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Cash for Clunkers Might Siphon Money from Renewable Energy Loans


In theory, Cash for Clunkers is a great program.  Want to get rid of your old, polluting car? The U.S. government will give you up to $4,500 to replace it with a fuel-efficient one. Cash for Clunkers has been so popular that the House passed a bill today to inject $2 billion into the program, which has nearly used up the $1 billion initially marked for use. But that $2 billion might come from a contentious source: renewable energy loan guarantees.

These guarantees, provided under a $6 billion Department of Energy program, provide financing fo major solar and biofuel projects. If Cash for Clunkers takes $2 billion from the initiative, the renewable energy industry will be hit hard. And while Cash for Clunkers is a temporary boost for the auto industry, funding for renewable projects could provide permanent solutions to our reliance on polluting sources of power like coal.

The Cash for Clunkers program is certainly a useful way to help transition the country to fuel-efficient cars. But renewable energy will provide the clean power that makes a plug-in hybrid vehicle network sustainable a few years down the line. One program is not more important than the other. Cash for Clunkers should be continued if at all possible, but not at the expense of green power.

[Via CNET]

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  • Mike Morgan

    The largest problem with the cash for clunkers program is that it will create a hole in automotive demand followed by a huge spike in demand in the future.

    The "clunkers" are of different ages and would have been retired from service at different times in the future (lets say over the next 5 years). The cash for clunkers program has created an artificial spike in demand right now, which will cause a shortage for demand over the next 5 years. This shortage of demand will be followed by an immediate spike in demand at some point between 7-10 years from now when the new cars are retired.