A Clunker On Climate Change

While there have been many things written both praising and condemning the extremely popular "Cash for Clunkers" program based on its effect on the economy, its effect on the environment has been mostly out of focus.
 
This is surprising. One of the main reasons given for implementing the program was to help prevent, or at least slow down the impacts of, climate change. 
 
To start, here is a brief breakdown of the data from the program. For a cost of $2.877 billion, 690,114 cars were traded in. The average vehicle traded in had a fuel economy of 15.8 mpg, while the average vehicle purchased got 24.9 mpg. 84 percent of consumers traded in trucks and 59 percent of consumers purchased cars. 
 
Yes, the program was clearly used by consumers to purchase more fuel efficient cars, and these cars do produce far less carbon dioxide--one of the stated goals of the program. But it's never that simple. A much larger analysis must be made in order to evaluate this nearly $3 billion tab to taxpayers.
 
First, as noted in this Wall Street Journal editorial, it's impossible to tell how many of these purchases would have occurred with or without the program. Gas prices continue to rise and the cost of fuel-efficient cars continues to decline so there was already great incentive for consumers to buy more fuel efficient vehicles.
 
And considering the fact that the cars traded in were often horrendous when it comes to fuel efficiency (with old Ford Explorers and Ford F150s topping the list of trade-ins), it would have been hard not to have increased fuel economy when the time came to purchase a new car. 
 
Second, the impact of raising average fuel economy by 9.1 mpg must be put into perspective. The average car is driven 12,000 miles per year, which translates to a savings of 278 gallons per year. This would have released about 2.8 tons of carbon dioxide. With the average price tag for these rebates at $4,200, it cost U.S. taxpayers a very pretty penny to save a few tons of carbon dioxide from being emitted over the next few years (the average U.S. household emits 10.4 tons of carbon dioxide each year). 
 
On top of all this, there is nothing to make this program sustainable. It cost almost $3 billion and will do nothing more to help the environment than it has already done. Almost 700,000 cars may seem like a lot, but there are more than 250 million registered vehicles in the United States, and more than 14.5 million new cars are sold every year. Selling a few cars that are slightly more fuel efficient over the course of a few weeks will do very little to curb CO2 emission. 
 
Looking at the bigger picture is key. Transportation on the whole, including mass-transit and shipping, only accounts for 28 percent of U.S. energy consumption. The other 72 percent comes from residential, commercial and industrial uses; the vast majority of energy used comes from power generated at power plants.
 
Working to increase fuel efficiency is definitely an important step in decreased CO2 emissions. But when it comes to scarce government money, it is important that it be used where it can be most potent. 
 
For example, a brand new nuclear power plant would cost about $3.6 billion in federal loan guarantees (note: these are only guarantees and would not actually be spent if the plant was built and used according to plan. Nuclear plower plants are built and run by private companies, but because they require so much initial investment, and can take 10-20 years to make it back, federal loan guarantees allow the plants to raise enough money to operate in the beginning years). And, one nuclear plant saves 8.6 million tons of CO2 per year. 
 
For slightly more money than the "Cash for Clunkers" program, U.S. taxpayers could have seen significant reduction in CO2 emissions that would have lasted for years to come. Investing in green technologies, like nuclear power, makes a lot more sense than temporarily encouraging consumers to increase the fuel economy of their cars.
 
"Cash for Clunkers" may have been popular at the time, but it's clear that its benefit to the environment is negligible, especially when compared to other initiatives for which that money could have been used.