Clunker Policy

Cars for Clunkers removes old cars from the road and replaces them with more efficient cars. This saves gasoline and thus means less CO2 emissions. But new cars are produced using CO2. So how much is saved? Obviously it depends on the net improvement in mileage and the amount driven. This article in Slate goes over the figures.

Assume that 250,000 cars have been replaced with an average fuel efficiency gain of 69% (about what happens if we replace a car with 16 mpg with one that gets 27 mpg). Further assume no net increase in miles driven (a big if) so that stays at 12,000 per year. Then these cars cut overall fuel consumption by about 76 million gallons a year and CO2 emissions by about 737,200 tons annually.

What about producing the new cars?

According to William Chameides, dean of Duke University's Nicholas School for the Environment, making a new car produces 3.5 to 12.4 tons of carbon dioxide, with an average of 6.7 tons per vehicle. The average new car would therefore need to save about 700 gallons of gas to offset the carbon costs of its manufacturing.

If we use the 6.7 ton figure for 250,000 cars we estimate about 1.7 million tons for the new cars. Thus it would take more than two years of driving to achieve any net savings.

How to assess the total cost of the program? Compare it to the cost of a ton of CO2 in the marketplace:

Was spending $1 billion a particularly cost-effective way to achieve those CO₂ reductions? Probably not. Assuming the above calculations are correct and that each consumer keeps his or her car for 10 years, then the total savings should be a little less than 5.7 million tons of carbon dioxide. That means each ton of carbon dioxide would be worth about $175.53 to the U.S. government. As the Washington Policy Center pointed out on its blog in June, a ton of CO₂ currently goes for about $17.50 on the European Climate Exchange.

I guess we can conclude that, however, successful an auto stimulus program this is, it is not much of an environmental winner.