The Crooked Dope

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Cash for Clunkers

with 3 comments

Sounds great, right? Appropo to the post preceding this one, it’s amazing how much Democrats can resemble Republicans when special interests wrap their grubby tentacles around them.

Adam Seigal has the definitive post on this:

In short, the bill is promised to target selling 1 million more vehicles before the end of the year and support these three policy priorities:

* Reduce dependence on foreign oil,
* Reduce air pollution, and
* Reduce greenhouse gas emissions.

The bill does this via “cash for clunkers”, vouchers to owners of old vehicles to encourage them to go shopping for a new vehicle and scrap the old one. As an example, when it comes to light passenger vehicles, owners (at least one year registered) of a car rated at less than 18 miles per gallon can receive a $3500 voucher (tax free) for a new car if it gets at least 22 miles per gallon and $4500 if it gets at least 28 mpg.

Why is this a bad bill, on both basic policy and basic analytical reasons?

1. The fuel saving requirements are absurdly low.
2. The actual oil demand reduction per tax dollar invested is absurdly low.
3. The bill, as structured, is overly restrictive in a counter-productive way.
4. There is a basic question as to equity.
5. This is structured poorly, using “mpg” which provides less visibility on impact than the better “gpm” (gallons per mile).

Adam’s full post explains 1-5 in detail and is worth the read.

But I think the critique misses an important point. I emailed the following to Adam after reading his post:

what about the cost of production of the replacement vehicles? Smelting all that steel isn’t all that environmentally friendly, is it? Think about all the diff’t components of a car… from the oil-based plastics, to the environmentally expensive tires, to the mining required to get at the platinum in the catalytic converter…

So if I bought a vehicle 13 months ago that gets 18 miles per gallon, I can trash it for a brand new car that gets 22 mpg? It’s not that I think that will happen all that often under this bill, but it might… For example, are car rental agencies excluded from this bill, or is this a windfall for them?

Even if the bill doesn’t end up incentivising obviously wasteful trade-ins, it is unclear to me whether or not the cost of production was taken into account. From the looks of the rest of Adam’s criticism’s, I’m skeptical.

Jane Hamsher has more.

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Written by crookeddope

June 16, 2009 at 5:19 am

Posted in Uncategorized

3 Responses

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  1. And, as per my response to the email:

    The issue of “embedded energy” is mentioned in my first point.

    Very roughly, from the analysis that I’ve seen, 7 tons of GHG emissions seems a reasonable rule of thumb for the pollution associated with making a new car. (Range is something like 4.5 – 11 tons in various analyses and vs type of car.) The systems’ CO2 for every gallon of gasoline is 25 lbs (about 21 lbs for the direct burning fo the gasoline, up to 25 lbs for the drilling, transport, refining ….). Thus, every 80 gallons saved is 1 ton of reduced CO2. In theory, then, you’ve “paid” for the embedded energy implications after something like 560 gallons of fuel savings.

    Using gallons per 100 miles as a tool, this is rather easy to figure out how fast (in mileage) that this is expected to occur. At 1 gp100m of savings, you hit the embedded energy savings at 56,000 miles or somewhere over 4 years of driving. Sadly, the bill’s structure is such that people will be eligible for $3500 vouchers in situations far less than that.

    While not ‘great’, this is why I suggest 1.5 gp100m as a minimum guidance point. This places the payback/embbeded energy ROI at about 37,000 miles. Still a mediocre three years of average driving, but better. Putting it at 2 gp100m would put this at about a 2 year payback period, which starts to be in the “good” range imo.

    How to get a 2 gp100m savings? If driving a 15 mpg McSUV or car (6.666 gp100m), we’re only talking about a 22 mpg new car (4.54 gp100m). If an 18 mpg (5.555 gp100m), then it would need to be about a 28 mpg vehicle. If moving from a 22 mpg vehicle, the new car will need to be about 39 mpg.

    A Siegel

    June 16, 2009 at 12:06 pm

  2. except that limits the analysis to CO2 emissions. What about the blown-up mountain tops? The heavy metals emitted when all that coal is burned? The ash ponds left behind?

    And that’s just to get the coal used to fire the electric power plants and smelters…

    crookeddope

    June 16, 2009 at 1:03 pm

  3. 60% the cars that are currently donated to charity will now be eligible for a $3500 or $4500 voucher under the cash for clunkers program. Since the tax deduction for donating a car is only $500 or what the car sells charities won’t be able to compete with the program and charitable car donation will end. A better idea is to just change the amount a person can deduct for donating their car back to the book value. That way every car is eligible, the government doesn’t have to spend $4 million of our dollars giving away vouchers and administering a program that is way too convoluted!

    karenc

    June 16, 2009 at 3:28 pm


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