Cashed-in clunkers at junkyard (planetgreen.discover.com).

Amidst the outstanding response and plethora of media coverage for the U.S. Cash for Clunkers bill and subsequent program, formerly known as Car Allowance Rebate System, it is important to address the issue of how Green the program actually is and the ramifications of the program for the environment. This government-funded program has dominated the news and commercials lately, and there is a healthy debate on the benefits of the program. Can it be considered part of the Green Revolution? 

Before answering that question,  a brief description has been assembled for ones not familiar with the program, prior to discussion of the Green attributes. Regardless, the naming convention for the program is ingenious, as the main concept speaks for itself and is understood by all; however the devil is in the details.

Individuals are able to trade-in cars or trucks meeting a specified set of conditions at a dealership listed as noted on the official government website. Persons that meet the eligibility requirements according to Cash for Clunkers car list details and complete the application process must designate their automobile for scrape and are entitled to the scrape value minus $50 for the dealer to dispose of the vehicle. Customers receive a $3500-$4500 credit to purchase a brand-new, more fuel efficient automobile and are still offered whatever deals are available from the dealer. It is arguable that the stimulative nature of the government program on the economy outweighs the environmental benefit, especially due to the fact that many dealerships sold more during the first week of the program than the rest of July combined. Ford Motor Co. stated recently that sales for July rose 2% compared to a year earlier, which was their first increase in 19 months and the first for any U.S.-based automaker since November 2007, one month before the recession began. The program is in effect tied to President Obama’s Green Energy Stimulus package in the incentive for people to buy new cars and aid the fledgling American auto and supplier industry, while also focused on improving U.S. energy conservation and lessening its dependence on foreign oil.  If the goal was simply for people to buy new cars, then there would be no need to trade-in a less fuel efficient automobile.

It would defeat the program's environmental purpose if the program accepted true junk cars for trading in, since cars that are not frequently driven are minimal polluters. Thus, there are a number of requirements such as recent registration and insurance over the last year and proof of ownership. There are numerous categories of fuel efficiency on both the vehicle for scrape and the vehicle to be purchased. 

Cash for Clunkers car list details indicate that automobiles for scrape must have an EPA-estimated combined fuel economy of 18 miles per gallon or less. The only number that counts is the one reported, as of July 24 on the EPA's fueleconomy.gov web site. In general, if the car purchased has an EPA-rated fuel economy, combined city and highway mileage, of 10 mpg better than your trade-in, one is eligible for a $4,500 credit. If it possesses 4 to 9 mpg better than the original auto, then the individual is eligible for a $3,500 credit. In addition, the standards for scrapping cars for new trucks or SUVs are more liberal. In this case, with only a 2 mpg improvement, one would receive a $3,500 rebate; with a 5 mpg improvement a $4,500 credit is available. The fuel economy requirements are not as strict for ridding a SUV, van or pickup for a new vehicle. 

Some may speculate that the minimal difference of a 2 mpg improvement between the car traded in and the one purchased is an insignificant difference. However, one has to look at the big picture. If 100,000 people, begin driving a new vehicle achieving 28 mpg vs. 26 mpg on average, for 100,000 miles over its lifetime, saving 275 gallons of gasoline; ultimately, the U.S. has decreased its demand for gasoline by 27.5 million gallons and approximately 1.4 million barrels of crude oil. Oil imported into the U.S. requires refining for transformation into gasoline used in common automobiles, which is also a fossil fuel and carbon emissions-intensive process that would be reduced with enhanced overall fuel efficiency. The benefit of less reliance on foreign oil cannot be underestimated, since it is now considered an issue of national security by the Obama administration. Furthermore, the newer more fuel efficient car is likely to have less carbon emissions than its predecessor, which reduces the U.S. impact on global warming. The U.S. has been the historical leader in carbon emissions over the last 30 years, even though China has overtaken the country in this regard in the last several years.

Not all auto recyclers are relishing in the government's new Cash for Clunkers program, which requires car dealers to literally crush the so-called gas-guzzlers received as trade-ins from new car buyers. However, the program was designed to rid the industry of less fuel-efficient parts and automobiles and not as the most economical way of handling the supply chain to the junkyard. Used engines and drive trains are a large component of recyclers' income from each scrapped car, and under the federal program those engines must be destroyed. If the engines were being collected, then ultimately a new market of less energy efficient parts would emerge with the potential of them being installed in other cars, which would defeat the purpose of the program. The idea is to promote fuel efficiency and help automakers, but it comes at a time when more than a dozen U.S. auto parts suppliers have filed for bankruptcy this year. Some argue about the issue of destroying good parts when the supply chain is in jeopardy; however, it may also stimulate demand for new parts, as opposed to refurbished ones, especially with the influx of newly purchased cars on the road.  

Other critics have suggested that the Cash for Clunkers program may cause more emissions from increased car manufacturing due to the elimination of so many older automobiles from the road; however, the program is helping alleviate the burden of excess inventory on the market, as sales have been down as much as 40% for some companies versus last year at this time. Furthermore, sales have been so low since the U.S. recession began in December 2007 that numerous dealerships have closed, especially in the case of the Big 3 of Crysler, GM and Ford. On the other hand, an indirect benefit of the program is that it will generate a much-needed financial boost to the ailing auto industry in the U.S. and give it the opportunity to invest this money to stay afloat and innovate in order to meet the tightening fuel efficiency and vehicle emissions mandate, which will take effect in 2016. Moreover, this innovation will lead to more hydrid and flex-fuel vehicles being available on the market and propel the rising biofuel or ethanol industry in the U.S., which has received a significant amount of Stimulus funding.  A new Cash for Clunkers bill grants additional funding of $2 billion, which is pending on a U.S. Senate vote this week, since the original allotment will be exhausted due to the overwhelming response from car customers.

The Cash for Clunkers program has been achieving its goal of stimulating the fledgling auto sales in the U.S., which have a major impact on the country’s gross domestic product, while also improving the country’s overall carbon emissions and fuel economy in years to come; however, the mechanism and enormous multi-billion dollar government funding used to meet these goals are definitely issues for debate. 

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For more info: Official Cash for Clunkers bill update and website- http://www.cars.gov/