Hoorah For Car Scrappage

The news this week headlined with the end of the Government’s car scrappage scheme. The scheme was set up to prop up the motor industry, and has been very successful at doing so. However, this policy has also been justified by citing the carbon abatement potential of replacing old cars.

BIS said that over 330,000 new cars were purchased under the scheme with average carbon dioxide emissions of 133 g/km, a 27% saving over the emissions of the cars scrapped. That suggests that the average saving from the exchange is 49.2 g/km.

If each of the cars is driven 16,000 km per year then the total reduction in annual carbon dioxide emissions will be just over 260,000 tonnes. An impressive headline figure; but at what cost has this been achieved?

Each new car was subsidised to the tune of £2,000, divided equally between the taxpayer and the motor industry, at a total cost in excess of £660 million. The same investment in renewable energy would yield carbon dioxide reductions of around 3 million tonnes each year.

Furthermore, it has been estimated that more than half of the cars scrapped under the scheme would have been replaced within the next few years anyway. Lets assume that in 10 years all of the scrapped cars would have been off the road in any case. This puts the cost of carbon dioxide abatement from scrappage at over £450 per tonne, 10 times the cost per tonne of carbon capture and storage.

The scrappage scheme did succeed in protecting 4000 jobs and so achieved its primary objective (at public subsidy of £82,500 per job). So hoorah for the scrappage scheme, but it is totally unjustified to celebrate its success on the basis of carbon dioxide abatement.

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