Will Cash for Clunkers Exceed Environmental Expectations?

Time will tell if the popular program will have a positive environmental impact.

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The program was once derided as " Handouts for Hummers" by Sens. Dianne Feinstein and Susan Collins, who argued for stricter fuel-efficiency standards for the trade-ins. But Cash for Clunkers, the nickname for the Car Allowance Rebate System, has proved to be extremely popular, necessitating a $2 billion boost from Congress. And while some Democrats may have objected to the less stringent environmental rules, their fears may be assuaged. Says the New York Times:

The Transportation Department reported that of 120,000 rebate applications processed so far, the average gas mileage of cars being bought was 28.3 miles per gallon, for SUV’s 21.9 miles per gallon, and for trucks, 16.3 miles per gallon, all significantly higher than required to get a rebate.

“The statistics are much better than anybody dreamt they would be,” said Senator Dianne Feinstein, Democrat of California, who, with Senator Susan M. Collins, Republican of Maine, was the author of an early version of a “cash for clunkers” bill that would have required bigger improvements. The actual mileage gain seen so far, she said was not due to the details of the law but “the good judgment of the American people.”

According to the Associated Press:

Transportation Secretary Ray LaHood said the average mileage of new vehicles purchased through the program is 9.6 miles per gallon higher than for the vehicles traded in for scrap. Buyers of new cars and trucks that get 10 mpg better than their trade-ins get the $4,500 rebate. People whose cars get between 4 mpg and 10 mpg better fuel efficiency qualify for a smaller $3,500 rebate.

LaHood said some 80 percent of the traded-in vehicles are pickups or SUVs, meaning many gas-guzzlers are being taken off the road. The Ford Focus is a leading replacement vehicle. General MotorsCo., Chrysler Group LLC and Ford accounted for 47 percent of the new vehicles purchased.

Are people using their Cash for Clunkers funds to get a shiny new gas guzzler? Ford's sales of SUVs and trucks have continued their decline, while car sales have improved.

But even if consumers aren't taking handouts for Hummers, the current program may not be enough to make a difference. Keep in mind, too, the manufacturing impact of replacing functioning old cars with brand new ones, since participants in the program are not able to purchase a used car. Reuters analysis says we can't count on Cash for Clunkers for an efficiency boost:

Even if the program is extended, analysts said the scheme will shave little more than 0.05 percent, or between 4,000 and 5,000 barrels per day, off the nation's daily consumption of 9 million barrels.

The projection assumes some 250,000 "clunkers" with an average 15 miles per gallon efficiency are traded in for vehicles rated at an average 25 mpg, and travel an average 10,000 miles per year.

Climate Progress' calculations are more optimistic:

A 9 mpg gain translates into annual savings of 3.8 million barrels of oil per year and nearly $1,000 for consumers at the pump -– not to mention that it will reduce carbon dioxide emissions by 660,000 metric tons a year.  Okay, not a cost-effective emission reducer, but still, given the multiple benefits of the program, pretty darn good.

Indeed, the environmental gain is even greater because the trade-ins are not resold to the public or shipped to the developing world — but recycled.

What do you think: Will Cash for Clunkers be hailed as an environmental success? Or is it just replacing old clunkers with new clunkers?

More on Cash for Clunkers:
4 Things to Know About the Cash-Strapped 'Cash for Clunkers'
Why 'Cash for Clunkers' Will Keep On Rolling
Do You Qualify for a Cash for Clunkers Rebate?