Let’s look at some of the facts. The first thing that springs to mind is that the money that is to be used for this scheme is being taken from other “green” programs, namely the Solar and CCS (carbon capture and storage) flagship programs as well as the renewable energy bonus scheme. The bombshell here is that not only will the $400 million come out of these schemes, the government is taking a further $120 million for good measure. Reducing the remaining value of the combined schemes by about 30%. Now it could well be said that by diverting the money from these schemes into the Cleaner Car Rebate (CCR) is a better use of the money, but if that's the case why not divert all the money to the CCR?
Crushing gas-guzzlers
What do we save by crushing 200,000 old gas-guzzlers? Let’s put this number in context. Australia's vehicle fleet is estimated to be around 15 million vehicles. At current rates new vehicle sales range between 950,000 and 1 million cars a year, while the attrition rate (cars taken off the road), according to the ABS, is between 550,000 and 600,000 cars a year. So in the four years of the scheme, the fleet will grow by some 1.6 million cars (4 million new cars less say 2.4 million cars taken off the road).
So removing 200,000 represents just 1.2 per cent of the all the cars in Australia. But even that’s overstating the case, because there is every reason to believe that a fair percentage of these cars would have been ‘retired’ regardless of the scheme. Furthermore, anecdotal evidence from the USA version of ‘cash for clunkers’ has shown that a lot of these old clunkers weren't even being driven that much, many were kept more or less as spare or secondary vehicles. This means they are driven considerably less than the ‘average’ 12,000 kilometres per year used to calculate the savings.
Negating emission savings
Indeed there is a significant likelihood that someone trading up from a 15-year old car to a more fuel efficient car, costing $25,000 or more, will actually drive more in the new car thus negating the lower emissions. The additional kilometres instead placing even further stress on our overcrowded infrastructure. According to the government’s fact sheet, this program should save approximately 1 million tonnes of Carbon yearly, but other sources say the savings are approximately 100,000 tonnes a year. Reverse engineering this figure and estimating 2.4kg of carbon for each litre of fuel burnt, this implies a saving of 42 million litres a year for ten years!
Finally, what about the green house gas effect of replacing a perfectly serviceable car with a new one to save a few litres of petrol? The calculations above are based on what is sometimes termed use-phase calculations. According to studies in the US, this approach overestimates the emission-saving potential because it ignores the cost of the energy ‘embedded’ in the vehicle. Various studies calculate this cost to be equal to between 10 and 15 per cent of the total lifecycle green house gas emissions.
Carbon price ten times higher than Europe
Over all it would appear that the CCR is a very, very expensive way of reducing carbon emissions. Studies have shown that the cost per tonne saved varies between $250 and $500 per tonne, which is between ten and twenty times higher than the price of a tonne of carbon in Europe (where they have a market price on carbon). On top of that, according to the owner of Hazelwood power station in Victoria, one of the biggest single polluters in Victoria, more than ten times the cost per tonne of replacing that power station with a much cleaner gas fired system.
This leads me to conclude that this Cash for Clunkers measure is most certainly a ‘greenmail’ (to entice people to do something that is probably not in their best interests) political trick, aimed at buying votes, and not a sustainable measure to “make positive changes to the way we live, work and travel”. Moreover, when you look at the conditions placed on the scheme, and the fact that there doesn’t seem to be any provision to pay for running the scheme, it is highly likely the cost will be higher and the overall effect will be far short of the mark.
The US scheme, like the ones in Germany, UK etc, were at least honest about their central purpose, that is they were designed as a bailout to their ailing car industries and by those criteria were probably a success. This scheme doesn’t even pass muster on that measure!
Notes on Greenmail:
Greenmail or greenmailing is the practice of purchasing enough shares in a firm to threaten a takeover and thereby forcing the target firm to buy those shares back at a premium in order to suspend the takeover.In a more general sense greenmailing is like bribery or indeed blackmail; but differs in the sense that blackmail usually involves the threat of violence, whereas greenmail is all about money. Ie Using green (money – from US green backs) to entice people to do something that is probably not in their best interests.
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Written by Gavan Farley
Image credit: Lee Jordan via Flickr Creative Commons
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