Cash for Clunkers: Inefficiently Green?

Even President Obama’s most stubborn opponents have had trouble denying that the Cash for Clunkers program has achieved extreme popularity, giving a much-needed boost to the struggling auto industry. However, basic calculations made from the data that the government has released have shown that the program may be extremely inefficient when it comes to accomplishing its goal of helping the environment.

Stanford University’s Michael Wara and the University of California Davis’ Christopher R. Knittel estimated that the Cash for Clunkers program may be paying anywhere from $200 to $500 per ton of carbon dioxide emissions that it avoids. This compares to $28 per ton that the government would pay in 2020 according to the climate bill that was recently passed in the House of Representatives.

The estimates are based on the statistics released on the average miles per gallon of the clunkers and the new cars, which marked an increase from 15.8 miles per gallon to 25.4 miles per gallon, as well as Environmental Protection Agency statistics that 20 pounds of carbon dioxide are emitted for each gallon of gasoline burned.
Also, the government paid an average of $4,229 for each clunker, and the calculations are made using varying assumptions of the amount of miles that each clunker would be on the road if it were not traded in.

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