The $1 billion Cash for Clunkers program has been so popular that it ran out of funds a week after launching, and now the Senate is debating whether it deserves an additional $2 billion. But how does the environmental argument for scrapping all those usable, old cars stack up? After all, those new, energy-efficient cars aren't going to just drop out of the sky, fully assembled.
The environmental rationale behind the Car Allowance Rebate System is pretty straightforward: The government offers a few thousand bucks to any consumer who's willing to scrap a low-mileage gas guzzler and buy a more fuel-efficient replacement. That's supposed to help reduce our dependence on nonrenewable petroleum and limit the carbon dioxide emissions associated with driving. At first glance, the numbers look pretty good: Burning a gallon of gasoline produces about 19.4 pounds of CO2, so if you if you swapped a clunker that got 18 miles per gallon for a new car that got 27.5 mpg (the current average fuel economy standard for passenger cars) and drove it for 12,000 miles (the average distance an American car travels annually), you would personally save a little more than two tons of CO2 from being emitted in one year. Multiply that by the hundreds of thousandsof people who've already participated in the program, and the savings look even more impressive.
It's not quite as simple as that, however. As you point out in your question, it takes a lot of energy—and makes a lot of CO2—to manufacture a brand-new car. (The same logic applies to replacing your household appliances or switching from a Corolla to a Prius.) 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.
How long it takes to accomplish that will vary, of course, depending on the difference in fuel economy between your old car and your new one—the bigger the improvement, the shorter the payback period. In fact, the cash-for-clunkers program offers significant subsidies even when the trade-in returns only a very modest increase in gas mileage. If you trade in an old car that gets 18 mpg for a new one that has a combined fuel economy of just 22 mpg, you'll qualify for a $3,500 voucher. A 2-mpg boost for SUVs and small-to-medium pickup trucks would earn the same amount, so long as the new vehicle gets at least 18 mpg. The same goes for large-truck trade-ins that get a 1-mpg boost to at least 15 mpg. (Small boosts do make a much bigger difference for the worst gas-guzzlers, as this editorial by Duke professor Richard Larrick explains.)
Given these easygoing requirements, Chameides told the Greenwirenews service that it might take five years before a new car produced a net emissions savings over the clunker you traded in. (You'd be saving money on gas right away, of course, but what's good for your wallet would be bad for the planet at the outset.) If you got a small truck through the program, it might take a decade's worth of driving before there was any environmental benefit. Considering that Americans tend to switch cars every 8 to 10 years, that means some new truck trade-ins might never produce any CO2 savings whatsoever.
However, it seems that most consumers who took advantage of the program last week made fairly eco-friendly choices. Based on preliminary reports, trade-in vehicles had an average fuel efficiency of 15.8 mpg, while the average fuel efficiency of new cars purchased was 25.4 mpg—a 61 percent increase in fuel economy. And in other good news, many truck drivers seem to have shifted toward cars, which are generally more fuel-efficient.
According to an early analysis from the Web site Cash for Clunkers Information—which estimated an average fuel-economy increase of 69 percent and total sales of 250,000 cars—the program would cut overall fuel consumption by about 76 million gallons a year and carbon dioxide emissions by about 737,200 tons annually. Using Chameides' figures, it would produce about 1.7 million tons of CO2 to manufacture those 250,000 cars, so we won't really see those savings until a little more than two years from now.
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.