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They don’t call economics the dismal science for nothing. Despite the apparent early success of Cash For Clunkers in stimulating auto sales, academic papers studying the effects of government auto incentives on carbon emissions have cast doubt on the program.
A just-released study fromr the University of California’s Center for the Study of Energy Markets finds that Cash for Clunkers likely spends between $237 and $365 for each ton of carbon it keeps out of the atmosphere. That makes CARS at least 10 times less efficient than buying carbon credits or other carbon-reducing measures. The authors of the study gave Cash for Clunkers the benefit of the doubt in terms of the average amount of time each clunker would have stayed on the road if it weren’t replaced, though it is widely believed that many consumers would have likely bought a new car in the near future regardless of the rebate.
“Subsidizing high-mileage cars to reduce carbon emissions is a bit like subsidizing low-calorie foods or low-tar cigarettes in order to reduce obesity or lung cancer. If the amount of cookie consumption was constant, then a lower-calorie cookie would lead to thinner waistlines. ”
Harvard Economist Edward Glaeser
A Canadian study released earlier this month also questions environmental benefits of green car incentives. The University of British Columbia studied a $1,000 provincial sales tax rebate awarded to Canadian drivers who purchase a hybrid. They found that most participants in the program were likely to purchase fuel-efficient vehicles—hybrid or gas-only—regardless of the incentive. While the program is credited with a 31 to 38 percent increase in hybrid market share in Canada, researchers found the cost per carbon ton to be $195 Canadian—or $178 in US dollars.
Harvard economist Edward Glaeser, in a op-ed piece in the Boston Globe, rehashes the argument that replacing gas-guzzlers with fuel-efficient vehicles has little effect on emissions regardless of the cost. Glaeser believes that as fuel efficiency improves, drivers increase use of their cars at the expense of car pools and public transportation. To Glaeser and other advocates of higher gas taxes, the only way to cut emissions is to make driving expensive enough that people avoid it whenever possible.
If the Price is Right
Regardless of the immediate environmental benefits of the CARS program, the program demonstrated that there’s a genuine yearning on the part of the public for more fuel-efficient cars. At a time when gas prices remain relatively low, consumers chose cars that go well above the minimum fuel economy required to qualify for the program.
Under the program, consumers must trade in a car getting 18 mpg or less EPA combined city/highway rating—or SUVs and light trucks that number is 16 mpg. For a mileage improvement of 4 mpg, consumers can receive a voucher from the dealership for $3,500 towards a new car. An improvement of 10 mpg qualifies for a $4,500 voucher. And yet, the Toyota Prius, with a combined average fuel efficiency rating of 50 mpg, was the fourth most popular car purchased under the CARS program.
Perhaps former President Bill Clinton had the right idea when he recently suggested a scrappage program specifically tailored to stimulate the sale of electric vehicles, which will be hitting the market soon. Such a program would help make expensive electric cars accessible to mainstream buyers, and it would also be a boost to General Motors, one of the American car companies Cash for Clunkers was designed help. GM’s Chevy Volt has been trumpeted as the car that could bring the company back to relevancy. Clinton’s suggestion—made in passing at last week’s National Clean Energy Summit in Las Vegas—could take $4,500 off the car’s sticker price for trading in a Clunker for a Volt—in addition to the $7,500 tax credit already offered as an alternative vehicle.
According to Clinton, what holds true for the current Cash for Clunkers program would also work for introducing zero or near-zero emission vehicles. “Americans will bite if you make it economical enough,” said Clinton.