The voices of Tax Policy Center's researchers and staff
Commentors on last week's post on Cash for Clunkers have argued that the newly-expanded program is better than other government subsidies because of its positive environmental effects. So I did a little research and it turns out that the “green” benefits of this program may be wildly overblown.
There was a nice summary of these modest environmental outcomes in Sunday’s Washington Post by researchers Lee Schipper, Joel Mehler, Brian Gould, and Chris Ganson. They, and others, conclude that the net benefits of the Clunkers program are very small.
It is true that, so far, cars turned in under the program got slightly fewer miles per gallon than the typical aged vehicle, and the vehicles purchased under the program are about 10 percent more efficient than the typical auto bought this year. This is a good thing.
However, as my colleague Bob Williams and others have noted, new cars are driven more than old cars. A lot more. On average, the Post piece notes, a new car is driven 25 percent more than a 10-year-old vehicle, and twice as much as a 14-year old clunker. This is not such a good thing.
So, new cars get better miles per gallon, but because they are driven much more, they drink almost as many gallons. Net net, according to Schipper and friends, the program will reduce CO2 emissions by a barely measurable 0.04 percent.
Others have noted the environmental cost of building new cars and suggested that, if clean transportation was the real goal of the program, it would encourage purchase of late model energy-efficient used cars as well. But they are not eligible.
Finally, the program both rewards owners of energy inefficient cars and buyers of relative gas guzzlers. Rather than tie the subsidy to the fuel efficiency of the new car, which would make the most sense, the program instead links it to the new car’s increase in MPG relative the old vehicle. And it subsidizes even smaller marginal improvements for SUVs, vans, and pickups than for passenger cars, encouraging the purchase of these oversized gas guzzlers.
For instance, a new passenger car is eligible for the full $4,500 credit only if its mileage is at least 10 MPG better than the clunker. But an SUV can get the full credit if it gets just 2 MPG better than the traded-in car. No program with a true green focus would be designed this way.
Bottom line: Trading in clunkers for new cars may slightly reduce pollution. But the program is far from the most environmentally efficient way to spend $3 billion. Let’s face it, this program is overwhelmingly about buying new cars, not reducing greenhouse gases.
Posts and Comments are solely the opinion of the author and not that of the Tax Policy Center, Urban Institute, or Brookings Institution.