THEGREENGROK

Cash-for-Clunkers Agreement: Still Not Ready for Prime Time


by Bill Chameides | May 8th, 2009
posted by Erica Rowell (Editor)

Permalink | 6 comments

To make a cash-for-clunkers deal a win for the environment, gas mileage requirements for old and new cars must be stringent enough for as small a payback time as possible. (Getty Images)

Congress has been kicking around the idea of paying people to scrap their old cars and buy new, more fuel-efficient ones. On May 5, Democratic lawmakers and President Obama reportedly agreed on a one-year cash-for-clunkers proposal. Unfortunately, as far as the planet is concerned, the proposal … well, kind of clunks.

The reported “goal of the ‘cash for clunkers’ legislation is to sell 1 million vehicles.” It’s also supposed to help get old gas-guzzlers off the roads and put Americans into cars with higher gas mileage in an effort to:

  • cut back on our dependence on foreign oil,
  • limit air pollution, and
  • emit less greenhouse gases.

Great idea in theory, but in practice it’s not quite that simple.

The Devil in the Detail

Manufacturing a new car requires energy and that in turn leads to greenhouse gas emissions like carbon dioxide (CO2). It’s estimated that when you drive your new car out of the showroom your car has already effectively emitted anywhere from three to 12 tons of CO2 — we call those embedded emissions. For purposes of illustration, we’ll use an average value of 6.7 tons for our embedded emissions, a little more, it turns out, than a typical car emits over a year of operation.

When you scrap an old car for a new one, you actually start out having emitted more CO2 than you would have if you had just stayed with your clunker — about a year and a half’s worth. If your new car is more fuel-efficient than the old one, those excess emissions shrink with each mile you drive. Eventually, you reach a break-even point when your new car’s embedded emissions are offset by those emissions you avoided by driving that new car. The time for that to occur is called the payback time. It’s not until the payback time is over that the cash-for-clunkers swap begins to accrue real greenhouse gas emissions savings.

An environmentally sound cash-for-clunkers program must require a big enough miles-per-gallon differential between the old and new cars to keep the payback time short, and certainly no longer than the lifetime of the new car. Cars today probably last about 10 years or more.

How the New Plan Stacks Up

The House Committee on Energy and Commerce has released a fact sheet [pdf] that lays out the basics of the new plan. Here’s the summary.

Minimum Requirements of Cash-for-Clunker Trade in Proposed House Bill

Old Vehicle (mpg) New Vehicle (mpg) Minimum
Difference (mpg)
Cars less than 18 22 4
Light trucks 18 or less 18 2
Large light trucks
(6,000–8,000 lbs.)
unspecified 15 1

All of the above deals are worth $3,500. A voucher of $4,500 can be earned by purchasing a new vehicle with even better fuel economy: 10 mpg (for cars), five (for light trucks), and two (for the road hogs).

The Worst Case Scenarios

Building on the example from my first post on this topic, here are the payback times for a cash-for-clunker program involving the minimum mileage differential required to qualify for the $3,500 voucher.

Old vehicle (mpg) New vehicle (mpg) Payback time (years)
Car less than 18 22 5
Light truck 18 20 10
Large truck 15 16 14

Short Payback Time Highly Dependent on MPG

Want more details? Interested in a different comparison? Our graph and table below show the payback time in action.

The number of years it takes to “drive off” the embedded carbon dioxide emissions in a new vehicle when it replaces an old one. The x-axis shows the new car’s mpg, and the various line are for different old vehicles. Assumptions: New car’s embedded emissions are 6.7 tons CO2; average number of miles driven in a year is 13,000.

What to Do?

Click on table for larger, readable version. (Table will open in new window.)

The curves in the graph show that a cash-for-clunker deal can have real greenhouse gas benefits. If the requirements are stringent enough (like those in the $4,500-voucher deal), reasonably quick payback times of two years or less are achievable. You can see how focusing on scrapping old vehicles with fuel efficiencies of less than 12 mpg would be especially effective.

But the latest proposal on the table is too lax. Payback times of five years for a car and 10 years or more for a truck strike me as far too long to subsidize a new car purchase to the tune of $3,500. My recommendation, Mr. or Ms. Congressperson, if you are interested, is to scrap the $3,500-voucher — it’s a clunker. And if you’re really serious about ratcheting down the pollution from our roadways, don’t just help Detroit — make the voucher dependent on the amount of embedded CO2 emissions in the new vehicle as well as the mpg differential. Now that would be really innovative.

filed under: carbon dioxide emissions, climate change, faculty, global warming, transportation
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6 Comments

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  1. Lauri Nevill
    Jun 11, 2009

    Is this figure a city, highway or combined figure?

    • Wendy Graber (Researcher)
      Jun 11, 2009

      Hi Lauri, That would be EPA combined mileage.

  2. Hank Roberts
    Jun 4, 2009

    For personal decisionmaking, actual miles driven matters enormously. Can someone there add information for other possibilities? I doubt it’s linear. Try for example: various vehicles driven 500, and 2000, and 20,000 miles per year. For example someone who hauls a few loads of firewood, in a 10mpg truck driven 500 miles per year; if that’s replaced by a brand new truck also driven 500 miles per year, it isn’t a wise change I suspect.

    • Bill Chameides
      Jun 4, 2009

      Hank, You are right: the payback time does depend on the number of miles one drives each year. The payback times we showed assume that 13,000 miles are driven annually. The payback time is inversely proportional to the annual miles driven. So the payback time would decrease by a factor of 2 for 26,000 miles per year and would increase by a factor of 2 for 6,500 miles per year.

      • hank
        Jun 5, 2009

        Understood. That’s why, driving 2000 miles/year, I’m not replacing my old 4wd. Not everyone will have figured that out, though. I realize there are more average people than any other kind (grin) but still, if you could put that math into your web page, it would give people a real ability to use your calculator by looking at their actual miles driven (most people probably get the odometer reading annually for renewing car insurance). I can do the math for our vehicles; others may need more help — and it’s a big financial decision; your information could be a significant factor in informed choice.

        • Bill Chameides
          Jun 12, 2009

          A great idea, Hank, and one that could transform this generalized discussion into a practical application. Unfortunately, without specific embedded carbon numbers for makes and models of all cars, we just don’t have accurate enough values to build a calculator that would be appropriate for individual cars as opposed to the fleet. For example, the amount of steel in a small compact differs greatly from that in a large SUV, and this difference changes the embedded carbon value. The same is true for other high-carbon parts, such as hybrid batteries. The studies performed to date indicate that hybrids tend to have larger embedded values than vehicles with traditional internal combustion engines. So, while I agree it would be a great tool, it would be misleading to use the generalized numbers from the post for specific models. That said, if folks want to do their own calculations keeping these factors in mind, I’m all for it. Here’s an equation to plug your own numbers into: Y= 6.7 / ( (A/B*20*0.000454) – (C/D*20*0.000454) ) Y = years to offset embedded carbon A = miles driven in old car annually B = fuel economy of old car (mpg) C = miles to be driven in new car annually D = fuel economy of new car (mpg) 6.7 = average amount of embedded carbon (in tons) 20 = approximate amount of CO2 (in pounds) in a gallon of gas 0.000454 = conversion from pounds to metric tons

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