vvEPA
United States
Environmental Protection
Agency
Air and Radiation
EPA42O-3-98-GO 1
July 1998
Office of Mobile Sources
TRAQ Technical Overview
Transportation Air Quality Center
Transportation Control Measures:
Accelerated Vehicle Retirement
EPA's main strategy for addressing the contributions of motor vehicles
to our air quality problems has been to cut the tailpipe emissions for
every mile a vehicle travels. Air quality can also be improved by
changing the way motor vehicles are usedreducing total vehicle miles
traveled at the critical times and places, and reducing the use of highly
polluting operating mod^s. These alternative approaches, usually
termed Transportation Control Measures (TCMs), have an important
role as both mandatory and optional elements of state plans for
attaining the air quality goals specified in the Clean Air Act. TCMs
encompass a wide variety of goals and methods, from incentives for
increasing vehicle occupancy to shifts in the timing of commuting trips.
This document is one of a series that provides overviews-of individual
TCM types, discussing their advantages, disadvantages, and the issues
involved in their implementation.
> Printed on Recycled Paper
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Retirement
Contents
O Background
O Costs and Benefits
9 Implementation
O Equity Issues - -
© Recent Examples
9 Sources
On-line Resources..
Accelerated vehicle retirement (scrappage) programs
reduce emissions by removing older, high-emissions
vehicles from the road before they would normally be retired.
Scrappage programs typically focus on older vehicles because
emission inventory estimates indicate that older vehicles,
which make up a small portion of the overall vehicle
population, account for a disproportionately large amount of
the mobile sources emissions. This imbalance is primarily
because older vehicles had emission standards that are less
stringent than standards for newer vehicles, and average
emissions tend to increase with a vehicle's age and mileage
because of wear on both the vehicle and the emission control
technology.
Scrappage programs operate by paying a fee (sometimes called a bounty) to owners of
older vehicles who volunteer their vehicles, which are then scrapped, thus removing them from
use. In some instances, non-emission-related parts from the vehicles may be salvaged for use as
replacement parts. The bounty is typically a fixed price per scrapped vehicle, although some
programs have offered different bounties for different model years. Proposals have also been
introduced to purchase vehicles at prices that are based on their individual emissions
characteristics.
1. Background
Several successful scrappage programs have been implemented to date, both on a large
and small scale. Unocal operated a program called SCRAP that retired nearly 8,400 pre-1971
vehicles in the Los Angeles area in 1990. The U.S. Generating Company purchased 125 pre-198,0
vehicles in Delaware in 1992. The California SIP contains measure Ml which calls for the
voluntary accelerated retirement of large numbers of older, higher-emitting vehicles in the South
Coast Air Basin from 1999 through 2010. The SIP commits the Ml program to achieving a 25
ton per day reduction in emissions of reactive organic gases and oxides of nitrogen in 2010. The
regulations enable .the reductions to be achieved by the activities of privately operated voluntary
accelerated vehicle retirement enterprises.
2. Costs and Benefits
The primary benefits of a scrappage program are reductions in vehicle emissions,
particularly HC, NOx, and CO. The net emission reductions for a particular scrapped vehicle are
calculated as the total emissions the vehicle would have emitted over its estimated remaining
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lifetime, minus the emissions from a '
replacement vehicle (if any) driven over
the same time period. In addition to
emission reductions, other potential
benefits include reduced fuel
consumption (if the replaced vehicle
has a lower fuel efficiency) and
improved vehicle fleet safety.
Scrappage programs typically focus on older
vehicles because emission inventory estimates
indicate that older vehicles, which make up a
small portion of the overall vehicle
population, account for a disproportionately
large amount of the mobile sources emissions.
The total costs of a scrappage program to the implementing agency are equal to the
bounty price per vehicle, plus any administrative costs per vehicle, times the number of vehicles
scrapped by the program. This method of calculating costs includes transfer payments, which
result when the market value of a scrapped vehicle is less than the scrappage bounty paid for it:
For example, if a program offers a bounty of $3,000 and the market value of a vehicle is $2,500,
the transfer payment is $500. The overall cost-effectiveness of a scrappage program is dependent
on the measure of costs (i.e., with or without transfer payments) that is used.
3. Implementation
Implementing a scrappage program reqllfesiin up-front' source of money to pay the
bounty. If the administrator of the program is a^public agency, obtaining the necessary funds may
be difficult. Many programs have been impleriie'nted by piivate cSmpanies. In these cases, the
emission reductions generated were often used td offset emissions elsewhere by that company.
Once funding is identified, start-up is relatively rapid; '-
Scrappage programs can be made more eost-effdetive by linking them to programs that
are designed to measure the emissions of indi^duad vehicles, such as inspection and maintenance
(I/M) programs and remote sensing prograrfJB''^raiejradviKafe^thes^&ograrnsis-that they^Hn
be used to screen vehicles to help ensure that only dirty vehicles are scrapped.
Scrappage programs may be more effective if they are limited in duration. Vehicle owners
wishing to participate may hold onto their vehicles and scrap them at the end of a continuous or
long-running program. In some cases, vehicles with no remaining lifetime endup being
purchased by scrappage programs rather than being "naturally retired," as they would have been
in the absence of these programs. In general, the cost-effectiveness of a scrappage program is
likely to decline over time as the "pool" of dirty vehicles is reduced.
The amount of the bounty is a
critical variable in a scrappage program. If
the bounty is too low, the program will not
attract enough vehicles to have any real
impact on air quality. If the bounty is too
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high, the program will tend to attract vehicles that are newer and cleaner, which would limit the
program's overall impact and reduce its cost-effectiveness. For the most part, actual scrappage
programs have offered somewhere between $500 and $1,000 per scrapped vehicle, with the most
common bounty being $700.
Vehicle eligibility for scrappage programs must be well-defined. A simple eligibility
criterion is vehicle age (or model year). However, eligible vehicles should also be required to be
driven to the scrap site and should have fully functional components to ensure that bounties are
not paid on previously retired vehicles. Eligibility should be linked to the duration of a vehicle's
registration in the program area to ensure that the vehicle is contributing to the air quality
problem being addressed by the program and to prevent the scrappage of a vehicle imported into
the region specifically for that purpose.
The environmental benefits of a scrappage program depend on the vehicle replacement
decisions made by owners of scrapped vehicles.
** Scrappage programs are most effective (and cost-effective) when scrapped
vehicles are not replaced at all. However, this scenario is unlikely to occur in
practice.
* Replacing scrapped vehicles with new vehicles would also result in substantial net
emission reductions, but the fact that the typical bounty for scrapped vehicles is so
low relative to the price of a new vehicle suggests that many participants will
replace their scrapped vehicles with used vehicles.
*» A problem arises when high-polluting vehicles are replaced by similar vehicles (or
even dirtier vehicles, in which case program cost-effectiveness could actually be
negative).
>» A similar problem could occur if the vehicle owner were to drive the replacement
vehicle significantly more than the original vehicle.
** Operators of scrappage programs should consider areas of uncertainty and ensure
that the programs include implementation follow-up and evaluation procedures to
minimize any uncertainty in emission benefits.
4. Equity Issues
A voluntary scrappage program does not require anyone to sell their car for a bounty.
Therefore, no one is directly affected by this measure who does not choose to be. More of a
concern is that these programs can be expected to drive up used car prices, so lower income
people have more difficulty affording transportation. A mandatory scrappage program could
negatively affect low income people, who are more likely to own a vehicle that would be targeted
and also are more likely to depend on that vehicle as the only means of transportation. In some
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Scrappage programs can be expected
to drive up used car prices, so lower
income people have more difficulty
affording transportation.
areas, persons with assets (including their vehicle)
above a certain amount do not qualify for
government assistance. Therefore, scrapping and
replacing their vehicle with a newer or higher-
priced vehicle may disqualify these individuals
from receiving needed assistance. Another
concern is that where a scrappage program is used
to generate credits for trading or offsets, it could provide a way for stationary sources to continue
to emit unacceptably high levels of pollutants, in particular toxics, impacting surrounding
neighborhoods.
5. Summary of Recent Examples
The State of California enacted the M1 program, which requires the development of a
statewide scrappage program. The goal of the program is to reduce reactive organic gases
(ROG), a subset of total HCs, and NOx emissions in the South Coast Air Basin, by 25 tons per
day.
In 1993, Sun Company
offered $700 to pre-1980 vehicle
owners in five counties in the
Philadelphia area. A total of 166
vehicles were retired by the
program. Ninety percent of the
emission credits generated from
the program were eligible to b«
used by Sun Company to offset
emissions from the expansion of
its two area refineries and to
postpone the installation of new emission controls. In 1994, Sun used remote sensing to identify
high-polluting vehicles in the Philadelphia area and offered owners of the identified vehicles up
to $450 for emission system repairs. As with Sun's earlier scrappage program, 90 percent of the
emission reductions obtained by the program were eligible to be used as emission offsets.
In 1992, the U.S. Generating Company purchased 125 pre-1980 vehicles at a price of
$500 each. Initially, vehicles eligible to be scrapped were those receiving waivers in Delaware's
I/M program (these vehicles could not pass the state's emissions test even after at least $75 in
repairs were made). However, the program was later opened up to all pre-1980 vehicles in the
state. The main goal of the program was to offset emissions from barges and tugboats that would
be transporting coal up the Delaware River. These offsets were generated as a measure of
goodwill, as the U.S. Generating Company was not required to obtain them.
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The Illinois Cash for Clunkers Project was conducted in 1992 by the Dlinois
Environmental Protection Agency, with help from seven corporate sponsors. The project, which
retired 207 vehicles from model-years 1968 to 1979, was unique in that it offered a variable
bounty depending on model-year. Overall, bounties ranged from $647 for a 1968 vehicle to $902
for a 1979 vehicle. The Regional Air Quality Council in Colorado conducted a study comparing
scrappage programs with repair programs. Scrap/repair candidates were identified using the
following:
>» A smoking vehicle hotline
** I/M waiver lists
»» Remote sensing
In total, 271 cars were scrapped and 218 were repaired, with scrappage being the more cost-
effective approach.
6. Sources
[1] Hahn, Robert W., "An economic analysis of scrappage," RAND Journal of Economics, Vol.
26, No. 2, (Summer 1995).
[2] California Air Resources Board, "Mobile Source Emission Reduction Credits: Guidelines for
the Generation and Use of Mobile Source Emission Reduction Credits," (February 1996).
7. On-Line Resources
The Environmental Protection Agency's (EPA) Office of Mobile Sources has established
the TCM Program Information Directory to provide commuters, the transportation industry, state
and local governments, and the public with information about TCM programs that are now
operating across the country. This document and additional information on other TCMs and
TCM programs implemented nationwide can be found at:
.. .. http://www.epa.gov/omswww/transp/traqtcms.htm
The EPA's Market Incentives Resource Center (MIRC) Directory of Air Quality
Economic Incentive Programs is an on-line resource which features a compilation of market
incentive program (e.g., transportation pricing, vehicle buy-back, trading programs, etc.)
summaries from around the United States. The MIRC Directory is posted as a link from the
Office of Mobile Sources' home page at:
http://www.epa.gov/OMSWWW/transp/traqmkti.htm
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