Cash for Clunkers Legislation Rolls Closer

April 29, 2009

Old, inefficient cars are one factor driving fossil fuel dependency. New federal legislation that would pay people to scrap these vehicles, thus getting them off the roads and permanently out of circulation, may soon receive Congressional approval, BusinessWeek reported on Apr. 24, 2009.

While spun primarily as an environmental effort, this legislation has gained momentum due to the general economic crisis and in particular the dire straits of US carmakers — since it would spur new car sales.

On the same day, the Detroit News reported on the two competing bills: HR 1550 and 520. Both would offer car owners significant cash payments for turning in older vehicles — but they differ in which new cars and trucks would qualify.

Right now, both bills are being considered by the House Subcommittee on Transportation and Infrastructure. Subcommittee majority info: 202-225-9989; minority info: 202-225-6715.

According to BusinessWeek, compromise legislation is likely to soon emerge from the subcommittee: "The likely outcome in a final bill would open up the program to all auto companies — U.S. as well as foreign — and allow consumers to trade their old cars in for more fuel-efficient vehicles no matter where they are built. To spread the program evenly, companies helped by the taxpayer-funded program would have their benefit capped according to their market share. ...The formula for which vehicles would qualify is still being hashed out. But trades, such as a nine-year-old or older Ford Explorer traded for a 2010 Ford Fusion Hybrid, for example, would probably be the kind of swap that would get the maximum benefit."

The American Council for an Energy Efficient Economy has voiced skepticism about the environmental benefits of HR 1550. Their biggest complaints about HR 1550 are:

  • "The qualification for vehicles to be scrapped under the program is based on age (model year 2000 or earlier) rather than poor fuel economy."
  • "The fuel economy threshold for U.S.-assembled cars to be purchased under the program (27 miles per gallon highway) is very weak, with well over half of all cars sold meeting this threshold."

ACEEE supports HR 520 because it "promotes scrappage of vehicles having a combined fuel economy under 18 miles per gallon and purchase of vehicles exceeding Corporate Average Fuel Economy (CAFE) standards by at least 25%."

On Apr. 27, Huffington Post presented an analysis of cash-for-clunkers programs from other countries. Bill Chameides writes: "There is a general sense out there that these programs will be good for the environment — after all how can removing an old, presumably polluting car from the roadways and driving a new one be bad? Well it turns out it can be an environmental downer, especially when the programs carry poor or unenforced environmental qualifications, or, of course, none whatsoever. Don't forget that manufacturing a new car requires energy and so it arrives in your driveway with several thousand tons of CO2 emissions embedded in it. To make up for those embedded emissions, you'd better be sure that there is a significant differential between the mileage of your old car and your new one."

Some auto dealers have voiced concerns about cash-for-clunker programs, fearing that they would encourage too many consumers to bring in non-running derelict vehicles for scrapping, rather than viable trade-ins. Auto dealers generally make their highest per-vehicle profit from selling used, rather than new, cars. National Automobile Dealers Association. Press: David Hyatt, 703-821-7120; or Charles Cyrill, 703-821-7121.

The Specialty Equipment Market Association, which serves the "motor vehicle aftermarket" (restorers, specialty parts, etc.), opposes cash-for-clunker programs. Press: Stuart Gosswein.

The Automotive Service Association (for repair shops) is lobbying to include a repair provision in the legislation, rather than simply requiring that older vehicles be scrapped. Release. Press: Clarence Mills, 202-543-1440.

Some states are working on their own cash-for-clunkers efforts. For instance, in IL, the proposed Clean Cars Act (HB 422) may include a provision to pay consumers to scrap older, less-efficient vehicles.