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Savings from Economic Incentives

With Rule 1610 the SCAQMD established the first program in the country that allows stationary sources to obtain credit for emission reductions from scrapping vehicles. Subsequently, the EPA developed a similar vehicle scrapping program that states can include in State Implementation Plans. Many states have followed up with specific programs of their own.

SCAQMD's Rule 1610 allows sources with AQMD-approved scrapping programs to buy and scrap 1982 or earlier automobiles. The sources can obtain credits for 26 to 91 pounds of reactive organic gases and 16 to 19 pounds of nitrogen oxides, depending on the model year. The credits are good for three years and may be applied toward compliance with stationary source emission requirements. The credits earned under Rule 1610 also are tradable.

In their anlaysis, AQMD officials estimated that at least 10,000 cars would be retired each year for an average cost of $800. Assuming an average cost of $800 per vehicle, the cost per ton of removing reactive organic gases or nitrogen oxides would be about $8,000. This cost compares favorably with incremental control costs faced by many stationary sources in the basin. For example, in the early 1990's Unocal officials claimed that they faced incremental control costs for these pollutants of approximately $160,000 per ton at a refinery located in the basin.

The potential cost savings from nationwide application of automobile scrapping programs may be estimated as follows. Approximately 30 million vehicles still in use could qualify; however, scrapping programs would operate only in serious ozone nonattainment areas, limiting the number of candidate vehicles to about 15 million. About 20 percent of the candidate vehicles would be retired each year without a scrapping program. The air quality gains for these vehicles would be zero, even though they might earn credits if bought and scrapped. An additional 5 percent of candidate vehicles might be scrapped each year due to the existence of a scrapping program. By the year 2000, only about 3.5 million candidate vehicles remain in serous ozone nonattainment areas; 5 percent of these could be scrapped each year; some 175,000 vehicles in the year 2000 and fewer in subsequent years. Assuming that scrapping produces savings averaging $5,000 per ton relative to alternative control costs for stationary sources, in the year 2000 a vehicle scrapping program would reduce pollution by about 20,000 tons and produce savings of some $100 million.

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