Study: Cash-for-Clunkers Programs Should Use Fuel Economy Rather Than Age to Maximize GHG Reductions
A study by researchers at UC Davis suggests that a properly designed vehicle scrappage (i.e., “Cash for Clunkers”) program could maximize greenhouse gas emissions savings by using fuel-economy based eligibility requirements rather than age-based requirements. The study presents a program framework that, at a minimum, ensures a program that offsets GHG emissions attributable to vehicle manufacturing and end-of-life disposal with use-phase emissions reductions.
The study also suggests that a long-term Cash-for-Clunkers program may be more suitable to CO2e reduction because with such a program policymakers could send a clear, long-term signal to auto manufacturers for more fuel-efficient vehicles. Considering the 4-6 year vehicle product planning, design, and introduction cycles where major retooling of automobile plants is needed, the researchers said, such longer term programs could actually induce technology changes.
An earlier, separate study by UC Davis transportation economist Christopher Knittel concluded that the US scrappage program paid nearly 10 times the projected price of carbon credits per ton in the best-case scenario to reduce GHG emissions. (Earlier post.)
Vehicle scrappage schemes have been implemented in a number of countries in Europe and the US. A first wave occurred in the 1990s, followed by a spate of current schemes to stimulate domestic auto industries in the face of the economic crisis. Specific requirements can vary greatly. However, the researchers note, there are regulatory elements common to all programs including: 1) retired vehicle eligibility, 2) length of program, 3) monetary incentive, and 4) replacement vehicle eligibility.
Although no program to date has focused solely on GHG emissions reduction, a number of recent scrappage programs make GHG emissions reduction an ancillary goal by setting fuel economy or grams of CO2e per km requirements on the replacement vehicles. These upgrades range from a fuel economy improvement of 5-9 miles per gallon (MPG) in the US CARS program to 120 g CO2e per km (roughly 46 MPG) minimum in Italy’s scrappage program. However, despite aggressive upgrade requirements in some countries, all scrappage programs in 2009 also require the scrapped vehicle be older than a minimum age (9-15 years) which lessens the effectiveness of the programs for reasons described below. The one exception is the US CARS program.
Unlike the subset of gross emitters that exists for criteria pollutants, low fuel economy vehicles—which produce the largest amount of CO2e emissions per mile travelled—are dispersed among all vehicle ages and values. A minimum age restriction will inadvertently exclude newer, low fuel economy vehicles from participation in the program. In addition, simply replacing an old vehicle with a new vehicle may not automatically lead to a fuel economy improvement, as the fuel economy of new vehicles has not changed significantly since the 1980s.—Allan et al. 2009
Based on their analysis, the researchers suggested that:
Because the GHG emissions associated with vehicle manufacturing, materials production, and scrapping equal roughly 10-15% of a vehicle’s lifecycle emissions, any program that seeks to reduce GHG emissions through scrappage should seek to save more GHG emissions than this amount.
A fuel economy-based eligibility system with no minimum age requirement could achieve this.
To help lower the cost per ton of abatement, such a program could include a maximum odometer reading, phased in over multiple years to ensure a specific life remains in the vehicle.
Alexander Allan, Rachel Carpenter and Geoff Morrison (2009) Abating Greenhouse Gas Emissions through Cash-for-Clunker Programs (UCD-ITS-RR-09-26)