As we noted on Friday, Senate Minority Leader Chuck Schumer wants to incentivize electric vehicle sales using a scrappage scheme in the mold of Cash For Clunkers. This is a well-intentioned plan and the goal of increasing EV adoption is a good one. It just ignores one serious problem: Cash For Clunkers sucked.
The core problem of the program—and similar ones in other countries—is that environmental groups, experts and car enthusiasts generally agree that keeping an old car running is more environmentally friendly than scrapping it and getting a new one. This holds true even if the new one is significantly more efficient. The environmental costs of new car production are serious, even if they look clean and sleek.
That’s also true on the back end, where crushing a car tends to be a terrible usage of resources. Cash For Clunkers required that cars traded in be crushed, which means that useful bits couldn’t be recycled. Instead, they ended up covered in oil and antifreeze and thrown in a landfill. Whether you’re looking at that from the lens of an enthusiast or an environmentalist, that blows.
Plus, you had a lot of undesirable market effects. The cheapest running vehicles out there were scrapped the most since the incentive structure of the program set a minimum value on any running vehicle. That meant that it became much harder for lower-income people to find affordable transportation, as those cars had been scrapped. And since the program required you to buy a new car, people who had beat-up old cars but couldn’t afford a new one were left out.
Instead, they found it harder to get reliable transportation after Cash For Clunkers because a bunch of perfectly usable cars and even some cool rare ones had been scrapped. So even though $454 billion already sounds like a lot of money for an EV transition period, note that the real cost will be higher once you factor in increased used-car prices for people who can’t afford EVs or have lifestyles that EVs don’t fit.
Finally, I’d argue that this is a program designed more to look environmentally friendly than be environmentally friendly. In addition to the aforementioned well-known environmental costs of scrappage schemes, you have to acknowledge that these programs entirely focus on new car sales, justifying that by saying that the transportation sector accounts for 1/3 of U.S. carbon emissions.
Reducing that is important, but this strikes me as another example of promoting consumer-level incentives over regulating large-scale polluters. The 29 percent of greenhouse gas emissions produced by the “transportation sector” does not only cover new cars, though that’s what’s always targetted. It covers cars, trucks, boats and air travel.
And it seems intentional that almost nowhere will break out numbers of cars versus the rest, as shipping and trucking are notoriously dirty. Globally, we know that air travel accounts for 2.5 percent of emissions while the transportation sector emits 15 percent of all carbon, but the EPA doesn’t seem to offer broken out numbers.
That makes it easier to push policies that focus primarily on the consumer side, as they can be guilted into action and don’t have powerful, connected advocates like the lobbyists for the shipping or airline industry. Sure, the auto industry has lobbyists too, but that’s probably why Schumer’s plan encourages new car sales and includes incentives for car companies to develop new cars.
To sum up, rather than regulate, these programs tax consumers and use that money to pay manufacturers to develop cars they should be developing already while incentivizing people to destroy perfectly good cars.