“Cash for Clunkers” program a good, sensible idea
Three U.S. senators — two Democrats, one Republican — introduced a bill today that would create a national incentive program for the voluntary retirement of inefficient vehicles. The four-year program would apply to anyone who had a driveable vehicle registered for four months or longer that got no more than 18 miles per gallon. The vehicle owner would have the option of turning in the car, truck or SUV to be scrapped in exchange for a credit of $2,500 to $4,500. The credit could be applied toward the purchase of a new fuel-efficient vehicle or, in the form of a voucher, could be redeemed for transit fares.
If passed, the bill would aim to encourage the early retirement of up to one million vehicles each year — four million in total. “If enacted, this bill would be an important part of helping getting America’s struggling automobile industry back on its feet — and help consumers who are concerned about covering the cost of buying a more fuel-efficient vehicle,” said Democrat Dianne Feinstein of California.
What’s good about this bill is that it would create economic stimulus and help achieve the goals of emission reductions and energy security. The value of the credit or voucher is determined by the age of the car being turned in and whether the person is buying a new car, used car, or accepting transit fares as a replacement. You can read details of the bill here.
I like it — though I guess it could be abused. That is, if someone takes some old clunker, registers it, and makes it work long enough to pass the “driveability” test. But it’s a great way of taking the most polluting cars off the road, and encouraging people to purchase vehicles that, at minimum, must be 25 per cent more fuel-efficient than the CAFE target for the year and class of vehicle being purchased. In other words, if you’re purchasing a 2007 used passenger car it must get 27.5 x 1.25 miles per gallon, or just over 34 miles per gallon.
Perhaps it’s something Canada should be considering as well, eh?
One criticism I do have, however, is that 18 MPG is too low for my liking. It should be raised a few notches. Beyond that, if you’ve got a 1986 Ford Bronco or 1991 Chevy Caprice sitting in your garage, this could be your big break — assuming the old clunkers still work.
Tags: CAFE, Cash for Clunkers
Tyler Hamilton is editor-in-chief of Corporate Knights magazine and a business columnist for the Toronto Star, Canada's largest daily newspaper. In addition to this Clean Break blog, Tyler writes a weekly column of the same name that discusses trends, happenings and innovators in the clean technology and green energy market. This blog is a personal project started in April 2005. It is not an official blog of the newspaper.
January 15th, 2009 at 1:13 pm
Hi Tyler,
Actually the Federal Government is working on a similar national vehicle scrappage program which will be unveiled later this month. It is being developed and will be administered by the Clean Air Foundation (www.cleanairfoundation.org), which has successfully run the Car Heaven program for 9 years. In this time Car Heaven has removed over 83,000 older, more polluting vehicles from the road.
So, good on the Americans and here’s hoping this bill passes but let’s not forget that Canada has been out-in-front on this issue for years.
January 15th, 2009 at 1:55 pm
Thanks Jeff. Yeah, Car Heaven has done a great job. Unfortunately the incentives haven’t been great — in fact they’re dramatically less than what’s being proposed in the U.S. and I’m not sure our federal government has plans to jack up the incentives much higher. I hope they prove me wrong.
So, yes, U.S. legislators may be aiming to mimic the Car Heaven model — which is a good thing — but they plan to go much further in terms of incentives, which is a better thing.
January 16th, 2009 at 1:18 pm
[...] “Cash for Clunkers” program a good, sensible idea Three U.S. senators — two Democrats, one Republican — introduced a bill today that would create a national incentive program for the voluntary retirement of inefficient vehicles. The four-year program would apply to anyone who had a driveable vehicle registered for four months or longer that got no more than 18 miles per gallon. The vehicle owner would have the option of turning in the car, truck or SUV to be scrapped in exchange for a credit of $2,500 to $4,500. [...]
June 2nd, 2009 at 5:45 am
I wish I could afford a $3,000.00 being on a fixed income I just hope I could get decent insurance and finacing for such a project. We should do the same thing for all the old tv’s and upgrade then to hd blue ray, our computers should all be wireless and portable with duo core processors, and make sure mini gets her nails clipped at the poodle palace this week while I am at it. OH and be careful what you say about where you got your dress…..it’s a scandal you know.
Yours,
RR
July 13th, 2009 at 10:40 pm
Tks for the post!
The Japanese Government has been doing a similar program for many years and the cash incentive (for old cars works very well as increasing taxes + fines versus a cash transfer). As a result, the program not only helped the Japanese auto industry to increase sales–regardless of space limitations and excellent public transportation systems–but also improved competition within the industry.