Estimates of statewide and nationwide carbon dioxide emission reductions and their costs from Cash for Clunkers

Abstract

Vehicle scrappage programs which provide private owners with inducements to scrap their older, less-fuel efficient vehicles offer the promise to both increase consumer spending on private vehicles and reduce greenhouse gas emissions. The Cash for Clunkers program enacted in 2009 is the first nationwide incarnation of such a program in the United States where past programs have been confined to specific regions and states. While measuring the success of such programs in terms of sales is straightforward, measuring their success in terms of greenhouse gas emission reductions is not. Much of the difficulty in estimating these reductions relates to projecting how private vehicle owners will use their newer, more fuel efficient vehicles. Using cross-sectional data on how the trade-in vehicles were typically used as well as projected usage increases due to the rebound effect (improvements in fuel efficiency cause more usage), this study estimates emission reductions and their costs for two different vehicle usage scenarios. Estimates from the two scenarios indicate that the nationwide effects of the Cash for Clunkers program on carbon dioxide emissions are modest, at best. Exploration of statewide carbon dioxide emission reductions and costs from Cash for Clunkers indicates that, as suggested by the literature, the environmental benefits of vehicle scrappage programs are limited.