Letter to the Editor, Wall Street Journal
You did not mention it in your "Cash for Clunkers" editorial today, but those seeking a new way to bail out Detroit are misusing a concept and program that was hugely successful 19 years ago. Today's advocates are going about it all wrong -- they need clear policy goals, powerful economics, and major industry participation, not taxpayer funding and a "Junk-Car Commissar." A well-thought out program would outdo the ill-conceived, derivative-spawning Cap-and-Trade boondoggle that our elected leaders are writing into law.
In 1990, California's South Coast Air Quality Management District proposed something equally outrageous, preparing to close and ban all oil refineries (more than a dozen) from the Los Angeles Basin. Faced with this multi-billion threat to each company, Unocal, an LA-based international oil and gas company, told Federal, State and Local regulators that we would run an experimental program of buying and destroying old cars (source of 60% of the pollution in the Basin, compared to 5% from refineries). We knew that the cost-effectiveness of our proposal would far outstrip their hideously costly and inefficient one, and hoped to convince regulators to change the rules to allow the exchange of mobile source emissions for stationary source emissions.
We had developed with voluminous statistical and economic analysis, and once we had the go-ahead, we set up and ran the South Coast Recycled Auto Program (SCRAP). It was hugely successful; its goals were clear and its economics powerful. The astounding environmental benefits to Los Angeles resulted in major regulatory and economic benefits to industry at no cost to the taxpayer. SCRAP earned favorable press across the country and the globe. Two years later at the White House, President George H.W. Bush presented Unocal Chairman Dick Stegemeier with the President's Award for Environmental Initiative and Achievement for SCRAP.
Unocal paid $700 for locally registered, in-use, 20-year old vehicles; SCRAP crushed 8,376 of them from June through September, 1991. According to CalEPA and South Coast Air Quality Management District tests and records, it removed 12.8 million pounds of air pollution (hydrocarbons, carbon monoxide and nitrogen oxides) from LA's air for the (very conservatively estimated) 3 years. HC emissions from SCRAP vehicles were 99 times greater than from a then-new 1990 vehicle (nearly 3 times what the regulators had estimated) and about 200 times greater than emissions from new cars today. Even those figures are understated -- they are tailpipe emissions only; evaporative emissions would add another 4-5 grams per mile. CO emissions were more than 50 times greater than the regulators had estimated. We did not count CO2 emissions -- at the time they were not "pollutants" and no one had heard of "greenhouse gases." The USEPA, CalEPA and the Air Quality Management District changed the rules to allow mobile source credits to be applied against stationary source emissions, and Unocal did several subsequent SCRAPS, including programs for other companies.
To address other issues raised in the editorial, a follow-up survey showed that SCRAP sellers' demographics generally reflected the LA Basin's, though participants were somewhat older, much more likely to be male, and had 15% less household income than the average. In addition, 46% of the principal drivers bought another vehicle, 42% were using another vehicle, 4% were getting rides and 4% were using public transportation.
Of the replacement vehicles, more than 80% were newer (1975 or later), less-polluting cars. Since 4-8 transactions, on average, take you from that first 20+ year old car to a new one, SCRAP helped increase new car sales in the Basin. We also allowed people to purchase cars in line awaiting their appointments, to eliminate the bogus charge that we would destroy collectors' hobbies.
So an updated SCRAP could eliminate much "need" for a Cap-and-Trade system, a Clunker Commissar and government participation -- and all the need for taxpayer bailout funds. It would result in cleaner air, more efficient vehicles on the road; it would clean up greenhouse gases, and would help Detroit sell moire cars.
SCRAP costs per unit might be higher today, but it would be far more cost-effective than any alternative Congress has proposed. Companies would certainly adopt it, properly targeting polluters and greenhouse gas emitters (old gas guzzlers) to win credits for stationary source emissions -- their costs per unit cleaned would be dimes on the dollar, one of the best possible ways to combat the problems Congress is struggling with. It would do all that without a massive federal handout and more government interference. Congress did not give it any thought, but they should; we all should. It's the kind of cost-effective approach that would eliminate a half-baked series of bailouts and Cap-and-Trade schemes.
In 1990, California's South Coast Air Quality Management District proposed something equally outrageous, preparing to close and ban all oil refineries (more than a dozen) from the Los Angeles Basin. Faced with this multi-billion threat to each company, Unocal, an LA-based international oil and gas company, told Federal, State and Local regulators that we would run an experimental program of buying and destroying old cars (source of 60% of the pollution in the Basin, compared to 5% from refineries). We knew that the cost-effectiveness of our proposal would far outstrip their hideously costly and inefficient one, and hoped to convince regulators to change the rules to allow the exchange of mobile source emissions for stationary source emissions.
We had developed with voluminous statistical and economic analysis, and once we had the go-ahead, we set up and ran the South Coast Recycled Auto Program (SCRAP). It was hugely successful; its goals were clear and its economics powerful. The astounding environmental benefits to Los Angeles resulted in major regulatory and economic benefits to industry at no cost to the taxpayer. SCRAP earned favorable press across the country and the globe. Two years later at the White House, President George H.W. Bush presented Unocal Chairman Dick Stegemeier with the President's Award for Environmental Initiative and Achievement for SCRAP.
Unocal paid $700 for locally registered, in-use, 20-year old vehicles; SCRAP crushed 8,376 of them from June through September, 1991. According to CalEPA and South Coast Air Quality Management District tests and records, it removed 12.8 million pounds of air pollution (hydrocarbons, carbon monoxide and nitrogen oxides) from LA's air for the (very conservatively estimated) 3 years. HC emissions from SCRAP vehicles were 99 times greater than from a then-new 1990 vehicle (nearly 3 times what the regulators had estimated) and about 200 times greater than emissions from new cars today. Even those figures are understated -- they are tailpipe emissions only; evaporative emissions would add another 4-5 grams per mile. CO emissions were more than 50 times greater than the regulators had estimated. We did not count CO2 emissions -- at the time they were not "pollutants" and no one had heard of "greenhouse gases." The USEPA, CalEPA and the Air Quality Management District changed the rules to allow mobile source credits to be applied against stationary source emissions, and Unocal did several subsequent SCRAPS, including programs for other companies.
To address other issues raised in the editorial, a follow-up survey showed that SCRAP sellers' demographics generally reflected the LA Basin's, though participants were somewhat older, much more likely to be male, and had 15% less household income than the average. In addition, 46% of the principal drivers bought another vehicle, 42% were using another vehicle, 4% were getting rides and 4% were using public transportation.
Of the replacement vehicles, more than 80% were newer (1975 or later), less-polluting cars. Since 4-8 transactions, on average, take you from that first 20+ year old car to a new one, SCRAP helped increase new car sales in the Basin. We also allowed people to purchase cars in line awaiting their appointments, to eliminate the bogus charge that we would destroy collectors' hobbies.
So an updated SCRAP could eliminate much "need" for a Cap-and-Trade system, a Clunker Commissar and government participation -- and all the need for taxpayer bailout funds. It would result in cleaner air, more efficient vehicles on the road; it would clean up greenhouse gases, and would help Detroit sell moire cars.
SCRAP costs per unit might be higher today, but it would be far more cost-effective than any alternative Congress has proposed. Companies would certainly adopt it, properly targeting polluters and greenhouse gas emitters (old gas guzzlers) to win credits for stationary source emissions -- their costs per unit cleaned would be dimes on the dollar, one of the best possible ways to combat the problems Congress is struggling with. It would do all that without a massive federal handout and more government interference. Congress did not give it any thought, but they should; we all should. It's the kind of cost-effective approach that would eliminate a half-baked series of bailouts and Cap-and-Trade schemes.
Labels: SCRAP vs Cash for Clunkers
Read more!