President Obama signed into law a car exchange program which the NHTSA is calling the Car Allowance Rebate System (CARS), colloquially known as "Cash For Clunkers."  If your car is less than 25 years old, and when it was new it had a fuel efficiency rating of 18 MPG or less, then you qualify for the rebate.

The rebate is valid for American cars only, new cars only (purchases of used cars do not qualify, but you can either buy or lease the new car), and for "more fuel efficient cars."  Their website does not define "more fuel efficient," and it's unclear whether the new car simply needs to get better gas mileage than your old car, or if the government has a set of qualifications for fuel efficiency.

There are two ideas behind the "Cash For Clunkers" program:

1.    To increase the overall fuel efficiency of America's fleet of cars.  As a general rule of thumb, old cars get worse gas mileage the new cars.  Although there certainly plenty of exceptions to this rule, and I assume the NHTSA's program will not allow you to buy a new Escalade (13 MPG) or Jeep Grand Cherokee (11 MPG). 

2.    To promote the sale of American cars, and as we all know the American car industry is, shall we say, struggling.  Only American cars qualify for the rebate, although there is a lot of discussion about what constitutes an "American" car.  Many cars from Brands we consider foreign are actually built in the United States, and vice versa.  Most cars built in the United States are built from parts which are manufactured all over the world.

The "Cash For Clunkers" program is currently being developed, and is scheduled to roll out in late July.  I'm hoping they'll have more information available at that time, because the current website is pretty thin.  Clearly their heart is in the right place, but I have some qualms with the current workflow.  According to their website's simplistic explanation, it sounds like you go buy a car and hope that it qualifies.  The dealer sends all your paperwork to the gov't, and sometime later in theory you get a check.

I think the most problematic thing about this program is that your old car has to be scrapped.  On the one hand, I applaud the government and trying to help get people into more fuel efficient cars.  Peel crisis, emissions, Peak Oil, etc.  On the other hand, it seems like a waste to scrap thousands of vehicles which are in running condition.  (According to the rules of the program, the car has to be running.)

I spent a long time looking online for article I found about the carbon footprints of producing a new car, but I simply wasn't able to track it down.  Nevertheless, if you think about all the plastics involved in building a new car, and the fact that most of the parts are built overseas and shipped to America for assembly, you can see that this may not end up being such a great savings after all.