The Cash For Clunkers (C.A.R.S.) program has been a big success. No question there. But one of the stated reasons for the program is to reduce emissions. Getting low-mpg vehicles off the road in favor of ones that are more fuel efficient is a good idea, but a new report by UC Davis says that the cost to reduce CO2 via C.A.R.S. is about ten times as high as it would be to lower them using carbon credits. The university calculated that a credit for a ton of CO2 in the U.S. would cost about $28/ton (in Europe, the price is closer to $20/ton), whereas the "best-case calculation" of the cost of the clunkers rebate is $237 per ton of CO2. The "more likely" scenario puts the cost to eliminate a ton of CO2 using C.A.R.S. was over $500. UC Davis transportation economist Christopher Knittel, who authored the study, said he didn't factor in any of C.A.R.S.'s economic benefits; it just tried to calculate the cost of the CO2. You can download his paper, titled "The Implied Cost of Carbon Dioxide Under the Cash for Clunkers Program," here (PDF).

[Source: UC Davis]


'Clunkers' Program Is Expensive Way to Cut Carbon Emissions

August 13, 2009

New UC Davis estimates say the federal government's Cash for Clunkers program is paying at least 10 times the "sticker price" to reduce emissions of the greenhouse gas carbon dioxide.

While carbon credits are projected to sell in the U.S. for about $28 per ton (today's price in Europe was $20), even the best-case calculation of the cost of the clunkers rebate is $237 per ton, said 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.

"In the end, the lowest cost to remove one ton of carbon from the environment was $237. More likely scenarios produced a cost of more than $500 per ton, even when we accounted for reductions in pollutants other than greenhouse gases. That suggests the Cash for Clunkers program is an expensive way to reduce carbon."

Knittel did not analyze the program's other key objectives: stimulating the economy and providing relief for automobile manufacturers.

Knittel is an associate professor and chancellor's fellow in the UC Davis Department of Economics, a faculty associate at the UC Davis Institute of Transportation Studies, and the policy and business strategy leader of the Sustainable Transportation Energy Pathways Program at UC Davis.

His analysis, titled "The Implied Cost of Carbon Dioxide Under the Cash for Clunkers Program," was published online today (Aug. 13) by the University of California Energy Institute. It was funded by the Energy Institute and the Institute of Transportation Studies

Share This Photo X