A US$300M US energy department rebate scheme on energy-efficient appliances could be operating by Christmas. The UK’s main retail trade body meanwhile wants the government to drop value-added tax on eco-friendly white goods with a temporary car industry style scraping to kick start the demand. Clunkers schemes have certainly blown away expectations in the US and elsewhere; Germany’s helped pull the country out of recession this spring, and boosted car-making countries in central Europe. Even the UK’s stingier scheme stimulated sales. So why not try it with fridges? Like cars, sales of big-ticket white goods are suffering badly; US sales fell 15% in the seven months to July. And even offsetting the energy cost of destroying older products and building new ones, there are long-term benefits to the environment and consumers’ pockets. The US appliance industry body says replacing an eight-year-old washing machine with a new one cuts US$78 off average annual electricity bills. The argument against all such incentive schemes is that they simply divert spending from elsewhere or pull forward demand, meaning more pain later, but Germany’s clunkers scheme has unlocked some new spending. And there are “tide-over” effects, preserving manufacturing jobs until a broader recovery kicks in. Exceptional times mean that even exceptional measures such as these sometimes make it through the wash and come out clean for the economies.
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