Abating Greenhouse Gas Emissions through Cash-for-Clunker Programs

Policymakers use incentive-based vehicle scrappage or "Cash-for-Clunker" programs to pursue a range of social and economic goals such as decreasing vehicular emissions, preventing vehicle abandonment, lowering consumer spending on gasoline, and stimulating new vehicle sales. However, there are no programs aimed solely at greenhouse gas (GHG) reduction. This study discusses design considerations for such a program. We evaluate past and present programs to show how regulatory elements in vehicle scrappage programs can be adjusted to maximize GHG savings. We show how fuel-economy based eligibility requirements are preferable to age-based requirements and how financial incentives can be properly aligned to balance program cost and participation rate. Finally, we present a program framework that, at minimum, ensures a Cashfor- Clunkers program offsets GHG emissions attributable to vehicle manufacturing and end-oflife disposal with use-phase emissions reductions.