IMPLEMENT STATE CAR ALLOWANCE REBATE SYSTEM (“CASH FOR CLUNKERS”)

The Nevada Division of Environmental Protection (NDEP) Greenhouse Gas (GHG) Inventory, Section 3.4 on Emissions Projections, 2017–2039, states:

“There is a high degree of uncertainty with transportation-sector projections. This is due in large part to the proposed federal rollback of passenger car and light truck vehicle fuel economy standards. In 2018, NHTSA and the EPA proposed the Safer Affordable Fuel-Efficient (SAFE) Vehicles Rule. This rule would freeze fuel economy standards for all passenger cars and light trucks for vehicle model years 2021 through 2026. This would have the effect of rolling back the already finalized Tier 3 passenger car and light truck fuel economy standards, which requires vehicle manufacturers to produce increasingly more efficient vehicles through model year 2025. Any reduction to the existing standards will result in an increase of GHG emissions.”

A state car allowance rebate system would ameliorate this situation through an incentive to replace higher-emitting, less-efficient vehicles with more-efficient, lower-emissions vehicles modeled after the 2009 federal “cash for clunkers” program.

While the original federal program was designed as a post-recession stimulus program to boost auto sales with fuel efficiency as a secondary objective, the program can also be used as a tool to reduce GHG emissions.

Greenhouse Gas Implications

Increasing or encouraging turnover of the vehicle fleet to lower-emitting, more-efficient vehicles would reduce GHG emissions. However, the amount of this reduction cannot be determined without better definitions on what vehicles would qualify for the program and how large the program is.

A University of Michigan study determined that the 2009 federal program had a one-time effect on GHG emissions of preventing 4.4 million metric tons of CO2e, about 0.4% of U.S. annual light-duty vehicle emissions. Of these, 3.7 million metric tons are avoided during the period of the expected remaining life of the inefficient “clunkers” and 1.5 million metric tons were avoided as consumers purchase vehicles that are more efficient than their next replacement vehicle would otherwise have been. An estimated 0.8 million metric tons are emitted as a result of premature manufacturing and disposal of vehicles. These results are sensitive to the remaining lifetime of the clunkers and to the fuel economy of new vehicles that would have been purchased in the absence of the program, suggesting important considerations and significant uncertainty for policymakers deliberating on the use of accelerated vehicle retirement programs as a part of the GHG reduction policy.

In addition to limited GHG reduction from vehicle replacement, this policy would not reduce travel demand and vehicle miles traveled (VMTs). Vehicle manufacturing, disposal, and operations (roadway construction and materials) generate some amount of GHGs with or without additional tailpipe emissions.

The state could, however, tailor this program differently from the federal program, including stricter eligibility requirements to replace the most-polluting vehicles with low- or zero-emissions vehicles. The federal program was very popular and provided for a faster turnover of highly-polluting vehicles. 

Further, although the magnitude of the impact is still likely to be fairly low compared with the GHG reduction targets, there are benefits to replacing older vehicles with newer models because of reductions in tailpipe emissions of other pollutants that contribute to poor air quality, including particulate matter. New vehicles are also required to meet higher safety standards. 

Simply, this type of policy would likely reduce GHGs, but the magnitude and timing of emissions reductions would depend on the size and scope of the program. 

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Climate Justice

This program would not provide for the full cost of a new vehicle, so it might only benefit those who are either already considering a new vehicle purchase and/or have the financial resources to invest in a vehicle, albeit at a lower cost. 

However, the policy might also allow someone who needs a newer vehicle, but has not collected the resources yet, to be able to do so sooner. Operating costs would be lower due to better fuel economy and/or electricity rates compared with gasoline costs. Repair and maintenance costs for the new vehicles may be lower for a new vehicle, however, often newer vehicles have more-complex systems that might be more difficult or costly to repair in the long term. 

A “cash for clunker” model that provides for carefully selected low-emission or fuel-efficient vehicles with an accessible cost-to-benefit ratio for vulnerable populations could help address affordability concerns. In addition, consideration of a model that integrates other forms of low- and zero-emissions transportation, for example, bicycles, could be explored.

Removing older, polluting vehicles would reduce tailpipe emissions of other criteria pollutants, including particulate matter and carbon monoxide (CO), which would have localized benefits to improving air quality.

This policy has a number of unknowns that would need to be refined and require further discussion with vulnerable communities about how to address concerns.

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Integrated Economic Assessment

The initial amount of federal funds allocated for the original 2009 program was $1 billion, which was expended in a month. Congress then authorized an additional $2 billion to support the program, given its popularity. 

Assessing the economic impact of this policy depends on the subsidy per vehicle, anticipated number of vehicles for replacement consideration, and how complex the requirements would be. The administrative costs are unknown. The dealers would receive a direct subsidy when the new car is registered, and proof is provided of the old car being rendered unusable. Using an existing mechanism should minimize administrative startup costs and additional staff. However, additional resources would still be necessary to support the program. 

The California Air Resources Board (CARB) initially provided funding for vehicle retirement and replacement incentives with the adoption of AB 118, Chapter 750, Statutes of 2007. AB 118 created the Enhanced Fleet Modernization Program (EFMP) through a $1 surcharge on motor vehicle registration, generating about $30 million every year. Two main features of EFMP include a scrap-only element administered statewide by the Bureau of Automotive Repair (BAR) and a program run by regional air districts to scrap and replace vehicles in air basins with the worst air quality. AB 630 Chapter 636, Statutes of 2017, codified the new EFMP Plus-Up pilot, and renamed it the Clean Cars 4 All Program. Clean Cars 4 All is a voluntary car scrap and replacement program that focuses on providing incentives through California Climate Investments (CCI) to lower-income California drivers to scrap their older, high-polluting car and replace it with a zero- or near-zero-emissions replacement. To specifically incentivize replacing internal combustion engine (ICE) vehicles with zero-emissions vehicles (ZEVs), the Clean Cars 4 All, Replace Your Ride, and Drive Clean San Joaquin programs award income-eligible households up to $9,500 in grants to apply toward ZEVs or public-transit vouchers.

All funding needs for the California programs were/are: $30–$35 million for 2019–2020. $35–$41 million for 2020–2021, and $38–$45 million for 2021–2022. California has greater than 10 times the population and registered vehicles asf Nevada, so the cost would be significantly less, but much more information is needed to estimate the actual cost of initiating and running a similar program. 

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Implementation Feasibility

Although Nevada statutes do not appear to provide explicit authority to adopt a “cash for clunkers” program, existing authority for the state to adopt this policy and provide legislation to implement it may exist. NRS 445B.100 establishes that it is public policy of the State of Nevada and the purpose of NRS 445B.100 to 445B.640, inclusive, to achieve and maintain levels of air quality that will protect human health and safety; prevent injury to plant and animal life; prevent damage to property; and preserve visibility and the scenic, aesthetic, and historic values of the state. The statute further states that it is the intent of NRS 445B.100 to 445B.640, inclusive, to require the use of reasonably available methods to prevent, reduce, or control air pollution throughout the State of Nevada…” The intent of a car allowance rebate system is to assist with achieving the purpose of NRS 445B.100. In addition, existing and retired federal and state legislation provide potential models, such as:

The legislature might authorize this program and appropriate funds from an existing account, such as the Account for Management of Air Quality, NRS 445B.590; the Motor Vehicle Fund, NRS 482.180. This may require amendment of these statutes. Alternatively, the legislature might create a new account to fund this program. 

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