Cash for the Climate

Edward Glaeser (over at the Economix blog) and I are doing a few posts on the high-speed rail (HSR) component of the economic stimulus package (find the first post here).

“A turnover of this magnitude has approximately the same impact as magically turning the average passenger car on the road into a Prius.”

HSR promises to reduce carbon emissions, but so does the other hot transportation policy at the moment, Cash for Clunkers (CFC). Under CFC the federal government is providing rebates to consumers who trade in their vehicles for new ones that get better gas mileage. Which program is the more effective way to cool down the ice caps while heating up the economy?

First, unlike most of the stimulus spending, CFC is targeted directly at one of our most distressed industries (the auto sector) and at our most distressed state (Michigan). Moreover, CFC is providing stimulus right now, when we really need it.

HSR is not geographically targeted; backers have proposed routes across the country, watering down the benefits for the most hard-hit areas (the industrial Midwest, the West Coast, and the Southeast). Some, though not necessarily all, of the proposed HSR lines don’t make much sense economically or in transportation terms, but casting the geographic net broadly will certainly help with securing support in Congress.

As for the speed of the impact, HSR will provide timely employment for planners, surveyors and engineers. But construction will not commence in earnest until after years of planning. This time lag before the dirt finally flies and the construction jobs materialize makes it curious that HSR was bundled with the stimulus package at all. Remember all the emphasis on “shovel-readiness” with the other transportation elements of the stimulus?

Second, CFC is going to save us lots of fuel, starting today. The average vehicle being traded in gets about 15.8 miles per gallon (6.33 gallons per hundred miles), and the average new vehicle that replaces it gets about 25.4 m.p.g. (3.94 gallons/100 miles). A turnover of this magnitude has approximately the same impact as magically turning the average passenger car on the road into a Prius. (See my post on the efficacy of getting the worst gas guzzlers off the road here.

HSR, on the other hand, would probably benefit the environment in the long haul. But the effect might be disappointing. See Glaeser’s new post on the environmental benefits of HSR here. He finds the environmental savings are real but are comparatively modest next to the system’s cost. Moreover, he does not consider emissions from the system’s construction (see this). Because of construction emissions and the considerable amount of time the HSR program will need to gear up, HSR’s greenhouse savings will not be felt for years or, perhaps, decades. The long time horizon doesn’t necessarily mean that the enterprise isn’t worth undertaking. But my hope is that we can meaningfully cut emissions before U.C.L.A. is underwater.

There is always the chance that the ridership for HSR might prove disappointing. CFC, on the other hand, has had a demonstrated, enthusiastic response from consumers. (Cars have been flying out of the lots and three months’ funding for the program ran out in one week, though admittedly the response from consumers is slowing.)

CFC largely pays for itself, at least in the net. The average customer will reap an estimated $700 to $1,000 dollars per year in reduced fuel costs. At that rate, society will have achieved a net direct benefit (not even counting the environmental pluses) by the time the lifetime of the car ends. Who can’t get behind a pro-environment program that actually makes society money instead of costing us?
On the other hand, even HSR backers admit that the lion’s share of the cost of building the system will never be recovered at the farebox. Capital costs per rider are dauntingly high: see Glaeser’s post on the direct benefits and costs of HSR here. The system may not even reap an operating profit: Amtrak requires a subsidy of $2.6 billion/year.

This is not to say CFC is a perfect program. After the initial stampede, consumer interest is starting to wane. Only a small number of people will benefit. The program rewards those who behaved badly (bought gas guzzlers) in the past, while those who were virtuous miss out. Hope that the program will be repeated in the future may actually persuade people to hold onto their gas guzzlers longer than they would have otherwise. Finally, it’s an open question as to how long the clunkers would have stayed on the road without the intervention. Would they have clunked along for years, or were they about to hit the scrap heap anyway?

Still, the pluses of CFC outweigh the minuses. A little green (so far the program has received $3 billion) is going to mean a lot of green behavior.

And HSR? The prospects are not as bright.

Admittedly, HSR has some benefits that CFC doesn’t. HSR may influence land use patterns for the better and promote economic development (Glaeser will quantify these benefits next week). HSR would build American competence in a futuristic technology. It would improve road safety (so will CFC, since it will put cars with the latest safety features on the road). HSR will also ameliorate congestion (see Glaeser for a dollar figure for this benefit).

Finally, HSR will relieve pressure on our transportation infrastructure, particularly the airports. (Although even if HSR isn’t built there is nothing requiring us to build new runways; we can cope by raising ticket prices or flying bigger planes instead.)

Let’s wait till next week to see Glaeser’s fourth and final post, when he will get to the bottom line. Hopefully when all the numbers are in we’ll find we’re not on the verge of shelling out a lot of cash for a policy clunker.

(Thanks to the University of Minnesota’s David Levinson for thoughtful comments on this post, though the opinions (and any possible errors) are my own.)

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COMMENTS: 63


  1. caseynshan says:

    One problem, you are assuming, miles driven are being traded 1-1.
    My parents traded in two vehicles.. 1 was an old van that was driven an average of 1000 miles a year and qualified for CFC, the other was a 2001 minivan that was driven average of 15000 miles per year. They utilized the CFC program, traded in both, and bought a crossover, that is much more fuel efficient than the first vehicle, but slightly less efficient than the minivan. … Net is bad for environment. I have a feeling many of the clunkers being traded in were rarely driven.

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  2. Kevin says:

    You claim that “A turnover of this magnitude has approximately the same impact as magically turning the average passenger car on the road into a Prius.”

    And that’s completely false- If a lot of people started driving Prius’s or cars that got better mpg than a Prius, then sure, it would be as if the average passenger car was turning into a prius. But 25mpg is significantly lower than what a Prius gets! We aren’t anywhere near having lots of fuel efficient cars on the road, even with CFC.

    Overall, your analysis of HSR so far has been incredibly short sighted and in many cases wrong, in terms of arguments for and against HSR!

    In some ways this isn’t your fault, HSR introduces a whole new dynamic into transportation. The way people act with good public transportation is completely different. For example, you claim airport usage may go down with HSR. This may be true in some respects, but at the same time with better HSR we may start to see more public transportation (“last mile”) from HSR hubs. If this also services airports, we could see more airplane usage from people who would have driven in the past so that they’d have an easy way to get around at their destination.

    The main problem with how the US is currently viewing HSR is that public transportation needs to be built on an intra and inter city basis simultaneously, or else there will not be enough ridership on either. As an example, consider Providence, RI. The local transportation is adequate in some areas, but has poor service for most of the city. Given better HSR service, would more people from NYC and Boston choose to take the train to Providence rather than drive? Without efficient local transportation, there is little incentive not to take one’s own car, unless someone else is paying for a rental car. But when an integrated system is built, people can travel all over effectively while leaving their car in the garage. The carbon savings of this are huge- and add additional savings on to any calculation of gains from HSR.

    HSR would be a great addition to the US, but it’s really only a start. Until we consider transportation at all levels, we’ll never have a system that’s as effective as Europe’s or Japan’s.

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  3. Peter Merriam says:

    These aren’t the only choices. Someone NEEDS to give Skytran a fair trial. If it does half of what it claims, it will beat adding more cars to the road by a long shot, and will face many fewer barriers than HSR.

    Here in the DC area, where a new Metro line was recently approved, and badly needed, the NIMBY arguments are already clogging the airwaives. Skytran will have a much smaller impact, both financially and aesthetically.

    Pete Merriam

    http://www.skytran.net/phpsite/home/Home%20Intro.php?bg=neg

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  4. Willis says:

    Cash for Clunkers is only good in that it is getting numerous inefficient vehicles off the road. I expect it to have the same problem that the “dealer pricing” and “0% interest” policies have had in the past. A lot of people who might not have purchased a vehicle for a year or two have decided to upgrade. The result will be even worse sales over the next two years or so. The companies who did not pursue these absurd policies are still profitable (Japanese and German companies) while the american companies are all filing Chapter 11 and seeking bailout money. Businesses need a consistent and regular cash flow and getting $14 bil in sales in a 3 week period followed by no sales for the next 6 months is not very consistent. I assume that the $4500 per car with $3bil in funding will result in about 667,000 sales of about $20k each. And as an additional question, is this going to actually put people back to work, or are these just cars which were already produced and sitting on lots. I doubt many dealers are going to be restocking to the same levels as in the past with the future sales looking fairly bleak.

    Dream all you want about CFC as a great idea, it is a temporary patch. To improve the future, you need to look to the future and the future of transportation is HSR unless the authors have invented some sort of teleportation.

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  5. Arvin says:

    How about a study on the impact of all the waste that becomes of those old cars? How much energy will be needed to get them where they’ll end up, and how much of the materials will be recycled, and how much of the scrap will contribute negatively towards the environment.

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  6. Freddy J. Nager says:

    In answer to Willis above:

    CFC is putting people back to work. Here. In America. As announced right here in today’s New York Times:

    http://www.nytimes.com/2009/08/14/business/14ford.html

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  7. Steve in Pennsylvania says:

    The government should have just bought the inefficient cars. The seller then could decide to buy another car from a dealer or private seller, The seller also could decide to buy school supplies, go to Vegas, retire debt, or just save it.
    The environmental good would have occurred — old cars off the roads — but the collective decisions of millions of people would have shaped the economy.
    I would imagine that many people in NYC who own cars would have just sold them and used mass transit instead. In the burbs, many two- and three-car families would figure out how to get around with fewer cars.
    In the exurbs and smaller cities with no good mass transit systems, inefficient cars would have been traded for more efficient cars.
    In any event, the people would shape the new economy.

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  8. rsand says:

    The problem is that all of the new cars don’t just appear, and all of the old cars don’t just disappear. It seems that creating this demand for new cars is actually creating a worse situation for the environment.

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  9. robu says:

    As a stimulus for the auto industry, the CFC would have to actually cause production to go up. Based on what I see at the Michigan supplier plants, it isn’t happening. Dealers are using this as a way of reducing bloated inventories.

    And I agree with caseynshan, in my limited exposure to people who actually used CFC, the trade in vehicles were not used often. My neighbor traded in his pickup that he only used to haul lumber on weekends or pull his trailer up north to campgrounds. He bought a new crossover. His plan is to drive the crossover and use his old Escort less unless “Gas gets too high again”. Let’s look at the score here: replaced high mileage daily driver with lower mileage daily driver (-1) and did not cause assembly plant in state to rehire laid off workers (-1).

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  10. Philippe says:

    As Kevin says, the answer is simply to take your car, then a plane, and have a look at Europe, or Japan, or even India…
    As surprising as it sounds, in these places you can actually live without owning a car. But as Kevin also mentionned, for that you need a real policy that includes both long distance and short distance public transportation, from cities to cites AND from districts/suburbs to disctricts/suburbs.

    I live in a big european city, do not own a car, have a bike and/or a subway/bus within the city, and grb a train whenever i move for the week-end (which happens almost every week-end). That being said, there lies the issue of density of population : the US is so large that it’ll be centuries before having a real alternative to cars…

    Cheers

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  11. jacob says:

    Why not make clunkers a 2 tier system. if a car gets 14-18 miles it can be resold as a used car if a super clunker is traded in instead

    A super clunker a car getting at least 5 MPG less than the clunker and with at least 50,000 less miles.

    This would also help out the people with the worst cars that can’t afford a new one even with a rebate

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  12. Andrew McKeon says:

    One of the aspects of HSR that CFC does not enable is something called TOD – or Transit Oriented Development. The idea behind TOD is that a good mass transit network will enable other “postive externalities” as economists like to say. These consequences can include building communities with reduced air pollution, congestion, and increased foot-traffic on the streets. Folks don’t have to live in their cars, they can walk to the shops, hop on a tram to go to the movies or to the office. I just returned from a trip to Portland Oregon whose city elders made a commitment to transit 20 years ago, and the fruits of that commitment can be seen today in a vibrant, people populated city center without gridlock or sprawl. As I was waiting for the Tri-Met Light Rail to take me to the airport (for $2.30) I struck up a conversation with a gentleman standing next to me. He said he owned a car and a motorcycle but he always used the light-rail because “you can’t beat it for convenience and cost.”

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  13. John Doe says:

    We know you dont support trains. But the article you cite is just a joke.

    Unfortunately in the US the economists are very influent. In Europe and Japan, they dont care too much about economists.

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  14. cirby says:

    Net gas savings from Cash for Clunkers, if people act like they always have when given higher-mileage cars?

    None. Every once in a while, someone keeps track of driving patterns of people who buy newer, higher mileage car, and they find that people increase the amount of miles driven – the limiter for most folks is “how much can I spend on gas this week,” not “how many miles do I need to drive?”

    So no. Overall, the program won’t do much except expend a few billion dollars, shove a few cars off the lots somewhat faster (sales are apparently collapsing as we speak – people waited for the CfC program to kick in to buy cars, then went back to below-normal buying patterns), and increase the future US debt.

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  15. charles says:

    Terrible miss on some basic unintended consequences of the CFC program. With the breadth of the rest I would have thought a 10 min brainstorm of possible negations might have been in order…or is it that you want CFC to be something it’s not?

    Poster 1 nailed the first issue, and it’s one I’m seeing first hand.

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  16. Sean Samis says:

    has anyone calculated the “Capital costs per rider” on the Interstate system? How large is the subsidy that supports the unprofitable highway system?

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  17. Rodney says:

    So, the US government borrows money to pay people to upgrade to cars that save them money. Win-win, right? So, what effect comes from that money being taken from the credit market? Might lowering the supply of credit by a few billion dollars mean that some folks who otherwise were hoping to replace an old car this year can’t do so because they can’t get a loan that they would have gotten with a higher credit supply? Does supply and demand not affect credit markets or is the effect of diminished supply inconsequential?

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  18. Rodney says:

    Unfortunately in the US the economists are very influent. In Europe and Japan, they dont care too much about economists.

    Are you saying that Japan and Europe are better off economically or just that they have more passenger trains?

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  19. Swingline says:

    I was reading about the potential number of plane trips not taken and automobile rides as well in a fully developed HSR system. This was in the CSMonitor weekly. It seemed that, at those levels, it would dramatically shrink if not kill the auto and airline industries. Of course, it is claimed that early auto manufacturors hastened the decline or stultification of the railroad in the US.

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  20. BruceMcF says:

    You write that HSR systems will require years of planning, in apparent ignorance of the long planning process that has already taken place for the Midwest Hub and Ohio Hub.

    Indeed, you worry about the “targeting” of the program, and then mention three areas … the West Coast,, the Midwest and the Southeast … likely to receive a majority of the $8b HSR funding in the Stimulus bill.

    I’ll admit that neither are as sloppy as using UK average emissions assuming no special program to reduce CO2 emissions to estimate the CO2 emissions of a California HSR system with an explicit program to reduce CO2 emissions, nor of talking about the lack of construction estimates for CO2 when citing a report that includes construction estimates of CO2 …

    … but still, awfully sloppy.

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  21. DrS says:

    To Kevin, who refutes the claim that it is almost like turning the average car into a Pruis because “25mpg is significantly less than a Prius”, you’re forgetting, as the author remembered, to use gal/100m rather than mpg. The net gain of the new cars bought compared to the cars removed from the road is over 30% less gas used per mile driven.
    If you consider a Prius to get 46 mpg(2.17 gal/100m), it uses 30% less than a care that gets 32.2 mpg(3.11 gal/100m), which is close to the average passenger car sold.
    Lets also remember that the difference in mpg in reality vs. rating is larger for the Prius than for most cars.

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  22. dav says:

    I’m actually buying a gas guzzler in case they do this again next year.

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  23. Gary says:

    “The program rewards those who behaved badly (bought gas guzzlers) in the past, while those who were virtuous miss out.”

    And the virtuous pay for it in higher taxes and devalued currency . This is just another way in which government always does more harm than good when it tries to manipulate behavior.

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  24. Nolan says:

    I’d like to see someone study the environmental effects of manufacturing tens of thousands of cars more than otherwise would have been been under cash for clunkers
    freakonomics team on the case??

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  25. ben says:

    To be honest I think this post is ludicrous. The assessment of the CFC program leaves out the value of the cars destroyed, and that turns the economics on its head. This is the broken window fallacy. Waning consumer demand is the very least of the CFC’s imperfections.

    This blog’s stock just went down 10 points in my book.

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  26. velorution says:

    What you’re missing in the MPG increase argument is the embedded CO2 costs of producing the new car. Given the average of 6.7 tons of CO2 in each new car, the MPG increase has to be very substantial just to work off the embedded CO2 (years in some cases) before the benefits of MPG start to take effect.
    Good graph on this here:
    http://www.nicholas.duke.edu/thegreengrok/cashforclunkers

    An green use of $3 billion would be to give it to transit operators to improve transit service to replace driving, not encourage more driving.

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  27. ianvl says:

    I agree with previous posters who point out that inter-city transport like HSR is dependent on intra-city public transport to really be convenient. In fact, I think it makes much more sense to start with local networks, since links for short communtes are not dependent on other networks.

    My personal habbits support this: I live in the Czech Republic, where some cities have excellent public transportaion, but it’s not very convenient to get around by train or bus in small villages in the countryside — like it is in a country with an excellent rail system, like France for example. I own a car but basically use it only to travel to such places, and prefer taking a train or bus if I can hop on a metro or tram when I reach my destination. I find it’s less stressful and a more productive use of time, since I can read the paper or work while traveling.

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  28. Griff says:

    CFC, as a stimulus package, can’t run forever: a continual/lonf term incentive to fuel-efficient cars will be needed.

    The UK has high fuel tax, deliberately adjusted in excess of inflation each year, plus fuel efficiency related annual vehicle tax. That is a strong incentive to get a fuel efficient car (and there’s also the annual vehicle inspection to pass, which takes ‘junk’ cars off the road).

    I don’t know what a practical US incentive might be (can’t see it being fuel tax!).

    HSR must surely have a place in the US for city to city Business travel – and that will affect Airlines. Spanish ‘internal’ airline use has dropped recently since HSR rail extensions came into use.

    With many US towns/cities more spread out than Europe, public transport will always be more of a challenge – but there must be some advantage in developing HSR for those commuting into city business districts. something like the ‘Javelin’ sprint trains being introduced this year in London.

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  29. dude says:

    Missing from you analysis is a comparison of how many people might use high speed rail rather than cars. What is the milage/100 miles per person for a train full of 100 people? And what is the difference between that sum and the sum of 100 people driving 100 miles?

    Just curious….

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  30. David Strom says:

    Couple of points…

    As someone pointed out, the traded-in clunkers are destroyed, not even usable for parts. I would expect this would hurt those who can’t afford a new car, but need to buy the cheapest transportation available, those “clunkers”. It’s the bigger, more fuel-inefficient vehicles that can last 10 years plus, and still get a working poor person to work or the store a couple or a few miles away, and can be bought for $500-$1000 and will run for another year or 2 or 3. These people are injured by this program.

    And the destroyed parts… engines that could have repowered existing cars / trucks / vans that are needed by those not so well off, small trades workers, etc.

    Now about the so-called “High speed rail” — what I’ve seen about this is that it’s not really “high speed”, like in Japan or Europe, but “medium speed” at best. And, when it’s done, how much money will have to subsidize its operation? I’m thinking Amtrak, but probably not as many riders due to the political nature of the route decisions. Once built, the taxpayers will be on the hook for billions of dollars each year in subsidies I’ll bet, with no end in sight. I cannot believe that there would be better ways to spend our money… how about more & greener buses, if green is the goal?

    Mark Twain was, if anything, too easy on Congress.


    Dave

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  31. Ellen says:

    Three points:

    1. HSR is not some ‘futuristic technology’ – Japan’s HSR was built in te 1966, while France’s was launched in 1981. That would be 43 and 27 years ago, respectively. Hardly futuristic, this is now standard technology in much of the industrialized world.

    2. Investing in the long term is usually considered a prudent strategy rather than aiming for short term gains. How would HSR be any different, given that what we are gambling with is the future of our quality of life as we currently know it?

    3. Amtrak’s subsidy is $2.6 billion per year, and you state that this is untenable. Yet the Federal highway spending budget for 2008 was $41.2 billion. If that’s not a subsidy, I don’t know what is.

    The point is, moving goods and people is critical to the healthy functioning of an economy, and thus an appropriate role for the government to ‘subsidize’ if said government is interested in a healthy economy and stable society. There are many tools in the transportation tool box, only two of which our government ‘subsidizes’ to any significant degree: roads and airlines. Americans need to understand that the train — intercity, HSR, and light rail — can and should be an equal pillar in the American transportation equation, equal to cars and planes. And let’s not forget critical infrastructure for yet other options: the bicycle and our own two legs.

    Finally, to the point that development of HSR will kill the auto and air industries, that’s just bunk — Europe and Japan both still have auto industries that design, make and sell cars across the world. They also have industries that design, make, and sell train cars and equipment across the world. There’s a valuable opportunity for us here in the US if our manufacturers were only smart enough to seize it: convert some of those abandoned car factories into HSR and light rail train factories.

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  32. senzaferma says:

    CFC= old game, played slightly better with improved energy efficiency and emissions, continued destruction of urban fabric and farmlands.

    HSR=new game. Reversal of urban blight and sprawl, preservation of green America.

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  33. Anderkoo says:

    Why, as economists, do you presume that past performance predicts future returns? Just because to-date trade-ins of “clunkers” get on average 15.8 MPG doesn’t mean that will continue — as the low-efficiency clunkers are cleared out, inevitably the mean will creep up and the gains will decrease, unless the MPG requirements for the new car also rise.

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  34. elam b says:

    what they need to do is cash for clunkers but include bicycles and scooters it would cost the govt much less and make a bigger impact on our carbon footprint

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  35. enoriverbend says:

    @senzaferma:

    CFC=bailout of car dealers stuck with big backlog of unsold vehicles

    HSR=cool new expensive toys for a few upper-middle-class urban dwellers

    neither having much real net impact on the quality of environment

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  36. BS says:

    #10 – Philippe obviously has never been to the U.S. because there are many cities where people don’t own cars and use public transporation to get around. I’m always amazed when traveling in Europe how distorted peoples views are about the U.S.
    For me, I live in a big [U.S.] city, do not own a car, have a bike and/or a subway/bus within the city, and grb a train whenever i move for the week-end (which happens almost every week-end). Sorry, but perhaps you should spend some time traveling outside your perfect Euro continent, via plane of course.

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  37. Mike Lieberman says:

    The problem with economists is that they make assumptions. Guessing simply produces invalid results. I used the CFC program. I had an 87 Nissan Pathfinder (16MPG). I also have another vehicle. I live alone. So why have a second vehicle – well (1) it wasn’t worth selling, (2) it was my ‘oh crap’ vehicle for when the other needed to go to the shop, and (3) I used it for really dirty jobs. How much did I drive it? Under 500 miles a year in the past 5 years. But I am getting married and my bride – a foreign national will need a car – so hey! Perfect timing! She is getting a new 35MPG vehicle and I got money for my old beater. For any number of reasons people hold on to old vehicles that are not efficient but still run. It does not mean they are the primary source of transportation. Only a well done case study of a representative sample of participants will tell if it was good for the environment. Did it help the auto industry?… yes in the short run, and in an odd reversal of assumptions if the CFC program retired non/rarely-used vehicles it may not have relieved the pressure to purchase new cars that some CFC critics worry about. So the bubble of CFC sales may not then suppress future car sales. Once again – only careful studies will tell us. Guessing is as useful when done by economists as when done with a magic 8-ball.

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  38. Kevin says:

    @BS, #36

    Sorry, but there are NOT “many cities” where people don’t own cars. There are a handful at best (NYC, Boston, Chicago, San Fran to name a few), but it is nothing like in Europe where even small cities are livable car free.

    Take Providence, Hartford, Worcester, and Springfield as some Northeast examples of cities where a car is necessary for almost everybody there. Size-wise, these cities compare with relatively small European cities where a car would not be necessary. With improves public transportation, this situation could change!

    And @Dr. S, who refutes my assertion that saying CFC is like making the average car a Prius- Sorry, but just because you get a 30% savings doesn’t suddenly make that statement even slightly correct. Putting Priuses on the road makes the average car a prius. Regardless of the percentage gain in fuel efficiency, the cars on the road getting 25mpg are still emitting more CO2 into the atmosphere than a Prius would. Saying anything else is simply a dishonest representation of the environmental effects of CFC.

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  39. Dave in NYC says:

    As good as the benefits to CFC sound and perhaps even feel, the big difference between CFC and HSR is that CFC is a temporary solution that will help us now, but less in the long run because it will do little to change our behavior. It relies on the same old model: the role of citizens as consumers.

    The problem with that model is that every time there’s an economic downturn, companies suffer as citizen/consumers are forced to cut back, so the downturn just gets worse. Right now, what were really feeling is that the US was dependent on a consumerist society that was unsustainable. Remember, the average family was taking out a sub-prime mortgage, waiting six months, then borrowing on the “equity” to finance vacations, new cars, and even boats. Meanwhile, health care and education costs continued to soar while infrastructure investment slid.

    At the end of WWII, the Allied nations all needed transportation investment. European nations chose to make large investments in rail and light rail, while the US nearly killed rail while embracing the automobile. It may be time for that to reverse, especially now that consumers are backing away from making automobile purchases.

    Why can’t GM make trains? What happened to the “This is America and we can do anything” mentality? Maybe it’s just time to re-think the consumer model; it doesn’t seem to have worked out too well.

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  40. Ron says:

    HSR is long term strategic thinking; CFC is short term band-aid thinking.

    European countries, after the decimation of WWII, had a choice opportunity to move towards transportation that is energy, cost, environmental and land use efficiency – and they made that choice wisely.

    The US, on the other hand, grew towards individualism, constructing ever more roadway, cramming more vehicle trips into smaller spaces with resulting traffic and environmental issues, thrusting inner-city dwellers outside cities in search of cleaner air and peace and quiet. And where has that left us? Building societies which increasingly move outward to avoid the ills they built themselves into; a condition auto companies feed themselves on. This ugly co-dependency must be broken.

    So who is really being served here? The people, or the auto companies?

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  41. Evan says:

    I’m sorry, did you just compare the national Amtrak system to a high-speed rail line? You’re being serious?

    A national network of long-distance routes, kept in place by the senators whose states they cross – with a few popular regional routes – is not comparable to a high-speed rail line. How about instead, you actually make a valid comparison, which would be comparing a high-speed rail line to Amtrak’s Northeast Corridor, where Amtrak regularly turns an operating profit.

    Then we can talk. Not to mention, you go on about how cost-effective it is to spend $4,500 to pay someone to get a car with better mileage, yet you don’t make any reference to the massive costs of building and maintaining our road infrastructure or the safety benefits of using high-speed rail over individual automobiles (think of the lives saved).

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  42. Bill S says:

    My octogenarian mom is considering junking her 15 MPG Chevy for something that gets more like 22 mpg, and wouldn’t even be considering it except for the subsidy. It’s a good thing.

    As for the lost value of the cars junked, given their higher emissions, and the real social cost of carbon, their residual value is significantly negative. That’s the whole point: get them off the road to reduce carbon emissions. Ben (25) is also overlooking the fact that medical costs decline substantially when we remove cars that lack airbags and stability control.

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  43. laurenlp says:

    It takes an enormous amount of resources to manufacture a car. Buying a new vehicle comes with the “energy debt” it took to create it. CFC is another appalling line thrown to the already tanking US auto industry, and has nothing to do with the environment – let’s think re-use people, and keep mechanics in work.

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  44. Imad Qureshi says:

    I would love CFC if it also accepts my car. I have a 93 accord with 290000 miles. I am in market to get a new car (possibly civic hybrid). But I am not getting a $4500 or $3500 discount like most other new car buyers.

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  45. Hanoi Paris Hilton says:

    Sorry, several of my estimated numbers were mistakenly lo-balled in the next-to-last paragraph of my previous posting on the energetics of CfF. The difference is fuel consumption is correct at 1,600 gallons altogether over the comparable 50K miles. But the cash savings in fuel alone are closer to $4,000, or about $800/yr, or $67/month. (Compare this with the minimum $300+ monthly payment for a typical new vehicle.)

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  46. Hanoi Paris Hilton says:

    Ellen (10:32) compares favorably the $2.6B federal subsidy to Amtrak with the $41.2B spent by the feds on highways. But she didn’t mention that most, if not all of the latter amount is underwritten by earmarked fuel taxes on highway users (including costs eventually borne by consumers of anything and everything transported by truck). Whereas the Amtrak subsidy is paid for, almost in its entirety, by non-Amtrak riders.

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  47. E says:

    I fail to see how the two can be compared. HSR is being expanded all across Europe with a nod to the future.I grant the cost to set it up is great buut consider this -1 gallon of diesel in a train can move goods 400 miles.
    As for the CFC program-not alll cars are that efficient. Many people are trading in older pickups and SUVs for new ones that do not get good mileage-going from 15mpg to 18mpg is not much of an improvement! The other thing that is not discussed is the cost of builing and maintining roads and bridges for the cars. That never seems too be factored in. Sure the infrastructure is there but is is in need of large capital infusions too keep it useable.

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  48. JeremyCroke says:

    When I hear people praising the cash for clunkers program it makes me cringe. Our government debt is currently 11 billion dollars with each citizens share of the debt reaching close to forty thousand dollars. The fact that our government, persuaded by the auto industry is digging itself deeper into debt and encouraging American families to take on more debt.in a time of economic crisis (as consumers take out auto loans to pay for these new vehicles) is irresponsible, immoral, unsustainable and clearly unsuccessful.

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  49. Albanius says:

    The entire automobile based transportation system , and the suburban sprawl it enables, is one enormous clunker.

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  50. Albanius says:

    A faster economic stimulus, as well as emissions benefit, could have been, and still could be, achieved by including substantial operating funds to public transit systems, including bus systems.

    Albany NY is one of many transit systems forced by cuts in funding from overstretched state governments to cut service and raise fares just when ridership was increasing to record levels.

    New York City had enough clout in Albany to get partial relief from the painful increases proposed by the MTA, but unfortunately failed to include comparable relief for transit systems around the state, making the political task harder.

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  51. Gunnar Hand, AICP says:

    This guys missed the most important point about High Speed Rail. If and when HSR becomes a viable transportation option, it will remove the need for people to own a car or buy a plane ticket. It will encourage them to use transit and not an automobile at all. With that said, he should calculate the savings of not owning or driving a car at all in terms of the pocket book and greenhouse gas emissions. Not to mention that it will have a dramatic long-term effect in the way we build our communities; transit-oriented development vs. automobile oriented development. The point of HSR is to end the dependence on the automobile for regional travel, to build and enhance local transit, and to stop the exponential growth of car ownership and vehicle miles traveled in this country. Then gain, raising the price of gas will do that as well. We could probable reduce vehicle miles traveled, increase transit ridership, and generate enough money to fund the entire HSR system if we just raised the gas tax enough to get people out of their cars!

    GUNNAR HAND, AICP
    Los Angeles, CA

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  52. Chuck Metalitz says:

    HSR *does* pay for itself, because it increases land values in the area served. People are willing to pay in order to have HSR access. All we need do is collect part of this payment to cover the cost of HSR.

    And btw, I do pay gas tax, and I wish the money would be used for HSR so that I wouldn’t need to buy so much gas.

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  53. JD says:

    CFC is a great idea but it’s short term. That’s good, in that it makes a difference right now, but in 10 years it will have no impact – at that point the cars that are clunkers now would be gone anyway. HSR will be a slow start but will make a bigger difference over time. We need both short and long term solutions.

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  54. ian zurzolo says:

    what about our disastrous dependency on oil? We need to start biking more and using HSR as an alternative…

    We need to change the way we move across this earth.

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  55. Hanoi Paris Hilton says:

    This evidently didn’t make it through moderation the first time around, but nobody else has so far posted good data regarding the basic energy usage in the CfC scheme:

    Here follows a very quick-and-dirty work up of the relevant crude energetics (all data from five minutes of Googling):

    Assuming 50K miles remaining service life in the “clunkers” getting 16 mpg (now being destroyed instead ), the comparative savings in gasoline in a 32 mpg vehicle over those same 50K miles is about 1,600 gallons.

    The energy content in a gallon of gasoline is about 130 MegaJoules (i.e., ~35 MJ/l). Producing new steel requires about 22 MJ/kg, while recycling old steel requires about 14MJ/kg. The energy yielded by the 1,600 gallons of saved gasoline is 210,000 MJ, or about enough for smelting a little less than 10 tons of completely new steel, or to reprocess about 15 tons of recycled steel.

    I’ve also seen another set of figures showing production energetics of raw steel at 65 MJ/kg, and recycled steel at about 52 MJ/kg. If those numbers are more correct, the fuel saving allows for producing only 3.5 tons of new steel or 4.1 tons of recycled steel

    I further Googled up a figure of 66 giga joules (GJ) as the ballpark energy input required to manufacture a single new motor vehicle, including the metallurgical energetics (as above, plus copper wiring, aluminum components, etc.). One gigajoule is 1,000 megajoules, i.e., 66,000 MJ/vehicle. That figure comes from Ford and is based on Taurus sedan or a F-150 pickup truck.

    Ford also offers a lifetime energy consumption of those same models at about 961 GJ = 961,000 MJ, assuming a 120K lifetime mileage yield

    So very roughly speaking, it would take the fuel savings (over 50K miles estimated remaining life in each) of recycling four or five (!) clunkers to account for the lifecycle energetics of only one new vehicle.

    No doubt this is a vastly oversimplified analysis, and doesn’t at all address the carbon issue at the heart of the global warming hypothesis, on which it it bears saying that many, many high-powered scientists don’t accept as legitimate the conventional wisdom on AGW : either of the problem or of the various proposed solutions.

    This also doesn’t address the personal financial issues of holding onto a fully-paid-for clunker getting 16 mpg, or alternatively taking on a $15,000 auto loan for a 32 mpg vehicle that saves only about $4,000 in fuel costs (at $2.50 gallon, roughly the present average cost of gasoline in the USA) over the first 50K miles driven. Or only about $800/yr (or $65/month) at the typical 10k miles/yr driven by Americans. Of course the maintenance and repair costs of a new car will likely be much lower than of an old clunker over the first 50K miles.

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  56. Anthony says:

    This article overstates the benefits and ignores the downsides of the clunkers program. Also, what of the opportunity costs of having done nothing? According to sales data, the main beneficiaries of the program are not the Detriot automakers, but everyone else Hyundi, Toyota, Honda, and so on because they sell the small, fuel effiecient cars. The program destroys perfectly good cars that were fully paid for. It also needlessly destroys alot of the scrap value of the participating cars as some sort of liquid is poured into the engine to make it sieze up. This policy I understand is costing billions. This program is also saddling people who should be reducing their household balance sheets with potentially tens of thousands in new debt. Facing hundreds of dollars in new car montly car payments, CFC participants will be limited in what they can spend on other things going forward. As for the environment benefits, it takes alot of energy and resources to build new cars, and it you can’t just compare the average mileage of the cars being traded in with the care being purchased. You have to look at usage and buying patterns over a longer period of time. By sense is there will be some fuel efficiency gain, but it will be fairly small in the long term.

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  57. Jennifer @ Improve Gas Mileage Guide says:

    It’s a tough call on this one. I go back and forth on the Cash for Clunkers issue. For one, I see new cars with lots of life left in them destroyed for the program, and all that scrap metal is going where exactly? That’s not good for the environment.

    Also, I’m not sure about the economy. We see a sudden growth in the economy now, because people are out there spending spending spending on cars, but what about later? I mean, look at what happened to the housing market! All these people were out buying houses that were too expensive for them because someone gave them money, and then they couldn’t afford the payments. $4500 doesn’t make much of a dent on a new car, and some of these people are taking out loans they won’t be able to pay for.

    So, can we predict that the auto industry will have the same problem the housing market did? It’s possible. Only time will tell. But I think the government needs to learn to stop getting involved in such matters.

    However, in all honesty, if I had a clunker, I would trade it in for a new car and $4500. Why turn down free money? But only if I could afford the new car with the extra money. I wouldn’t put myself in debt that I couldn’t pay down.

    http://www.improve-gas-mileage-guide.com/cash-for-clunkers.html

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  58. Troy Cross says:

    CFC destroys the clunkers after paying out the $$$. What about the economic value of those old vehicles?

    Without CFC, they would have been available, cheap transportation. Now, there is an artificial floor of $4k on used cars. This is devastating for the poor, and not good for the affluent either, since transportation is often what keep them from working, which drives up the cost of labor in affluent areas.

    CFC

    1. is regressive, since the debt will be carried by all members of society, though only those wealthy enough to purchase a new car benefit and the poor are punished with expensive used vehicles;

    2. sets the bar so low on mpg of the new vehicles, it won’t change the mix of new vehicles sold, creating a demand for efficient diesels, compacts, and hybrids, i.e., won’t fundamentally shape the marketplace or buying behavior;

    3. won’t lower CO2, arguably, at all, since the pace at which fuel efficiency is increasing is greater than the time required to compensate for CO2 produced by manufacturing the new vehicle. That is, if purchases were delayed, they would buy higher mpg vehicles. That fact, together with the delayed auto factory / mining / shipping CO2 emissions, offsets the continued driving of the clunker in the meantime. So, I doubt there is ANY CO2 reduction in the CFC plan.

    So what does the bill really accomplish? It’s a giveaway to auto companies, dealers, and middle class people in the market for a new vehicle.

    Would it not be more effective to take the same amount of money, 3 billion, or whatever, and capitalize GM?

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  59. Graham Katz says:

    It is a common misconception, repeated in comments above, that highways are paid for by “earmarked fuel taxes on highway users.” In fact, the fuel taxes that pay for interstate highways is mostly generated by taxing non-highway fuel use (of the 3 trillion vehicle miles traveled in the USA in 2008 only 700 billion were driven on interstate highways – about one quarter). Interstates are extremely expensive to build and maintain, and fuel taxes on cars driving on the interstate can’t come near to paying for them. Which is why – although accounting for only 25% of the use – highways costs take up about 90% of gas tax revenues. We massively cross subsidize interstate highways with fuel taxes paid for by cars driven mostly on local and county roads. And who pays for those roads? Everybody (property tax payers, sales tax payer, etc). Just like Amtrak.

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  60. aaron says:

    You way over-sell C4C. You assume a 1 for change in the miles driven, the clunkers traded in probably aren’t primary vehicles. The sales are shifted from the future, so less of the better cars of tomorrow will be bought.

    It really just pushes up the price for cars in the less than $4500 range in the long run.

    So far, the only benefit I can see is that by getting the poorest, and therefore least intelligent, least efficient, and least safe DRIVERS off the road, we get a slight reduction in congestion.

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  61. Magne Salveson says:

    Reading the article it seems like you are forgetting the possibility of using the tracks for freight trains at night. This is what’s done in Germany and other European countries that have HST.

    Off course this only applies for the “ordinary” HSH, not the really fast ones like the MagLev.

    As for the car industry, in WW2 they managed to produce planes and torpedos within a year after som pressure from the government. Source for this is Jack Doyle, Taken for A Ride, Detroits Big Three and The Politics of Pollution.

    Michael Shnayersons, The Car That Could, The Inside Story of GMs Revolutionary Vehicle makes one wonder if the company would have done it better if it hadn’t dropped the EV-1.

    Here in Norway (with our lnterests in fossil fuel) it’s almost amusing to follow the debate about HST. (Keep in mind that lot of norwegians are highly critical to the US environmental policy).

    Deutshe Bahn (http://www.db.de), a company that has a lot of experience with HST researched the viability of HST here in Norway. They concluded that it would indeed be viable, provided that the speed was at least 300 km/h (ap. 480 m/h). Among the things the report pointed out was that it would be cheaper to build the rails here than on the continent because it’s a lot of rock, hence the fundamentation is not a problem. I guess the Rockies and surroundings and the farmlands of the midwest can serve as a parallell.

    However our environmental friendly politicians, eager to open for oil drilling in the north, seems to have more confidence in a small local consultant company without previous experience in the field of HST. They have concluded that it’s not cost effecient.

    A spokesperson for the aviation authorities came up with the following argument against HST
    “If we build high speed trains it will make it impossible to keep the small airports running due to lack of overhead from the larger. We have a lot of airports here:
    http://en.wikipedia.org/wiki/List_of_airports_in_Norway

    It’s about 5 million peoplee living in Norway.

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  62. Eric says:

    It seems like the statement about direct net benefit for society is based on a false assumption. The talk is about the fuel savings over the lifetime of the new car, but the old car wouldn’t have lasted that long. The savings per year is only good for as long as the clunker would have been used – after that, it might have been replaced with a new car that thanks to new tech, gets better mileage than what’s on the road today, or a slighly less clunkerly used car, or maybe not at all.

    But do we know the average mileage on the clunkers? If they only had two years of full fledged driving left in ‘em anyway, we’re clearly not recouping our losses.

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  63. Mekhong Kurt says:

    I’m somewhat surprised at the apparent bias against HSR in this piece.

    Sure, *any* rail between, say, Laramie and Fargo wouldn’t make sense. But what about between, say, Los Angeles and San Francisco?

    I’m from near the Dallas-Fort Worth area, and a number of the cities in the Metroplex, as it’s called, are participating a a mass transit project that involves more highways, more buses, and extensive light rail. There’s also talk of limited streetcars returning to downtown Dallas. There’s also talk of a HSR link between at least D/FW and Austin, very possibly on to San Antonio. And there’s talk of a side branch to Houston and a southern one going on to the Mexican border. And I think that’s a good idea. And how about north to Oklahoma City? For years government economists have spoken of the Oklahoma City-San Antonio corridor as being in some ways a single, integrated economic entity.

    BTW, the light rail in D/FW serves D/FW Airport.

    As for the dollar costs, well, I’ve seen such wildly varying estimates that I really have no idea about those, so can’t argue one way or the other about those.

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