Democrats eyeing full control of the government in 2021 are rallying around the idea of providing consumers rebates to swap old gas guzzlers with zero-emission vehicles, seeking to improve upon the Obama “Cash for Clunkers” program.
In recent weeks, presumptive Democratic presidential nominee Joe Biden, along with a special climate change committee created by House Speaker Nancy Pelosi, has endorsed a plan by Senate Minority Leader Chuck Schumer to take more than 63 million gas vehicles off the road over a decade, replacing them with cleaner ones.
Democrats argue that it’s insufficient to just increase demand for zero-emission vehicles through measures such as tax credits, regulatory requirements, or restrictions on how much vehicles can pollute. Transportation emits more carbon than any other economic sector in the United States. Electric vehicles only accounted for about 3% of new sales globally last year, as consumers have been slow to pay for the higher upfront cost, along with being skeptical about the range of the vehicles and a lack of charging stations.
“Each new vehicle being purchased today will still be on the road in the 2030s,” Alison Cassady, the deputy staff director for Democrats on the House Select Committee on the Climate Crisis, told the Washington Examiner. “So if we want to dramatically reduce greenhouse gases from passenger vehicles by 2050, we need to quicken the turnover of gasoline-powered vehicles.”
But Democrats are wary of their plans being linked to the Obama administration’s 2009 Cash for Clunkers, a trade-in vehicle program with mixed reviews that some analysts say did not boost new vehicle sales or reduce greenhouse gas emissions as much as supporters hoped.
The primary goal for the Cash for Clunkers program, which was approved by Congress, was to boost consumer spending to help the economy recover from the Great Recession while offering $3,500 or $4,500 credits to buyers who traded-in vehicles for new ones with better fuel efficiency.
The climate-focused initiative promoted today by Democrats, by contrast, would specifically prioritize deploying cars that don’t emit any carbon at all, such as electric vehicles, plug-in hybrids, and hydrogen fuel-cell.
“We can learn from how it was designed and need to get under the hood on what we need to do differently,” Cassady said. “We shouldn’t just do what they did, because the goals are different.”
Schumer’s proposal, released as a draft plan, is meant to ensure that all vehicles on the road in 2040 are “clean.” He said the proposal would be a “key element” of “bold and far-reaching” climate legislation Senate Democrats plan to introduce in 2021 if they take control from Republicans.
“The Clean Cars for America plan is an essential part of Democrats’ bold, far-reaching clean energy and infrastructure proposal,” Schumer told the Washington Examiner. “Confronting the climate crisis will be a top priority for Democrats in Congress next year.”
Joshua Linn, an economics professor at the University of Maryland and senior fellow at Resources for the Future, said Democrats’ new program should learn from Cash for Clunkers.
A 2010 study he co-authored found about 45% of the spending from the program went to consumers who would have purchased a new vehicle anyway, meaning it had little effect on consumer behavior. The Obama administration, meanwhile, claimed 88% of the nearly 680,000 transactions approved through Cash for Clunkers were directly attributable to the program. (The Government Accountability Office explains the discrepancy this way: “There is little consensus on the number of incremental sales attributable to the program.”)
“If you are just offering an overall scrappage subsidy for older vehicles in general, that may not turn out to be effective, which is what we learned from Cash for Clunkers and programs in other countries,” Linn said.
Linn said a more effective program would target vehicles for replacement that have the highest future emissions, regardless of their age. He suggests tying the subsidies to its odometer reading, or mileage, and its emissions rate.
“Yes, you want to get those clunkers off the road, but if there are vehicles in better shape that have remaining life in them with still high emissions rates, those are the vehicles we want to go after,” Linn said.
The Schumer proposal, while lacking detail, seems generally to follow that direction.
It would give consumers looking to swap their gas-powered car a point of sale rebate starting at $3,000, “ramping” up the subsidy amount based on the zero-emission range of the vehicle.
The gas-powered car being traded in, however, would have to be at least 8 years old.
Lower-income consumers would be eligible for an additional $2,000 rebate for new vehicles or a 20% rebate for used ones, to help ensure the program would attract more than wealthy buyers, who have been the primary consumers of electric vehicles.
Schumer’s plan also seeks to broaden its appeal by encouraging U.S.-based manufacturing of electric vehicles, providing additional rebates for any car made in America with strong labor standards or with domestic manufactured content, such as batteries. It would provide grants to retool existing auto manufacturing plants and build new ones specializing in electric vehicles.
The plan, costing $454 billion in total, would also invest in infrastructure needed to support electric vehicles, offering grants to states and cities that build charging stations.
Biden, who specifically endorsed the made in America piece of the Schumer plan, has sought to win over unions to his climate agenda by promoting job opportunities in building clean energy technologies, such as electric vehicles.
Labor unions United Automobile Workers and the International Brotherhood of Electrical Workers have joined environmental groups in supporting both the Schumer and Biden plans.
“The bold Clean Cars for America plan would help make U.S. workers the leaders in clean vehicle jobs while also dramatically cutting pollution from passenger vehicles,” said Luke Tonachel, senior adviser to the Natural Resources Defense Council Action Fund.
Cassady of the House climate committee cautioned against moving too quickly on a trade-in program, however.
She noted the Cash for Clunkers program was implemented before the Obama administration imposed stricter fuel efficiency standards, meaning there were not enough low-emitting vehicles in circulation to replace dirtier ones.
“We may want to take other measures first to increase its success,” Cassady said. “If the goal is to increase turnover, consumers will need more options and zero-emission vehicles on dealer lots to satisfy demand.”
