Cash for Clunkers: A Wildly Expensive Way to Cut Emissions

By Ucilia Wang

The "cash for clunkers" program is wildly popular among consumers and car dealers. Apparently, it is also a wildly expensive way to cut greenhouse gas emissions.

The billion-dollar program could cost taxpayers $237 for each ton of greenhouse gas emissions, said Christopher Knittel, an economics professor at UC Davis, in a research paper (.pdf) (he called it "back of the envelope calculations").

That's only under the best-case scenario and roughly 8.5 times higher than the $28-per-ton estimate in the climate change legislation (Waxman-Markey bill) that the House passed in June. The cost could exceed actually $500 per ton, Knittel said.

Knittel wrote:

While the program is an expensive way to reduce greenhouse gases, it is certainly possible that the stimulus benefits outweigh the added environmental costs. I leave this question for a broader analysis of the program, but note that key legislators have suggested that the environmental gains from the program are large.

The federal government launched the "cash for clunkers" program late last month to boost consumer spending on fuel-efficient cars. Car buyers get up to $4,500 toward buying a new car only if they get rid of their gas guzzlers, most of which have turned out to be American brand SUVs and trucks such as Ford (F) Explorer.

The $1 billion program was so popular that it was running out of money only a few weeks after its launch (see Cash for Clunkers: The Program's Inside History). Last week, Congress approved another $2 billion for the program.

The U.S. Department of Transportation, which administers the program, didn't appear to have considered the environmental cost. It only touted that the initial program would take about 250,000 inefficient cars off the road.

Knittel did some calculations to find out just what all of that money would buy in terms of the emissions reduced from replacing polluting vehicles with cleaner ones.

Each gallon of gasoline produces about 20 pounds of carbon dioxide. Knittel took that number and factored in the government rebate, the fuel economy of the new cars, and the effects of having the clunkers on the road if the program didn't exist.

He also assumed that driving habits wouldn't change after consumers received new cars, though he noted that some analysts believe consumers would in fact drive more given the fuel economy they would gain.

He came up with different savings based on the number of years and the amount of emissions the clunkers would've produced it they weren't taken off the road by the government program.

If the clunker were left on the road longer and therefore produced more pollution, then the cost-per-ton would drop. Knittel's calculations showed that it would cost $333 per ton if the old cars were left on the road for five more years and $556 per ton for three years.

He came up with the $237 per ton estimate, the lowest in his modeling, by factoring in other social and health benefits of getting rid of clunkers.

These benefits would come from reducing the particulate matter, nitrogen oxide and other non-greenhouse gas emissions from the cars. Those emissions are known to cause health and environmental damage as well, and federal and state laws already are in place to regulate those emissions.

Image via kodiax2 / Creative Commons

Comments

[a. palmer jr.:]

I think congress should have waited and applied the $4500 only to electric or other non-petroleum fueled vehicles. But the reason for the cash for clunkers may have been another bailout for automakers, in that case it worked.

Aug 16 08:46 AM

[Loopy:]

Compare to the military budget. Do this with education while you are at it.

Aug 16 10:36 AM

[Kodi:]

Let's face it, CFC is an expensive vote buying program that should have been applied to electric or alternative energy vehicles. Don't forget, that to produce a new vehicle, there are environmental costs as well. Add up the carbon footprint required to produce a new car in steel production, petroleum based plastics, electrical components, tires, paint, commuting workers, shipment of a new vehicle, visiting showrooms, waste produced, etc. It appears that no one considered all the ancillary activities associated with the production of a new product. This whole thing stinks of political pandering that those of us who did not participate, get stuck with the tab.

Additionally, my guess is that those who could truly afford a new car loan, are not the needy, but likely the son or daughter driving the old clunker back and forth to college or work. I see a lot of truly poor people still driving clunkers who are unable to purchase even a worthy used vehicle. So what does our government do, increase personal debt load to satiate a chosen few and increase the prices in the used car market.

My understanding is that pick up trucks have been the major purchase through this program. What kind of incremental improvement is that? It seems to me to truly make an improvement in the environment, the minimum mpg for a new vehicle should be set at 32 mpg.

Aug 16 10:43 AM

[ex GM emp:]

More Bulldung from the academia crowd.

Aug 16 11:07 AM

[john s. gordon:]

to the extent that heavy guzzlers are replaced by featherweight efficiencymobiles, there could be an effect on vehicle injuries.
after recently buying a scion i expected my collision & comp premium to rise compared to my 2000 model bomb but the medical payments part went up too. the actuarial data base used by the insurance company seems to know something.
> jack

Aug 16 11:13 AM

[Truthmeister:]

Our Congressmen aren't going to stand up and loudly proclaim that the CFC program is about reducing the purchase of foreign oil, that might upset our "buddies" in Saudi Arabia and OPEC. But that's what it's about, along with trying to revive the automotive market, not treehugger greenhouse crap.

Aug 16 11:14 AM

[User 465979:]

"Each gallon of gasoline produces about 20 pounds of carbon dioxide."

How do you get 20 pounds of carbon dioxide from burning approximately 6 pounds of gasoline (1 gallon of gasoline equals approximately 6 pounds)?!?!

This article has a number of questionable pronouncements, and that makes its value very limited.

Aug 16 12:17 PM

[ArtfulDodger:]

In my view, after looking back over Obama's statements and writings from before he ran for office, It's as much about his lust to transfer tons of wealth from the productive to the non-productive as anything.

Aug 16 12:47 PM

[sethmcs:]

Go long on clunkers and short greenies.

Aug 16 01:02 PM

[wwcody:]

User 465979 asks "How do you get 20 pounds of carbon dioxide from burning approximately 6 pounds of gasoline...?!?!"

Most of the mass of the combustion products of burning fuel comes from the oxygen, normally provided by air. Since oxygen used in combustion has more mass than either the carbon or hydrogen in fuel and since each atom of carbon or hydrogen winds up with two atoms of oxygen, the mass of the combustion products exceeds by several fold the mass of the fuel. Of course, the total mass of oxygen in air and the carbon and hydrogen in fuel equals the total mass of oxidized carbon and hydrogen in the combustion products.

You might want to identify other pronoucements you think are questionable so your assumptions can be validated.

Here are more details. Gasoline is almost entirely carbon and hydrogen. When burned, most of the carbon atoms should wind up attached to two oxygen atoms each ("carbon dioxide"), with oxygen coming from air, instead of the average of about 2.3 hydrogen atoms they started with ("hydrocarbon"). As oxygen is 16 times heavier than hydrogen, and 33% heavier than carbon, 1 pound of gasoline winds up as about 3.1 pounds of carbon dioxide. So burning 6 pounds of gasoline produces approximately 18.6 pounds of carbon dioxide.

The difference between 18.6 pounds and the 20 pounds noted in the original article is partly the result of using a figure from the low end of the estimates for the mass of gasoline and perhaps for ratios of carbon and hydrogen.

Note that the burning of the hydrogen component of gasoline also produces additional weight of water ("hydrogen dioxide") but we don't yet regard that as a pollutant worth worrying about.

On Aug 16 12:17 PM User 465979 wrote:

> "Each gallon of gasoline produces about 20 pounds of carbon dioxide."
>
>
> How do you get 20 pounds of carbon dioxide from burning approximately
> 6 pounds of gasoline (1 gallon of gasoline equals approximately 6
> pounds)?!?!
>
> This article has a number of questionable pronouncements, and that
> makes its value very limited.

Aug 16 01:34 PM

[soloram:]

I traded a 13 mpg suv for a 25 mpg suv and I removed $25,000.00
from my 401k to pay for it and immediately paid $5,000.00 income tax. I will
probably pay more next April 15th and suspect this is not an
isolated case. I calculate an immediate $500.00 gain for uncle
sam. The folks who are crying the most about this program are
also the folks who caused the financial meltdown that made this
program necessary.

Aug 16 03:47 PM

[car_guy:]

Your understanding is very wrong. The average buyer increased the fuel economy of their vehicle by over 60% and top selling vehicles have been the Ford Focus and Toyota Corolla. To qualify for the $4500 you have to increase mpg by 10 which which is a minimum of 26-28 mpg. Increasing the requirement to 32 mpg eliminates all of the vehicles at 30 mpg combined, including the Corolla and Focus, and leaves only 1 vehicle, the Ford Fusion hybrid, that is manufactured in the US. Eliminates the incentive to preserve remaining jobs at US plants (Toyota, Honda, Hyundai, Ford, GM, Chrysler, Nissan, etc) and destroys the payback in taxes and reduced unemployment comp.


On Aug 16 10:43 AM Kodi wrote:

> Let's face it, CFC is an expensive vote buying program that should
> have been applied to electric or alternative energy vehicles. Don't
> forget, that to produce a new vehicle, there are environmental costs
> as well. Add up the carbon footprint required to produce a new car
> in steel production, petroleum based plastics, electrical components,
> tires, paint, commuting workers, shipment of a new vehicle, visiting
> showrooms, waste produced, etc. It appears that no one considered
> all the ancillary activities associated with the production of a
> new product. This whole thing stinks of political pandering that
> those of us who did not participate, get stuck with the tab. <br/>
>
> Additionally, my guess is that those who could truly afford a new
> car loan, are not the needy, but likely the son or daughter driving
> the old clunker back and forth to college or work. I see a lot
> of truly poor people still driving clunkers who are unable to purchase
> even a worthy used vehicle. So what does our government do, increase
> personal debt load to satiate a chosen few and increase the prices
> in the used car market.
>
> My understanding is that pick up trucks have been the major purchase
> through this program. What kind of incremental improvement is that?
> It seems to me to truly make an improvement in the environment, the
> minimum mpg for a new vehicle should be set at 32 mpg.

Aug 16 07:43 PM

[TinyTim:]

nice image.
Cost for the C4C program should be divided over benefits to environment, energy / foreign oil and car maker stimulus.

I've not seen any napkin or back of envelope pencil whipping covering all three. I suspect only by adding in political "goodwill" does the cost balance.

Aug 16 08:51 PM