Criminals undermine, and profit from, car scrappage scheme

The scrappage scheme, which offered buyers a €2500 payment if they got rid of a car more than nine years old, was already controversial from an environmental perspective, and was strongly criticised on economic grounds too. Now the German police say an estimated 50 000 German cars have been sold illegally overseas, mostly to Africa and eastern Europe.

A central part of the scrappage scheme was that the cars would indeed be scrapped, thereby contributing to a global fleet that had more newer – and ‘cleaner’ – cars. But an official of the German police association BDK, quoted in the Financial Times, said, ‘What matters is that a subsidy has been introduced while totally overlooking the fact that there are a lot of organised criminals with an interest and the structures in place to use it for their own purposes.’

In an editorial, the FT attacked the economic justification for scrappage schemes, saying ‘there is no sound economic reason to sustain the capacity to produce cars that consumers are unwilling to pay for in full.’

– Two American academics have said the USA’s scrappage scheme is an expensive way of tackling climate change. Michael Wara and Christopher Knittel have calculated that the scheme has cost between $200 and $500 per tonne of carbon dioxide emissions avoided.