The final Cash for Clunkers numbers are in:
Old vehicles: 15.8 MPG on average
New vehicles: 24.9 MPG on average
That saves about 2 gallons of gas every 100 miles of driving, or 2 tons of CO2 every 10,000 miles of driving.
There is an AP story ridiculing the fact that some pick up trucks were traded in for other pick up trucks with essentially the same MPG (a 15 MPG truck for a 16 MPG truck), but that loophole was obvious from the start. It was built in by design to support Detroit. The Feinstein/Schumer/Israel contingent tried to hold out for good size increases in MPG, but had to compromise with the Stabenow contingent. Bare minimum truck trade ins was the disappointing concession. The time to publicize this flaw was in May. (As we noted in June, "The final bill has decent MPG improvements for cars (4 MPG and 10 MPG)--enough to "payback" the carbon released in producing the car--but not for large light duty trucks. We believe a tiered system based on GPM and requiring larger gas savings would have been better for reducing CO2 emissions.")
It's a little late now to lament it.
However
The numbers on the NHTSA site inspire no confidence, so all of these conclusions, from my perspective, are in doubt. For example, the NHTSA reports an overall new MPG level of 24.9 based on the following data:
59% new vehicles with an average 27.9 mpg
34% new vehicles with an average 21.6 mpg
7% new vehicles with an average 16.2 mpg
Amazingly, they have averaged the mpgs to get their final figure. Of course, they need to take the harmonic mean, which requires converting the mpg figures to gpm before calculating the final average. The harmonic mean is 24.2 mpg. So which is the real final figure: 24.9? or 24.2?
Update: This post examines the data more closely and finds that the actual MPG of the new vehicles is 23.8.
Using behavioral insights to promote smarter decisions about energy efficiency and energy use.
Showing posts with label co2 reduction. Show all posts
Showing posts with label co2 reduction. Show all posts
Friday, November 6, 2009
Wednesday, August 5, 2009
MPG Improvements from Cash for Clunkers - A GPM Analysis of the CO2 Reduction
The Cash for Clunkers (CFC) program has not just been popular. It has also been effective. It has helped the auto industry. And it has reduced CO2 emissions.
Let's look at the DOT numbers released on August 3:
Let's translate this into gas saved and CO2 emissions reduced.
A 60% increase in MPG translates to a 37% reduction in gas consumption holding constant the number of cars and the miles driven. (The math is .6/1.6 and is explained at this post.)
Holding constant the number of cars is a reasonable assumption: These are trade ins that work one-for-one.
Holding constant the miles driven is a more problematic assumption. More fuel efficient cars make it cheaper to drive and people may drive further. Economists call this effect a "rebound" effect (which is an example of a "moral hazard"). How large is the rebound effect? The reality is that most people drive the distance they need--to work, to school, etc--without much opporunity for discretionary driving (The exceptions? "Sunday drives;" vacations that wouldn't have been taken; travel made in a car that would have been taken in a plane). MIT Technology Review reports numbers that the rebound effect is about 20%--for every 10% increase in fuel efficiency, drivers wipe out 2% by driving further. The best guess is that rebound effects are small. It is not clear whether CFC purchasers will be different.
Let's look at the gas savings created by replacing a fleet that has an average MPG of 15.8 with a fleet that has an average MPG of 25.4 using gallons per 100 miles:
100/15.8 = 6.33 gallons per 100 miles
100/25.4 = 3.94 gallons per 100 miles
That's a savings of 2.4 gallons per 100 miles. If we take into account a rebound effect, that might reduce the net gas savings to roughly 2 gallons per 100 miles.
A gallon of gas releases about 20 pounds of carbon dioxide when burned. (In fact, Aaron Seigel has emailed me that the real emissions are closer to 25 pounds because gasoline manufacturing emits carbon--so, a gallon saved eliminates this carbon, too.) Twenty pounds of CO2 translates to one ton of CO2 in 10,000 miles of driving. This improvement alone saves 2 tons of carbon dioxide every 10,000 miles of driving that it replaces in the old vehicle. That is a valuable savings.
However, the new vehicle released carbon dioxide as it was made: About 7 tons of carbon. This figure includes materials and manufacturing. (The actual estimates, from the ACEEE, range between 3 and 12 tons.) Do the gas savings need to repay this carbon "debt"? Arguably, the carbon debt is sunk for cars already sitting on lots. However, because cars are also being destroyed, it is more conservative to assume that selling existing cars is accelerating the manufacture and purchase of soon-to-be-made cars--when the lots are empty, new cars will be built that wouldn't have been built otherwise. Thus, we need to "charge" the cars on the lot with some carbon debt. Let's be conservative and use 7 tons of carbon as the debt.
How much gas needs to be saved to cover the carbon debt?
We have shown in earlier posts (here and here) that saving 2 gallons per hundred miles "pays back" the carbon used to make the new car in about 35,000 miles of driving, which is a reasonable payback time (and modeled on the standard proposed by Bill Chameides, Dean of Duke's Nicholas School). Every additional mile driven in the new car in place of the old car beyond 35,000 miles yields a net reduction in CO2 emissions.
What if the clunker was truly a junker and wouldn't have lasted 35,000 more miles? In the extreme, what if the junker couldn't go another mile? Then the key comparison is to the new car that "would have been" purchased without the CFC requirement of an MPG improvement. For these situations, the carbon dioxide released manufacturing the new car was inevitable, and the relevant factor is the difference between the MPG of the car bought under CFC and the MPG of the car that "would have been bought" otherwise. Edmunds reports that trade ins of comparable cars yields a 5 mpg improvement on average, well-below the 9 MPG increase observed in the CFC trade ins. (Edmunds does not try to adjust for any self-selection of types of buyers who are taking advantage of this program (e.g., eco-minded buyers who were going to buy a higher MPG car anyway).) For trade ins of junkers, CFC has helped reduce CO2 emissions if the CFC trade in improves on the MPG of the car that "would have been bought."
In these earlier posts, we had proposed that "2 GPHM" be the minimum gas savings allowable in a CFC trade in, thereby ensuring that new cars cover the emissions from their production. The original Feinstein/Collins/Irael bill called for efficiency gains that would have met this standard. However, the final June bill had MPG improvements that fell far short of saving 2 gallons per hundred miles. If car buyers had simply met the minimum MPG improvements in the final bill, the program would have failed as a CO2 reduction policy.
The good news--the great news--is that car buyers have been happy to ditch their inefficient vehicles (60% of those traded in have been trucks and SUVS) for much more efficient vehicles that have yielded significant savings in gas. Here is a link to the top 10 sellers, listed with gallons per 100 miles. Thus, Feinstein and Collins have praised what car buyers have done with this opportunity and are supporting the extension.
The bottom line: CO2 has been reduced. This new fleet will cover its own carbon debt as long as it replaces 35,000 miles that would have been driven in the old vehicles. If the old car would not have made it 35,000 miles, CO2 has been reduced if CFC has encouraged car buyers to improve their MPG by more than they would have without the voucher.
Let's look at the DOT numbers released on August 3:
Vehicles traded in under the program averaged 15.8 miles per gallon, compared with 25.4 miles per gallon for the new purchases, or a 61 percent improvement, according to the Transportation Department data.
Let's translate this into gas saved and CO2 emissions reduced.
A 60% increase in MPG translates to a 37% reduction in gas consumption holding constant the number of cars and the miles driven. (The math is .6/1.6 and is explained at this post.)
Holding constant the number of cars is a reasonable assumption: These are trade ins that work one-for-one.
Holding constant the miles driven is a more problematic assumption. More fuel efficient cars make it cheaper to drive and people may drive further. Economists call this effect a "rebound" effect (which is an example of a "moral hazard"). How large is the rebound effect? The reality is that most people drive the distance they need--to work, to school, etc--without much opporunity for discretionary driving (The exceptions? "Sunday drives;" vacations that wouldn't have been taken; travel made in a car that would have been taken in a plane). MIT Technology Review reports numbers that the rebound effect is about 20%--for every 10% increase in fuel efficiency, drivers wipe out 2% by driving further. The best guess is that rebound effects are small. It is not clear whether CFC purchasers will be different.
Let's look at the gas savings created by replacing a fleet that has an average MPG of 15.8 with a fleet that has an average MPG of 25.4 using gallons per 100 miles:
100/15.8 = 6.33 gallons per 100 miles
100/25.4 = 3.94 gallons per 100 miles
That's a savings of 2.4 gallons per 100 miles. If we take into account a rebound effect, that might reduce the net gas savings to roughly 2 gallons per 100 miles.
A gallon of gas releases about 20 pounds of carbon dioxide when burned. (In fact, Aaron Seigel has emailed me that the real emissions are closer to 25 pounds because gasoline manufacturing emits carbon--so, a gallon saved eliminates this carbon, too.) Twenty pounds of CO2 translates to one ton of CO2 in 10,000 miles of driving. This improvement alone saves 2 tons of carbon dioxide every 10,000 miles of driving that it replaces in the old vehicle. That is a valuable savings.
However, the new vehicle released carbon dioxide as it was made: About 7 tons of carbon. This figure includes materials and manufacturing. (The actual estimates, from the ACEEE, range between 3 and 12 tons.) Do the gas savings need to repay this carbon "debt"? Arguably, the carbon debt is sunk for cars already sitting on lots. However, because cars are also being destroyed, it is more conservative to assume that selling existing cars is accelerating the manufacture and purchase of soon-to-be-made cars--when the lots are empty, new cars will be built that wouldn't have been built otherwise. Thus, we need to "charge" the cars on the lot with some carbon debt. Let's be conservative and use 7 tons of carbon as the debt.
How much gas needs to be saved to cover the carbon debt?
We have shown in earlier posts (here and here) that saving 2 gallons per hundred miles "pays back" the carbon used to make the new car in about 35,000 miles of driving, which is a reasonable payback time (and modeled on the standard proposed by Bill Chameides, Dean of Duke's Nicholas School). Every additional mile driven in the new car in place of the old car beyond 35,000 miles yields a net reduction in CO2 emissions.
What if the clunker was truly a junker and wouldn't have lasted 35,000 more miles? In the extreme, what if the junker couldn't go another mile? Then the key comparison is to the new car that "would have been" purchased without the CFC requirement of an MPG improvement. For these situations, the carbon dioxide released manufacturing the new car was inevitable, and the relevant factor is the difference between the MPG of the car bought under CFC and the MPG of the car that "would have been bought" otherwise. Edmunds reports that trade ins of comparable cars yields a 5 mpg improvement on average, well-below the 9 MPG increase observed in the CFC trade ins. (Edmunds does not try to adjust for any self-selection of types of buyers who are taking advantage of this program (e.g., eco-minded buyers who were going to buy a higher MPG car anyway).) For trade ins of junkers, CFC has helped reduce CO2 emissions if the CFC trade in improves on the MPG of the car that "would have been bought."
In these earlier posts, we had proposed that "2 GPHM" be the minimum gas savings allowable in a CFC trade in, thereby ensuring that new cars cover the emissions from their production. The original Feinstein/Collins/Irael bill called for efficiency gains that would have met this standard. However, the final June bill had MPG improvements that fell far short of saving 2 gallons per hundred miles. If car buyers had simply met the minimum MPG improvements in the final bill, the program would have failed as a CO2 reduction policy.
The good news--the great news--is that car buyers have been happy to ditch their inefficient vehicles (60% of those traded in have been trucks and SUVS) for much more efficient vehicles that have yielded significant savings in gas. Here is a link to the top 10 sellers, listed with gallons per 100 miles. Thus, Feinstein and Collins have praised what car buyers have done with this opportunity and are supporting the extension.
The bottom line: CO2 has been reduced. This new fleet will cover its own carbon debt as long as it replaces 35,000 miles that would have been driven in the old vehicles. If the old car would not have made it 35,000 miles, CO2 has been reduced if CFC has encouraged car buyers to improve their MPG by more than they would have without the voucher.
Thursday, May 28, 2009
Op-Ed on GPHM and Cash for Clunkers
This Op-Ed summarizes why "gallons per hundred miles" (GPHM) makes it easier to formulate a Cash for Clunkers policy:
http://news.duke.edu/2009/06/larrick_oped.html
For a longer version of these ideas, see this May 10 post. The USA Today’s automobile writer, James Healey, has started adding GPHM to his automobile reviews. We need the EPA, DOE, and Consumer Reports to follow suit.
To see the gas savings from a Cash for Clunkers trade in use the table from this May 29 post or go to the gallons per mile calculator at http://www.gpmcalculator.com to explore savings over different distances and gas prices.
http://news.duke.edu/2009/06/larrick_oped.html
For a longer version of these ideas, see this May 10 post. The USA Today’s automobile writer, James Healey, has started adding GPHM to his automobile reviews. We need the EPA, DOE, and Consumer Reports to follow suit.
To see the gas savings from a Cash for Clunkers trade in use the table from this May 29 post or go to the gallons per mile calculator at http://www.gpmcalculator.com to explore savings over different distances and gas prices.
Wednesday, May 20, 2009
CAFE Math -- Percent cleaner versus percent further?
The Obama administration has proposed raising CAFE standards from an average of 25 MPG in 2009 to 35.5 MPG in 2016. We applaud this improvement because it accelerates gains that were planned for 2020. Detroit has signed on. However, we note that MPG has again caused confusion. Many prominent sources have interpreted the improvement from 25 to 35.5 as "40% cleaner" and as cutting "tailpipe emissions by almost 40 percent."
Before exploring the percentages, it is important to note that CAFE math is hard to interpret in general because it describes the average new vehicle sold in the fleet that year, and does not adjust either for an increase in total vehicles sold or for increases in the miles driven, both of which will diminish actual CO2 benefits. With that caveat, here's the right way to think about the increase of the average car's MPG from 25 to 35.5.
It is true that there is a 40% improvement, which can be seen by taking the difference between 35.5 and 25 (10.5), and dividing it by 25. However, this number does not tell you how much cleaner the average car is in terms of CO2 emissions. Instead, it tells you how much further you can now drive in a new vehicle on the same gallon of gas. One gallon will now take you 40% farther than it did before.
To see the percentage reduction in CO2 emissions, you need to calculate the percentage decrease in GPM. In this case, it is (1/25 - 1/35.5)/(1/25), which is 30%. Thus, for an average car driven a mile in 2009 and 2016, there will be a 30% reduction in gas consumption and CO2 emissions. (Many sources do get this right.)
More generally, you can calculate the percentage changes for MPG and GPM as follows, where MPGhigh is the MPG for the new, more efficient car and MPGlow is the MPG for the old, less efficient car:
Percentage improvement in MPG = (MPGhigh/MPGlow) - 1
Percentage reduction in GPM = 1 - (MPGlow/MPGhigh)
And you can calculate the relationship between percentage reduction in GPM and percentage increase in MPG as:
GPM% = MPG%/(1+MPG%)
For example, a 100% increase in MPG reduces GPM by 50%. A 50% improvement in MPG reduces GPM by 33%, and so on. CO2 is reduced as a linear function of changes in GPM, not MPG.
Note that CAFE calculations, which are based on the harmonic mean of all vehicles sold by a manufacturer, inherently involve GPM. The harmonic mean is simply a weighted average of GPM that is then flipped and expressed as MPG.
Carolyn Fischer at Resources for the Future has written a brief describing several benefits of switching from MPG to GPHM ("gallons per hundred miles"), including the ability to administer CAFE credits. The government routinely uses GPM for these calculations; why not make it a general practice?
Thanks to Frank Wang and Drew Carton for pointing out these misinterpretations of the CAFE increase.
Before exploring the percentages, it is important to note that CAFE math is hard to interpret in general because it describes the average new vehicle sold in the fleet that year, and does not adjust either for an increase in total vehicles sold or for increases in the miles driven, both of which will diminish actual CO2 benefits. With that caveat, here's the right way to think about the increase of the average car's MPG from 25 to 35.5.
It is true that there is a 40% improvement, which can be seen by taking the difference between 35.5 and 25 (10.5), and dividing it by 25. However, this number does not tell you how much cleaner the average car is in terms of CO2 emissions. Instead, it tells you how much further you can now drive in a new vehicle on the same gallon of gas. One gallon will now take you 40% farther than it did before.
To see the percentage reduction in CO2 emissions, you need to calculate the percentage decrease in GPM. In this case, it is (1/25 - 1/35.5)/(1/25), which is 30%. Thus, for an average car driven a mile in 2009 and 2016, there will be a 30% reduction in gas consumption and CO2 emissions. (Many sources do get this right.)
More generally, you can calculate the percentage changes for MPG and GPM as follows, where MPGhigh is the MPG for the new, more efficient car and MPGlow is the MPG for the old, less efficient car:
Percentage improvement in MPG = (MPGhigh/MPGlow) - 1
Percentage reduction in GPM = 1 - (MPGlow/MPGhigh)
And you can calculate the relationship between percentage reduction in GPM and percentage increase in MPG as:
GPM% = MPG%/(1+MPG%)
For example, a 100% increase in MPG reduces GPM by 50%. A 50% improvement in MPG reduces GPM by 33%, and so on. CO2 is reduced as a linear function of changes in GPM, not MPG.
Note that CAFE calculations, which are based on the harmonic mean of all vehicles sold by a manufacturer, inherently involve GPM. The harmonic mean is simply a weighted average of GPM that is then flipped and expressed as MPG.
Carolyn Fischer at Resources for the Future has written a brief describing several benefits of switching from MPG to GPHM ("gallons per hundred miles"), including the ability to administer CAFE credits. The government routinely uses GPM for these calculations; why not make it a general practice?
Thanks to Frank Wang and Drew Carton for pointing out these misinterpretations of the CAFE increase.
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