The Cash for Clunker’s program is in full swing yet keeps hitting potholes. Less than one week after it was launched, it ran out of money and the Senate/Congress passed another $2 billion for the program but to get the money, took it from current biofuels programs that were designated as part of the Recovery & Reinvestment Act. Now, the latest issue: researchers are saying that it is a very expensive way to cut carbon emissions.
A new UC Davis study, “The Implied Cost of Carbon Dioxide Under the Cash for Clunkers Program,” estimates that the Cash for Clunkers program is paying at least 10 times the ‘sticker price’ to reduce emissions of greenhouse gases including CO2. With carbon credit programs still under development, they are currently predicted to sell for about $28 per ton. However, in the best-case scenario, the calculated per ton cost of the rebate (either $3,500 or $4,500) would be around $237 per ton, this according to UC Davis transportation economist Christopher Knittel.
“When burned, a gallon of gasoline creates roughly 20 pounds of carbon dioxide. I combined that known value with an average rebate of $4,200 and a range of assumptions about the fuel economy of the new vehicles purchased and how long the clunkers would have been on the road if not for the program,” Knittel said. “I even assumed drivers didn’t change their habits, although some analysts have suggested that the owners of new vehicles will drive more than they would have with their old cars.”
Apparently, the researcher was being generous, as Knittel notes that more likely scenarios would produce a cost of more than $500 per ton. Ouch. Can we say not an economical way to reduce CO2? But hey – everyone knows that while the “public” agenda was to help the environment, we all know if was really to help the bankrupt auto industry move cars. I think the government needs to get a speeding ticket for this program.