Social Cost Of Carbon

SOCIAL COST OF CARBON

The social cost of carbon (SCC or sometimes referred to as SC-GHG) is an estimate of the cost, in dollars, of the damage done by each additional ton of carbon emissions and the benefit of any action taken to reduce a ton of carbon emissions. SCC is the main measure of the economic benefits of mitigating climate change used to weigh the benefits of proposals to tackle climate change (that is, the value of each ton of carbon that is not emitted) versus the costs (of regulation, equipment, transition to renewable fuels, etc.). 

Why Does It Matter?

The more policy makers understand about the true estimate of SCC, the more they will be better able to determine whether the costs and benefits of a proposed policy to curb climate change are justified. 

What Types of Information Are Significant When Calculating SCC?

There are four main components to be considered:

  • how much manmade carbon emissions will be created as a result of the size of our population and our economic growth
  • what will happen, as a consequence of those emissions, to the climate; how long will the emitted gases remain in the atmosphere; how much damage will result from sea level rise, temperature rise, increased precipitation and extreme weather
  • what will the economic impact be from these climate changes --on agriculture, on energy use, on productivity, on human health?
  • The cost of adaptation and mitigation. Most benefits will come in the form of avoided future damages but most costs will occur immediately. There will be a “discount rate” indicating the rate that society is willing to trade present benefits for future one. 

This was very well explained in 2021 by Columbia Climate School.

Who Uses the Social Cost of Carbon?

The federal government has used it in evaluating hundreds of proposed regulations. Several states like New York, Illinois, Colorado, Minnesota, Washington, Delaware, Maine, Maryland, Nevada, New Jersey, North Carolina, Vermont, Virginia, Washington and California have also used it when considering policy analysis or implementation as they move to better account for the impact of greenhouse gas emissions. Here is an effective guide for state officials, published in 2022.

Are there estimates for the social cost of carbon?

They vary. The Obama administration initially estimated SCC globally at $43 a ton. The Trump administration estimated the US number to be $3-$5 a ton. Since 2021, the Biden administration has been using an interim value of $51 per metric ton of carbon.

In 2022, the EPA, based on a report they commissioned, proposed increasing that $51 value to $190 per metric ton. Sometimes called “the most important revision you’ve never heard of to the most important number you’ve never heard of,” that report concluded that the SCC is the most significant tool for governments and industries alike to determine the benefits to society from acting to curb heat-trapping pollution. The media concurred, with NPR reporting in February, 2023, " One of the most important tools the federal government has for cracking down on greenhouse gas emissions is a single number: the social cost of carbon. It represents all the damage from carbon emissions — everything from the cost of lost crops to the cost of climate-related deaths.”

If increasing the number is so critical to reducing the effects of climate change, why hasn’t the administration done it?  

Politics. Since the 2022 mid-term elections, the democratic Biden administration no longer controls Congress. Embraced by most democrats as a powerful regulatory tool, Sen. Sheldon Whitehouse (D-R.I.) said the SCC metric would embed climate change considerations into everything the U.S. government did. “Think grants, permitting, purchasing, royalty rates, investment decisions, and trade agreements, just to name a few.” On the other side of the aisle, Senator Shelley Moore Capito (R-W.Va.), also recognizing the power of SCC,  introduced legislation to bar agencies from using it for fear it would hamstring fossil fuel development.

Will the proposal become a regulation?

It’s unclear if and when it can move forward with a divided Congress. If it does, the whopping metric could be used across the federal government, including in upcoming EPA rules, Energy Department efficiency mandates, Department of Transportation fuel efficiency rules and environmental reviews for major projects.

CURRENT NEWS

Carbon Pricing’s Giant Leap Forward

04/05/24
In March, the regulatory body governing international shipping “essentially committed” to setting a price on carbon emissions from that industry, which would effectively create the first-ever global price on carbon. The New York Times called…
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A First Step Toward a Global Price on Carbon

By Manuela Andreoni and Max Bearak 03/28/24
It didn’t make many headlines, but last week, at a meeting of the International Maritime Organization, something potentially world-changing happened. The United Nations agency, which regulates the shipping industry, essentially committed to creating the world’s…
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Don’t San Francisco–ize Clean Energy

By Christopher S. Elmendorf 01/28/24
ne great paradox of our time is that to limit humanity’s harms to the planet, we must decarbonize the economy; but to decarbonize the economy, we must build tons of new stuff: wind farms, solar…
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Key Biden Climate Pollution Metric Is Safe—For Now

By Niinah H. Farah and Others 10/11/23
The Supreme Court on Tuesday declined to take up a fight by Republican-led states over the federal government's method of estimating the costs of climate change, in a win for President Joe Biden's push to…
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Climate change is about to play a big role in government purchases – with vast implications for the U.S. economy

By CSU MarComm Staff 10/03/23
Each year, the federal government purchases about 50,000 new vehicles. Until recently, almost all of them ran on diesel or gasoline, contributing to U.S. demand for fossil fuels and encouraging automakers to continue focusing on…
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The military is turning to microgrids to fight global threats — and global warming

By Quil Lawrence 10/02/23
Col. Thomas Bedell had been commanding Marine Corps Air Station, Miramar in San Diego for just one day, in July 2021, when he got a message from the base energy management director. The city power…
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Biden-Harris Administration Proposes to Improve Air Pollution Emissions Data

07/25/23
The U.S. Environmental Protection Agency (EPA) announced proposed updates to the Agency’s Air Emissions Reporting Requirements rule, including proposing to require reporting of hazardous air pollutants, or “air toxics.” Air toxics are known or suspected…
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Social cost of carbon: What it is, why it matters, and why the Biden administration seeks to raise it

04/03/23
The social cost of carbon has been called “the most important number you’ve never heard of.” It is the main measure of the economic benefits of mitigating climate change, an estimate in dollars of the…
Read more

What is the social cost of carbon?

By Elijah Asdourian and David Wessel 03/14/23
The social cost of carbon (SCC) is an estimate of the cost, in dollars, of the damage done by each additional ton of carbon emissions. It also is an estimate of the benefit of any…
Read more

EPA Finds Higher Benefits from Curbing Climate Change

By Mohit Chhabra 02/16/23
A recent analysis by the Environmental Protection Agency (EPA) proposes that it’s worth around $190 to curb each ton of carbon dioxide emissions – almost four times more than prior estimates. That’s the central conclusion…
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The social cost of carbon: a powerful tool and ethics nightmare

By Rebecca Hersher, Aaron Scott and Others 02/16/23
One of the most important tools the federal government has for cracking down on greenhouse gas emissions is a single number: the social cost of carbon. It represents all the damage from carbon emissions —…
Read more

Stanford explainer: Social cost of carbon

By Isabella Backman 06/07/21
Carbon emissions not only are causing widespread and potentially irreversible damage to the environment but also may have significant impacts on the economy. Here, Stanford University economists Marshall Burke and Lawrence Goulder explain one tool…
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KEY RESOURCES

The Cost Of Climate Pollution

08/28/23
Climate change will have, and in some cases has already had, severe consequences for society. These consequences range from disruption of daily life to major physical destruction, including the spread of disease, decreased food security,…

Report on the Social Cost of Greenhouse Gases

09/01/22
This report presents new estimates of the social cost of carbon (SC-CO2), social cost of methane (SC-CH4), and social cost of nitrous oxide (SC-N2O), collectively referred to as the “social cost of greenhouse gases” (SC-GHG).…

MORE NEWS

Social Cost of Carbon: What Is It, and Why Do We Need to Calculate It?

By Renee Cho   04/01/21  
There are many policies that could potentially curb carbon dioxide emissions and slow global warming. Some are projected to cost trillions of dollars for governments and taxpayers. And yet, society will also pay a price…
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Social Cost of Carbon 101

By Kevin Rennert and Cora Kingdon   08/01/19  
The social cost of carbon (SCC) is an estimate, in dollars, of the economic damages that would result from emitting one additional ton of carbon dioxide into the atmosphere. The SCC puts the effects of…
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