Edwin Black: Cash for Clunkers—A Historic Mistake
[Edwin Black is the New York Times best selling investigative author of IBM and the Holocaust, Internal Combustion and The Plan: How to Save America When the Oil Stops—or the Day Before (Dialog Press). More information about The Plan can be found at www.planforoilcrisis.com.]
(This continuing coverage of America’s oil crisis arises from the The Plan: How to Save America When the Oil Stops—or the Day Before .)
The Cash for Clunkers program could have been a turning point for America’s movement to kick its oil addiction and promote alternative fuels. Instead, while it did incrementally improve some fuel performance with newer models, the program missed a historic opportunity to genuinely help the country switch off of oil. In many ways, this jobs program cum Detroit bailout masquerading as a fuel efficiency effort has condemned America to another decade of bad behavior by manufacturers and gas guzzlers.
The program could have subsidized the truly fuel-efficient cars such as the Honda Fit or Civic, the Toyota Prius, or the Dodge Caliber, and any other vehicle that achieved city mileage of at least 25 mpg. Or, it could have included any alt-fuel, alt-propulsion or multi-fuel vehicle such an electric, compressed natural gas (CNG), methanol or other biofuel vehicle regardless of the mileage. The program could have jump-started the mass conversion of oil-burning vehicles to CNG, electric or multi-fuel. Instead, Cash for Clunkers subsidized virtually anything on wheels, including some of the nation’s worst gas guzzlers, vehicles that now rate only a few miles above government mileage designations for highly taxable “gas guzzlers,” which is 15 or 16 mpg. The only requirement is that the new car exceeds the old vehicle’s mileage rating by only two to four mpg. So, some of the worst vehicles in America are now being taxpayer enabled in a recession. This includes the Honda Ridgeline, Honda Pilot, Cadillac SRX, and the 2009 GMC Canyon.
Under the rules, passenger cars receive a $3,500 voucher if the new vehicle performs just 4 mpg better and $4,500 if the new car rates at least 10 mpg more than the trade-in. But for sport utility vehicles, pickup trucks or minivans—the worst offenders—these gas guzzlers can fetch a $3,500 rebate if the new vehicle is rated just 2 mpg higher than the old vehicle.
By way of information, what we call “Cash for Clunkers” is a tried and true program of premature scrappage. The average vehicle enjoys a life of approximately a decade—this is the scrappage rate. Typically, the oldest vehicles constitute the worst oil consumption offenders on the road. Mandatory or voluntary scrappage programs designed to retire the most fuel-inefficient and environmentally unfriendly vehicles, often in exchange for governmental cash support, have been tried before. In the past, vehicles older than 15 years have been targeted by a variety of governmental and community programs. In such programs, the engine is typically destroyed and the other parts salvaged. Scrappage programs have long been advocated by policymakers, but too often opposed by auto interests.
For example, Congress proposed a scrappage provision as part of the Energy Policy Act of 2002 that would help states carry out their own mandatory scrappage of cars and trucks older than 15 years. The stated goal was to achieve better overall fuel economy and emissions. Section 803 of the 2002 legislation, “Assistance for State Programs to Retire Fuel-Inefficient Motor Vehicles,” would have taken hundreds of thousands of gas guzzlers off the road and compensated owners. But the Automotive Services Association, which represents the repair industry, seeing a gold mine in patching up old vehicles, lobbied vigorously against the provision. Eventually, the federal program was watered down into a quiet, strictly voluntary program and stuffed into an innocuous corner of Section 832. It was quickly forgotten.
Similar programs have been opposed in numerous local American jurisdictions. A scrappage measure in Vermont, Senate Bill 316, was defeated by the auto hobbyist community in 2007. The Florida Governor’s Action Team on Energy and Climate Change included vehicle scrappage in a May 2008 review of the state’s options to improve transportation, but the measure has yet to be implemented. Yet, as many as 13 million vehicles annually are voluntarily scrapped each year by their owners, according to Polk Co., which tracks new registrations and scrappage rates.
Such efforts, however, have been successful north of the border. Well-proven provincial and local Canadian programs bear user-friendly names such as “BC Scrap-It” and “Cash for Klunkers,” both in British Columbia, “Steer Clean” in Nova Scotia, and “Car Heaven” in Alberta. Canada’s nationwide program explains, “Of the 18 million personal vehicles in use in Canada, an estimated five million are 1995 or older models,” declares a Canadian government web statement. “These older vehicles were not manufactured according to today's more stringent emissions standards, and produce 19 times more smog forming air pollution than newer vehicles. Although they make up less than one-third of vehicles on the road, older cars generate as much as two-thirds of the smog-forming pollutants caused by personal vehicle use.”
Had sense and science prevailed in America’s program, Utah could have witnessed the proliferation of CNG vehicles that so many in that state are waiting for. Electric vehicles could have been financed throughout California complete with a recharging infrastructure. A stimulus would have been injected for all flex-fuel or multifuel vehicle types everywhere in America, from the Chevy Volt to the multifuel world envisioned by the Open Fuel Standard, which calls for vehicles to combust both oil and any other liquid fuel such as sugar cane ethanol and methanol. A collection of other road-ready alternatives from hydrogen, to ammonia to propane could have been incentivized. Within months, the nation’s foreign oil tab would have continued its flat growth to downward spiral. Such premature scrappage to sensible alternatives in a non-emergency would have set the basis for a crash program of fuel switching in the event of an oil interruption.
Instead of doing the right thing in the right way, we did what we have always done in fuel policy: we did the right thing in the wrong way. Washington just threw money at the problem shotgun-style as fast as possible and as broadly as possible. In the event of another oil crisis—which could occur any time Iran makes good on its promise to block the Strait of Hormuz, what many are now extolling under the Cash for Clunkers will be viewed as yet another historic wrong turn in America’s effort to get off of oil.
Read entire article at The Cutting Edge
(This continuing coverage of America’s oil crisis arises from the The Plan: How to Save America When the Oil Stops—or the Day Before .)
The Cash for Clunkers program could have been a turning point for America’s movement to kick its oil addiction and promote alternative fuels. Instead, while it did incrementally improve some fuel performance with newer models, the program missed a historic opportunity to genuinely help the country switch off of oil. In many ways, this jobs program cum Detroit bailout masquerading as a fuel efficiency effort has condemned America to another decade of bad behavior by manufacturers and gas guzzlers.
The program could have subsidized the truly fuel-efficient cars such as the Honda Fit or Civic, the Toyota Prius, or the Dodge Caliber, and any other vehicle that achieved city mileage of at least 25 mpg. Or, it could have included any alt-fuel, alt-propulsion or multi-fuel vehicle such an electric, compressed natural gas (CNG), methanol or other biofuel vehicle regardless of the mileage. The program could have jump-started the mass conversion of oil-burning vehicles to CNG, electric or multi-fuel. Instead, Cash for Clunkers subsidized virtually anything on wheels, including some of the nation’s worst gas guzzlers, vehicles that now rate only a few miles above government mileage designations for highly taxable “gas guzzlers,” which is 15 or 16 mpg. The only requirement is that the new car exceeds the old vehicle’s mileage rating by only two to four mpg. So, some of the worst vehicles in America are now being taxpayer enabled in a recession. This includes the Honda Ridgeline, Honda Pilot, Cadillac SRX, and the 2009 GMC Canyon.
Under the rules, passenger cars receive a $3,500 voucher if the new vehicle performs just 4 mpg better and $4,500 if the new car rates at least 10 mpg more than the trade-in. But for sport utility vehicles, pickup trucks or minivans—the worst offenders—these gas guzzlers can fetch a $3,500 rebate if the new vehicle is rated just 2 mpg higher than the old vehicle.
By way of information, what we call “Cash for Clunkers” is a tried and true program of premature scrappage. The average vehicle enjoys a life of approximately a decade—this is the scrappage rate. Typically, the oldest vehicles constitute the worst oil consumption offenders on the road. Mandatory or voluntary scrappage programs designed to retire the most fuel-inefficient and environmentally unfriendly vehicles, often in exchange for governmental cash support, have been tried before. In the past, vehicles older than 15 years have been targeted by a variety of governmental and community programs. In such programs, the engine is typically destroyed and the other parts salvaged. Scrappage programs have long been advocated by policymakers, but too often opposed by auto interests.
For example, Congress proposed a scrappage provision as part of the Energy Policy Act of 2002 that would help states carry out their own mandatory scrappage of cars and trucks older than 15 years. The stated goal was to achieve better overall fuel economy and emissions. Section 803 of the 2002 legislation, “Assistance for State Programs to Retire Fuel-Inefficient Motor Vehicles,” would have taken hundreds of thousands of gas guzzlers off the road and compensated owners. But the Automotive Services Association, which represents the repair industry, seeing a gold mine in patching up old vehicles, lobbied vigorously against the provision. Eventually, the federal program was watered down into a quiet, strictly voluntary program and stuffed into an innocuous corner of Section 832. It was quickly forgotten.
Similar programs have been opposed in numerous local American jurisdictions. A scrappage measure in Vermont, Senate Bill 316, was defeated by the auto hobbyist community in 2007. The Florida Governor’s Action Team on Energy and Climate Change included vehicle scrappage in a May 2008 review of the state’s options to improve transportation, but the measure has yet to be implemented. Yet, as many as 13 million vehicles annually are voluntarily scrapped each year by their owners, according to Polk Co., which tracks new registrations and scrappage rates.
Such efforts, however, have been successful north of the border. Well-proven provincial and local Canadian programs bear user-friendly names such as “BC Scrap-It” and “Cash for Klunkers,” both in British Columbia, “Steer Clean” in Nova Scotia, and “Car Heaven” in Alberta. Canada’s nationwide program explains, “Of the 18 million personal vehicles in use in Canada, an estimated five million are 1995 or older models,” declares a Canadian government web statement. “These older vehicles were not manufactured according to today's more stringent emissions standards, and produce 19 times more smog forming air pollution than newer vehicles. Although they make up less than one-third of vehicles on the road, older cars generate as much as two-thirds of the smog-forming pollutants caused by personal vehicle use.”
Had sense and science prevailed in America’s program, Utah could have witnessed the proliferation of CNG vehicles that so many in that state are waiting for. Electric vehicles could have been financed throughout California complete with a recharging infrastructure. A stimulus would have been injected for all flex-fuel or multifuel vehicle types everywhere in America, from the Chevy Volt to the multifuel world envisioned by the Open Fuel Standard, which calls for vehicles to combust both oil and any other liquid fuel such as sugar cane ethanol and methanol. A collection of other road-ready alternatives from hydrogen, to ammonia to propane could have been incentivized. Within months, the nation’s foreign oil tab would have continued its flat growth to downward spiral. Such premature scrappage to sensible alternatives in a non-emergency would have set the basis for a crash program of fuel switching in the event of an oil interruption.
Instead of doing the right thing in the right way, we did what we have always done in fuel policy: we did the right thing in the wrong way. Washington just threw money at the problem shotgun-style as fast as possible and as broadly as possible. In the event of another oil crisis—which could occur any time Iran makes good on its promise to block the Strait of Hormuz, what many are now extolling under the Cash for Clunkers will be viewed as yet another historic wrong turn in America’s effort to get off of oil.