Aug 4, 2023 - Energy & Environment

The case for paying to scrap polluting stuff

Illustration of one large golden carbon dioxide molecule in the back of a garbage truck.

Illustration: Gabriella Turrisi/Axios

The Biden administration's climate law has big incentives for building and buying cleaner things, but a new paper says something's missing: More incentives for scrapping high-carbon infrastructure and equipment.

Why it matters: Existing laws and policies, including the new law, won't decarbonize the economy fast enough to meet U.S. emissions targets, a number of analysts conclude.

  • That's partly because lot of high-emitting equipment tends to last a very long time.

Driving the news: UC-Berkeley resource economist James Sallee compared policy options for speeding up ways to put high-emissions vehicles, appliances, power plants and more out to pasture.

  • "The demand for new, innovative products is inherently connected to capital turnover and retirement," his working paper states.

The intrigue: Sallee's work explores taxing emissions, taxing used capital goods, scrappage subsidies and mandates, among other measures.

  • He looks at the world as it is, analyzing efficiency (carbon taxes do nicely there), as well as political viability (bummer, carbon taxes).
  • He also delves into whether policies are economically progressive or regressive, and other conditions.

What he found: New retirement subsidies win the contest. They can "provide some efficiency benefits and achieve progressive outcomes, while benefiting from favorable political economy."

The bottom line: "For energy-consuming durable goods that produce pollution, the used stock will generally be the dominant factor governing emissions in a period, which makes attention to them critical," Sallee adds.

Read the whole paper.

Go deeper