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‘Cash for clunkers’ and lifetime CO2 emissions

There have been many criticisms of the host of car market incentive or scrappage schemes that have sprung up across numerous countries in recent quarters. Like its counterparts in Europe and elsewhere, the US government’s so-called ‘cash for clunkers’ programme has been criticised from a number of perspectives, including that it:

  • creates a distorted, short-term business model for the automotive industry;
  • is simply postponing part of the current market downturn;
  • favours wealthier people, who can afford to purchase a new vehicle; and
  • removes many usable vehicles from the second-hand market that less wealthy people might be able to afford while disposing of an even older, ‘clunkier’ model.

As well as the obvious agendas stimulating the automotive industry and minimising short-term job losses, the ‘cash for clunkers’ programmes are also being touted as improving energy security and reducing emissions. In broad terms, these claims are true and praiseworthy, but in some cases the agenda of reducing emissions is not being achieved at all. In fact, quite the opposite is occurring.

First, the production of motor vehicles uses a wide range of valuable resources, and it is difficult to see how artificially stimulating the new car market can be seen as conservationist. Of course, it could be argued that many of the vehicles now being sold under these schemes were actually manufactured some time ago and have been standing around in the large inventories that accumulated while OEMs were still scaling down production as the recession took effect on sales. However, artificially stimulating the reduction of those inventories by reducing the useful lifetime of the ‘clunker’ essentially gives the longer-term production cycle a boost that is not necessarily easy to justify.

Second, while replacing an older, less fuel efficient vehicle with a new one of higher fuel economy will clearly reduce the consumer’s in-use emissions, the issue of the emissions produced during the vehicle’s manufacture has hardly been mentioned. Reducing toxic emissions is clearly a good thing to achieve, but even more urgently it seems that we need to reduce greenhouse gas emissions.

It is difficult to obtain exact figures for the amount of CO2 emitted during the production of a motor vehicle, but data released by Ford a few years ago suggest that production, from mining the raw materials to vehicle roll-out from the factory, constitutes a significant, if minor, proportion of a vehicle’s lifetime (120,000 miles) emissions. According to Ford, the production of a small car (in US terms) in 2004 caused 5.9 tonnes of CO2 to be released into the atmosphere while a mid-size car created 6.9 tonnes. These figures represent around 8.4% of lifetime emissions for a mid-size car that returns 17mpg (US gallons) and 10.3% for a small car that returns 25mpg. Interestingly, Toyota has stated that the production of an average Toyota is associated with 6% of its lifetime CO2 emissions, but this does not include the production of the materials used, which the company says are associated with a further 12%, taking the overall production CO2 emissions to 18%. In effect, then, Toyota’s figures tend to roughly double those given by Ford.

Under the current US Car Allowance Rebate System (CARS) programme, passenger cars that have an EPA combined fuel economy estimate of 18mpg or less are eligible for a US$3,500 grant if traded on a new car capable of 22mpg or more. If the fuel economy improvement is 10mpg or more, the grant increases to US$4,500. Taking the best-case scenario here, that of a 12mpg car being replaced with a 22mpg car, the lifetime CO2 savings amount to a very worthwhile 41.3 tonnes (assuming the commonly-used figure of 2.4kg of CO2 per litre of gasoline), so that the new vehicle will pay back its production CO2 emissions in only 20,000 miles or about 1.4 years at the US average of 14,000 miles per year. Even though the Toyota figures suggest that this is more like 40,000 miles and 2.8 years, this is clearly a worthwhile outcome.

However, the worst-case scenario possible under the scheme involves replacing an 18mpg example with a 22mpg one. In this case, the CO2 lifetimes savings amount to only 11.0 tonnes, which translates to around 75,000 miles or about 5.4 years using Ford’s figures or 150,000 miles and 10.8 years using Toyota’s. In other words, if the actual payback falls between these two estimates, there might be very little saving in CO2 emissions and possibly even an unnecessary contribution.

Of greater concern, however, are the grants available within two of the most popular US market niches – large pick-ups and SUVs. Although SUV sales have plummeted, they still account for a significant market segment. As for pick-ups, even during 2008’s punishing market conditions the top six models in the segment accounted for about 12% of total light vehicle sales.

Under the CARS programme, large light-duty trucks, which include pick-ups, SUVs and minivans with gross vehicle weight ratings between 6,000lb and 8,500lb, attract a US$3,500 grant provided that the new truck’s fuel economy is 15mpg or more and it is at least a mere 1mpg better than the old one, and US$4,500 if it is at least 2mpg better. It therefore seems reasonable to assume that many US consumers will take this opportunity to use the rebate to update the family pick-up or SUV. Base model pick-up prices, for example, start at around US$21,000, against which the discounts available are very attractive.

Extrapolating from Ford’s production CO2 figures, it would seem that a base model F-150 pick-up, which is in this class and has a curb weight of 4,707lb, is likely to have been responsible for as much as 10.0 tonnes of CO2 during its production. This means that, for example, a 1989 F-150 rated at 14mpg can be traded with a grant of US$4,500 for a new one rated at 16mpg, which will save around 9.7 tonnes of CO2 from fuel consumptions during its entire useful lifetime. In other words, the CARS programme will have contributed a little to greenhouse gas emissions in this case, even under Ford’s figures, and will have contributed hugely according to Toyota. Obviously, the situation is even worse if the ‘clunker’ traded on the new F-150 is rated at 15mpg, in which case the CARS programme will increase CO2 emissions by about 5.5 tonnes or 7% over a 120,000-mile lifetime under even Ford’s figures.

Fortunately, early reports indicate that US consumers are mostly using the rebates to shift down in vehicle size and up in fuel economy. However, it remains to be seen what will actually be achieved in the longer term in terms of greenhouse gas savings.

The opinions expressed here are those of the author and do not necessarily reflect the positions of Automotive World Ltd.