really meant for--stimulus--and so any emissions reduction, even a modest one, is just a beneficial side-effect. A C4C stimulus is still better environmentally than a road widening stimulus, no?

  2. Lee Schipper, Berkeley CA, USAWednesday, 12 August, 2009

    AUTOS: Consumers quickly losing interest in 'clunkers' program -- report (Tuesday, August 11, 2009)
    Josh Voorhees, E&E reporter

    Consumer interest in the government's "cash for clunkers" program peaked two days after its official kickoff and has been falling quickly since then, a leading automotive sales tracking firm said today.

    According to, interest in the federal program, which pays consumers up to $4,500 to scrap an old car or truck for a new, more fuel-efficient one, hit its highest level July 29. Since then, interest has dropped by 15 percent and could return to pre-launch levels before the end of next week, Edmunds senior analyst Michelle Krebs said in a note accompanying the data.

    Consumer interest in the trade-in program drove the seasonally adjusted annualized rate, or SAAR, for the U.S. industry to 19.8 million vehicles during the final week of July, according to Edmunds. The sales boost brought the full-month SAAR to 11.2 million, the first time above the 10 million threshold in 2009.

    The unexpectedly high interest in the trade-in program left dealers and lawmakers worried that its original $1 billion would be exhausted within days of its launch. At the White House's urging, Congress scrambled to approve an additional $2 billion to keep the program running before lawmakers went home last week for the August work period.

    Krebs said the relatively low original funding level -- which was less than the proposed $4 billion price tag that originally accompanied the program -- was responsible for "creating a Gold Rush mentality where consumers hurried to take advantage before funding ran out."

    The White House estimated that the additional federal cash would keep the program running through September. But with consumer interest falling, Krebs said the cash might last beyond the program's November expiration date.

    "With additional funding now approved, the sense of urgency to participate in the program is gone and the pool of eligible clunker owners who can buy a new vehicles has shrunk," Krebs said. "Interest in the program is fading as fast as the first billion was used up. Quite possibly, some of the extra $2 billion will go untapped."

    The Transportation Department said today that the trade-in program has paid out roughly $1.15 billion.

    Despite the waning interest in the scrappage program, is predicting that auto sales will continue to increase through the rest of the summer as the economy begins to rebound and as more consumers look for deals before the 2010 models arrive in dealer showrooms.


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  3. I think the fundamental misunderstanding here is that Cash For Clunkers isn't a greenhouse/energy program but a jobs that might coincidentally save a little energy. In hindsight, given the very strong consumer participation, it seems likely the MPG standard could have been set higher. But it's worth nothing that the model that sold out the fastest was the Ford Focus. So even if the government didn't get it quite right, the consumers did!


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