Energy Literacy Advocates Newsroom

Energy Literacy Advocates has been closely following the Cash for Clunkers debate on capital hill since several different versions of the legislation were floated months ago. We previously published a white paper discussing the pros and cons of such legislation, as well as key components we felt needed to be considered (Click here for details). Unfortunately the bill passed by the House on Tuesday does not contain several of these key components.

But first the good news: Only vehicles with fuel efficiencies of 18 MPG or less are eligible for the program in the current version of the bill (H.R. 2751). There is a cap on the new vehicle purchase price of $45,000 and you must prove you have been driving your clunker for the past year by providing proof of insurance. These parameters are both reasonable and logical, as avoiding the creation of a black market for clunkers and only incentivizing the purchase of reasonably priced vehicles (not luxury vehicles) is common sense.

However the hurdles set for the purchase of a new car (+4 MPG for $3,500 and +10 MPG for $4,500) are uncomfortably low and the hurdles set for trucks (+2 MPG and +5 MPG for Category 1 trucks, which include light trucks and SUVs) are woefully inadequate. Not to mention the incentives for Category 2 and 3, or “work” trucks, which are nothing short of a handout.

If we are going to commit $4 Billion for a program that replaces roughly 625,000 vehicles (as estimated by the Congressional Budget Office), or 0.31% of the entire fleet, we deserve to have a meaningful increase in fleet wide efficiency over time. Mind you any program that swaps for fuel efficient vehicles will be a small percent of the outstanding fleet, but all the better to make sure the program puts US consumers and the auto industry on a path to producing safe, fuel efficient vehicles well into the future, and without further incentives. (One could argue the one year duration of the program is too short as well, since charting a new path will surely take longer). Practically giving away $3,500 - $4,500 for modest gains in car efficiency and what would be difficult to even measure in trucks is simply unacceptable. We have a very unique opportunity right now to:

1. Set the course for a far more fuel efficient vehicle fleet, from an average of 22 MPG now to well over 30 MPG in the very near future, and
2. Provide much needed financial stimulus to the American economy, but in a way that results in the foundation for a more secure future wherein we become less dependent on oil and reduce our emissions.

If fiscal stimulus is all you seek, the current bill will provide it, but little more. However if you think we can take this opportunity to provide a stimulus that is more than just consumptive spending – something that might actually set a viable course for the American transportation fleet in the future – then we need to ask for much more of our elected officials. This is a once in a lifetime opportunity to choose a new path. Let’s take it.

Labels: automakers, CAFE standards, efficiency, energy policy