Is Cash For Clunkers Sound Environmental Policy Update

The efficiency of the Cash for Clunkers program as environmental policy has been questioned in many corners. He is the NY Times Green Blog:

"'The program is really not cost effective as a climate policy,' said Mr. Wara, who is an assistant professor at Stanford Law School and a faculty fellow at the university’s program on energy and sustainable development. 'It might be a great economic stimulus — we’re selling a lot of cars — but this is not the way to deal with mobile sources of climate change.'

Mr. Wara found that the program cost between $200 to $400 per ton of carbon dioxide emissions avoided, and Mr. Knittel’s estimates went up to $500 per ton. By contrast, the climate bill recently passed in the House of Representatives would result in a $28 per ton carbon price in 2020, according to analysis by the Congressional Budget Office."

Here a link to previous Cash For Clunkers posts. Sphere: Related Content

Cash For Clunkers Environmental Victory?

NY Times reports today:

"'What we ended up with,' said one senior Obama administration official, who would not speak on the record because he was being critical of his own administration’s environmental bona fides, 'is a program in which you trade in old clunkers for new clunkers.' Less discussed is the second critique of the program: It rewards drivers who chose to buy gas guzzlers a few years back, but not those who spent more to buy fuel-sippers (although in recent years those who purchased efficient new hybrids got generous tax credits)."

We should not be fooled, Cash For Clunkers was a program to help the auto industry clear inventory. There will be a environmental benefit but it could have been greater. It has been reported that the under the program trade ins have had 50% benefit in term of MPG. Cash for Clunkers has proved that with an incentive people will buy a more fuel efficient cars. That is great, but why not make threshold hold greater than only five MPG. Why not require consumers to purchase cars with at least a ten MPG improvement? Why not encourage people to purchase used fuel efficient hybrid?

Previous Cash for Clunkers posts here. Sphere: Related Content

Don't Hide Behind The Environment When You Want To Throw A Bone To The Auto Industry

The Economist's Democracy In America Blog has an issue with how some people are claiming Cash for Clunkers is a boon for the environment. From the blog:

"JUST wanted to throw in my two cents on this cash-for-clunkers business as I seem to be at odds with my fellow bloggers. It's a ludicrous waste of taxpayer money wrapped in offensively cynical packaging. If you want to save the environment and/or reduce America's dependence on foreign oil there are about a million things you can do before you resort to a $3 billion boondoggle. You can sit around and fiddle with the numbers so it sounds like we're going to eventually save petrol, but of course the proponents of the programme don't try to puzzle out how much we'd save if we just raised the petrol tax like a normal country. Because of course the point isn't to help the environment, the point is to help the car dealers. So why can't we just say that? Is our sense of entitlement so swollen that we not only think we deserve handouts at every turn but we need to be praised for taking them? I'm with the cranky commenters who find the whole thing grotesque."

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Cash For Clunkers MPG Success

Time magazine is reporting that new cars purchased through Cash for Clunkers are 61% more fuel efficient than the traded in cars. That is an additional 10 mpg. An environmental success? Sphere: Related Content

Rebuttal To Conor Friedersdorf On Cash For Clunkers

Alas! A Blog has an excellent rebuttal to Friedersdorf's Clunker's post. The Alas! post uses more sound economic arguments. Going back to the basics. Perhaps I was swayed by nostalgia. Alas actually draws a demand curve bringing me back to my school days.

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Glenn Beck Being Crazy Doesn't Make You Right -- The Debate On $$$ For Clunkers

Conor Friedersdorf offers a sensibility to the debate over the effectiveness and efficiencies of the Cash for Clunkers program. Just becasue the arguments of the loudest critics are crazy and make no sense that does not mean the there are no good arguments against the program. Friedersdorf writes:

"Just because the right includes a lot of people making very bad arguments right now doesn’t make the people they’re arguing against right. It’s a lesson I learned when I saw the behavior of bombastic, juvenile folks on the left translate into support for President Bush’s bid to invade Iraq."

Friedersdorf offers these places as good arguments against Clunkers:

Radley Balko
Challenging Jon Stewart's treatment of Democrats, Balko takes issue with Stewart piece on Clunkers. Balko breaks it down to a mathematical equation:
(all of the energy that went into making the old car) + (the energy it will take to destroy it) + (all of the energy it took to make the new car) + ($3,500)

Rich Lowry
Lowry argues that Clunkers only creates an illusion of demand. Essentially reducing future demand. Also, destruction of the trade in cars is a waste of goods with economic value.

Derek Thompson:
Thompson point is that C4C, as he calls it, incentivizes the purchase of environmentally unfriendly SUVs and has only encouraged auto sales that would have happened soon regardless of C4C. Unlikely to increase the annual auto sales number. Sphere: Related Content