Wednesday, August 12, 2009

Is there life after cash for clunkers?

"Cash for Clunkers" is certainly a popular government program even if politicians continue to debate if it can be deemed successful.

Given the experience of the Germans with their version of "C for C" it is clear that the program needs to be a smashing (literally) success in order to meet its environmental goals. In other words, the clunkers have to be removed from the roads.

This may not always be the case. (GW)

Driving Out of Germany, to Pollute Another Day

FRANKFURT — When the German government developed its pioneering cash-for-clunkers program, it neglected one small detail: making sure the clunkers no longer clunked.

Police investigators have concluded that the alluring premise of the program — providing generous incentives to people who replace aging, pollutant-spewing vehicles with environmentally friendly models — is being undermined as cars that were supposed to have been junked are finding their way to markets in Africa and Eastern Europe.

Up to 50,000 clunkers have whistled past the automotive graveyard in Germany and found new life elsewhere, according to Ronald Schulze, an expert with the Association of Criminal Investigators, a professional group of police sleuths. Experienced thieves, he said in an interview on Friday, discovered “a market opportunity.”

“There is simply an already established network for stealing cars in Germany,” Mr. Schulze said. “These crimes are committed by well-organized groups that have the manpower and the logistics.”

The cars are now churning out carbon dioxide and other pollutants in a host of foreign lands, undermining the ecological goals of the program. Some, investigators say, are even finding their way back to Germany.

“This program was about selling cars,” said Jürgen Resch, the director of German Environmental Help, an advocacy group. “We left open the question of what happens to the old ones.”

Germany kicked off its cash for clunkers plan in January and planned to spend about $2 billion, or around $3,500 for each car traded in. But explosive demand led politicians — up for re-election in late September — to extend the program to Dec. 31 and more than triple the program’s budget, to about $7 billion.

Other European countries, including France, Spain and Austria, created similar incentive schemes intended to destroy older cars so long as customers bought vehicles with lower emissions. The United States followed, with a popular program that Congress extended this week.

But Germany neglected safeguards like the ones adopted in the United States, which require dealers to destroy old engines by injecting sodium silicate in place of oil. In Germany, dealers were required only to drop off the old cars at junkyards.

But these are hard times for operators of those impressive crushing machines. Prices per metric ton for scrapped cars have tumbled under the pressure of a punishing global recession from nearly $600 as recently as early 2008 to as low as $14 these days.

“Organized crime has offered a lot of money, and someone who already has his back to the wall naturally says, ‘Okay, before I close my doors I’d rather give this a try,’ ” Gottfried Höll, the president of the Association of German Auto Scrap Yards, told German public radio.

Dealers who sell to exporters are guilty only of misdemeanor tax evasion if they do not report the profit, Mr. Schulze said.

The used-car trade between Western Europe and its underdeveloped peripheries has long been a legal commercial niche.

Travelers in Africa are accustomed to being packed like sardines into a hulking Mercedes reincarnated as a minibus. In Eastern Europe, used vehicles appeal to a population whose purchasing power still lags behind that of the West.

As the German program got under way, customs officials began noticing an increase in used cars shipped through the northern ports of Hamburg and Bremerhaven. Inquiries revealed that German scrap dealers were openly approaching buyers from Africa about selling cars traded in under the rebate program.

Mr. Resch, the environmental advocate, participated in an undercover investigation with a German television station this year. They watched a traded German car get smuggled into Poland and licensed for legal use there.

Soon afterward, the owner drove it over the long German-Polish border — free of controls in today’s Europe — and re-registered it in its former country.


Post a Comment

<< Home