STUDY: Cash For Clunkers not exactly a bargain, emissions reduction costs 10x more than carbon credits
The Cash For Clunkers (C.A.R.S.) program has been a big success. No question there. But one of the stated reasons for the program is to reduce emissions. Getting low-mpg vehicles off the road in favor of ones that are more fuel efficient is a good idea, but a new report by UC Davis says that the cost to reduce CO2 via C.A.R.S. is about ten times as high as it would be to lower them using carbon credits. The university calculated that a credit for a ton of CO2 in the U.S. would cost about $28/ton (in Europe, the price is closer to $20/ton), whereas the "best-case calculation" of the cost of the clunkers rebate is $237 per ton of CO2. The "more likely" scenario puts the cost to eliminate a ton of CO2 using C.A.R.S. was over $500. UC Davis transportation economist Christopher Knittel, who authored the study, said he didn't factor in any of C.A.R.S.'s economic benefits; it just tried to calculate the cost of the CO2. You can download his paper, titled "The Implied Cost of Carbon Dioxide Under the Cash for Clunkers Program," here (PDF).[Source: UC Davis]
PRESS RELEASE:
'Clunkers' Program Is Expensive Way to Cut Carbon Emissions
August 13, 2009
New UC Davis estimates say the federal government's Cash for Clunkers program is paying at least 10 times the "sticker price" to reduce emissions of the greenhouse gas carbon dioxide.
While carbon credits are projected to sell in the U.S. for about $28 per ton (today's price in Europe was $20), even the best-case calculation of the cost of the clunkers rebate is $237 per ton, said UC Davis transportation economist Christopher Knittel.
"When burned, a gallon of gasoline creates roughly 20 pounds of carbon dioxide. I combined that known value with an average rebate of $4,200 and a range of assumptions about the fuel economy of the new vehicles purchased and how long the clunkers would have been on the road if not for the program," Knittel said. "I even assumed drivers didn't change their habits, although some analysts have suggested that the owners of new vehicles will drive more than they would have with their old cars.
"In the end, the lowest cost to remove one ton of carbon from the environment was $237. More likely scenarios produced a cost of more than $500 per ton, even when we accounted for reductions in pollutants other than greenhouse gases. That suggests the Cash for Clunkers program is an expensive way to reduce carbon."
Knittel did not analyze the program's other key objectives: stimulating the economy and providing relief for automobile manufacturers.
Knittel is an associate professor and chancellor's fellow in the UC Davis Department of Economics, a faculty associate at the UC Davis Institute of Transportation Studies, and the policy and business strategy leader of the Sustainable Transportation Energy Pathways Program at UC Davis.
His analysis, titled "The Implied Cost of Carbon Dioxide Under the Cash for Clunkers Program," was published online today (Aug. 13) by the University of California Energy Institute. It was funded by the Energy Institute and the Institute of Transportation Studies.
Reader Comments (Page 1 of 2)
ioda006 7:47PM (8/16/2009)
Outrageously high cost as well as being incredibly wasteful.
The 'economic benefits' are completely not true. It's a prime example of the broken window fallacy: http://en.wikipedia.org/wiki/Parable_of_the_broken_window
Economics aside, I'm surprised more green folks aren't outraged by this program. It's insulting for the government to try and push this on us under the guise of being an "environmentally sound" program.
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Ray 9:19PM (8/16/2009)
The law of unintended consequences is cooler. Look they threw the dealers and finance institutions a bone. The trickle down theory is applied here also.
I have never felt sorry for car dealers and we all know what the financial institutions have been doing recently so yes I am not a big fan of CARS.
The upside is consumer benefits.
In this case the government was the little boy who broke the window.
Nozferat 1:35PM (8/17/2009)
What you SHOULD BE outraged about is that responsible people driving efficient cars aren't being rewarded...but the irresponsible douchebags are.
jpm 10:15PM (8/16/2009)
People in the media call it successful just because everyone is going out and trading their car. But is that the definition of success? Maybe to car dealers and manufactures (mostly), but not a significant impact to C02 emissions or the adoption of truly low emission vehicles. Just more WASTEFUL government spending. This program should have come 5 years from now when there are plug in hybrids, EVs, or hydrogen fuel cell (long shot) cars on the roads.
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Ray 11:16PM (8/16/2009)
Agreed it would have been much better 5 years from now for the reasons you mentioned. The economy will probably be better than today so the need for it will have decreased. Unless it truly was implemented to reduce co2 and not to a tiny degree stimulate the economy.
oldraven 10:25PM (8/16/2009)
If I never hear the term 'Carbon Credits' again, it'll be too soon.
Anyone who buys into Gore's dream currency (it's a currency, people) is as gullible as they come. If you want polluters to reduce, fine them. Don't give them a way to PAY someone for some bogus Carbon Credit so they can get away with polluting just as much as always, on the promise that someone in a foreign country can plant a tree, .... someday..... maybe. Only a very rich man or a politician, .... or BOTH, would come up with this, and only the biggest dupes on earth would support it.
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Ghen 9:12AM (8/17/2009)
Absolutely. The reason carbon credits are so cheap is because they're worthless compared to real environmental impact reduction.
nrb 11:10AM (8/17/2009)
Paying someone to plant a tree in a third world company, where that same person cut down a tree, isn't even carbon neutral (new tree has to grow to the size of the old one), much less a positive credit. This whole carbon credit thing just pisses me off.
the4thheat 2:03AM (8/20/2009)
Uhh...the act of the tree growing is actually part of how it sequesters carbon you know.
After all that's why when you burn wood you get carbon...the growing tree takes CO2 from the atmosphere and sequesters it.
Anyways I'm not a fan of carbon credits but for other reasons, but planting new trees does indeed sequester carbon. But as it is it's probably awful for human health.
Murc 11:07PM (8/16/2009)
that headline is horrible.
Of course Cash for Clunkers was a very dumb idea....about as dumb as carbon credits.
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smoggy 1:29AM (8/17/2009)
Cash for clunkers is not a carbon program. If you look at emissions for hydrocarbons, NOX and carbon monoxide, the cost to improve with new technology versus getting the junk off the road is the pay off. Cost numbers used to be [and keeping the current extremely good emissions standards] giving a clunker driver a new Cadillac was cost effective. The article lists carbon credits as approx. $20 per ton. Backing out the chemistry of turning coal carbon to CO2, coal costs would rise by $5-$8. When coal at the mine costs $3, the carbon tax credit [which is really just trading worthless pieces of paper*] doubles or triples energy costs.
* Looking at the energy content of a new car versus maintaining and auditing a good fleet of cars, the cash for clunkers is a "no win" situation. The third world is where the pollution is coming from anyway. The first world at least creates good for our net consumption.
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Jon 3:02AM (8/17/2009)
I don't think CARS can be compared with carbon credits. Carbon credits are intended as a *deterrent* to polluting, meaning that they may not necessarily have any effect whatsoever. CARS on the other hand mandates that people buy a car with a higher MPG, meaning there is at least some guarantee of improvement, however slight.
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CaramelZappa 7:03AM (8/17/2009)
Was CARS ever supposed to be green? Yes, it promotes buying cars with higher mpg, but I thought the real purpose was always just to sell more new cars.
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Murc 7:20PM (8/17/2009)
wrong.
It was 2 fold,
sell new cars & get rid of some gas hogs and replace them with "greener" cars.
It was/is a very stupid program.
Tim 8:24AM (8/17/2009)
Where are all the aggressive, abusive, mean-spirited "progressives" who were singing the praises of this central planning redistribution while attacking any dissenters?
I guess they are too ignorant to understand the law of unintended consequences or too arrogant to even care! After all, it is really about power & money redistribution and punishing the successful.
The progressives are probably out picking pockets of spare “change” this morning.
Spare "change" is all that many have left....
(others have a new car & new debt to the bankers)
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Anti-Tim 5:06PM (8/17/2009)
You were doing so well, making your points, stopping the name calling an baiting. What happened?
Tim 5:11PM (8/17/2009)
I got bored and your comments entertain me.
Nozferat 1:33PM (8/17/2009)
Hmmm...let's see....actually emissions reductions versus "carbon" credits.
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Julius 2:26PM (8/17/2009)
Remember, they're only emissions reductions if the new cars are driven the same or less than the ones traded in. I'd bet that those that could afford a new car most likely had the "clunker" as a secondary vehicle, and the new car will be driven more than the clunker ever was.
I'm not sure anyone can tell in the end how much this program "helped", noting that even CAFE when initially introduced in the 70's failed to significantly reduce overall gasoline consumption in the US even though fleet averages increased significantly...
politicalcalcs 2:02PM (8/17/2009)
As an alternative to digesting an academic paper, here's a tool where you can calculate how long it will take taxpayers to get their money's worth from the "Cash for Clunkers" program where reduced carbon emissions are concerned:
http://politicalcalculations.blogspot.com/2009/08/how-green-is-cash-for-clunkers.html
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