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.).
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.
There are four main components to be considered:
This was very well explained in 2021 by Columbia Climate School.
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.
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.”
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.
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.
