Clunker Program's Environmental Merits Questioned

NPR 23 Aug 09;

The Cash for Clunkers program was touted as a way to stimulate the flat-lining auto industry and to improve the environment. President Obama celebrated the program as a triumph. But while dealers could barely keep up with demand, questions remain about the plan's effect on Mother Earth.

"The program has been wonderful for the economy, but it's been only a middling success for greenhouse gas emissions," Michael Gerrard, director of Columbia Law School's new Center for Climate Change Law tells Weekend Edition host Liane Hansen.

To start, Gerrard says, "there was a provision in the law that automobiles over 25 years old could not be traded in. And that made no sense from an environmental standpoint. It was put there to help the dealers in used auto parts, but it really didn't help the environment at all."

Additionally, "the minimum required difference in the mileage for the old vehicles that were traded in and the new vehicles that were bought was just 4 miles per gallon — which is not much of a difference at all."

To make a bigger impact, the government could have required a greater mileage differential, Gerrard says. "You could have had a minimum of 15 mpg differential, which would have made a big difference."

People did buy cars with better average gas mileage, Gerrard says, "but it is still not a cost-effective way to reduce greenhouse gas emissions."

"There are some calculations that it cost somewhere between $200 and $400 per ton of carbon dioxide reduced, depending on what assumptions are used," he says. "That's way above the market price of carbon and way above many, many other methods of reducing greenhouse gas emissions."

At the Regional Greenhouse Gas Initiative — an American cap-and-trade system that trades in carbon — carbon dioxide is selling for about $3 a ton, Gerrard says. In Europe, it's around $18 or $20. "So the market price of carbon dioxide trading is much, much lower than the cost of reducing a ton of carbon dioxide under the Cash for Clunkers program."

More cost-effective ways to reduce greenhouse gases would include increasing energy efficiency in the industrial sector or in commercial and residential lighting, Gerrard suggests. Or providing combined heat and power systems in commercial and industrial settings. "All would be several orders of magnitude more cost-effective from a fuel-saving and greenhouse perspective than Cash for Clunkers was."

Successful or not, the government is putting the brakes on the popular program. After 8 p.m. Monday, car buyers will no longer be able to trade in their gas-guzzling vehicles for rebates of up to $4,500.