Tough
What’s tough?
Life
What’s Life?
A magazine
How much does it cost?
It costs twenty cents
I only have a nickel
Tough…
That once familiar little bit of comic doggerel, referring to the great Life weekly magazine that ceased to exist in 1972, has a resonance in the context of the long-running, often contentious debate over the “social cost of carbon” (SCC), an implementation of the often-tricky practice of cost-benefit analysis. It is an attempt to put a price tag on global warming and climate change in order to guide government policy. One standard definition of the social cost of carbon is “the marginal cost of the impacts caused by emitting one extra tonne (metric ton) of greenhouse gas (carbon dioxide equivalent) at any point in time, inclusive of ‘non-market’ impacts on the environment and human health.” Those who support dramatic, even draconian, government policies to reduce greenhouse gas emissions want to see a high social cost of carbon to justify their views. Those who fear climate change may be overblown (skeptics often referred to as “lukewarmers”) suspect a lower figure is more realistic.
As E&E news has reported, the Biden administration’s Environmental Protection Agency has been rather quietly advancing figures for the social cost as much as almost four times the current planning figure of $51/tonne used by the federal government’s Interagency Working Group (the IWG in acronymically addicted Washington) since Biden became president in 2021. Depending on the discount rate chosen, the working group has come up with an SCC of as much as $190/tonne.
It’s a debate and dispute that goes back several administrations in Washington, largely revolving around calculations surfaced by the EPA and other agencies with regulatory interests in the topic. In 2007, the US Supreme Court in the case Massachusetts v. EPA ruled 5-4 that the Clean Air Act gives the EPA authority to regulate tailpipe emissions of greenhouse gases and remanded the issue back to EPA to formulate rules.
The administration of George W. Bush told agencies they had to use calculations of SCC in their political and policy recommendations. The result was a policy Tower of Babel, as various agencies proposed their own SCC calculations designed to guide their policy preferences. Among the agencies with dogs in the SCC fight: EPA, the Energy Department, the Nuclear Regulatory Commission, the Interior Department, the Treasury Department, the Commerce Department, the Transportation Department, the Office of Management and Budget, and so it goes.
The new Obama administration in 2009 moved to sort out the confusion, ordering his OMB and Council of Economic Advisors to coordinate policy. The result became the Interagency Working Group on the Social Cost of Carbon. This newly populated policy group soon began looking at other greenhouse gases as well.
The Obama administration was the first to formally use the SCC, which it set at about $45/ton, clearly using some favorable assumptions in order to produce a substantial number. The successor Trump administration quickly flipped a political bird at Obama’s SCC, with the new, Trumpian appointees at EPA setting the SCC at $1-$7/tonne, while abolishing the IWG.
When Biden moved into the White House, he quickly ordered a review of the SCC. A reconstituted IWG, now formally the Interagency Working Group on Climate Change, proposed, and the administration adopted, an interim figure of $51/tonne, with a caveat that the figure was only tentative and different figures might be coming down the policy pipeline. Then last month, that Biden SCC shoe dropped with a thud. Well-known, sometimes contrarian, and sometimes controversial climatologist Judith Curry noted, “The debate on the social cost of carbon is heating up.” That observation is not controversial. The numbers are.
According to the E&E account, “EPA quietly proposed increasing that number to $190.” In fact, the agency came up with a range of costs, based on various discount rate assumptions, but $190 is a reasonable composite of the SCC numbers. E&E observes that EPA jumped in ahead of the IWG: “EPA made the new metric public before a highly anticipated proposal from the IWG, which includes the agency. The working group, which originally planned to release its proposal in April, streamlines the approach to calculating the metric across the federal government,” adding, “It’s unclear whether the figures released by EPA reflect changes the working group is also considering.”
EPA hinted at what was coming in a September “external review draft,” titled “Report on the Social Cost of
Greenhouse Gases: Estimates Incorporating Recent Scientific Advances,” focusing on oil and gas issues. The draft states, “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). These estimates reflect recent advances in the scientific literature on climate change and its
economic impacts and incorporate recommendations made by the National Academies of Science, Engineering, and Medicine (National Academies 2017).” The EPA notes that it is participating in the IWG.
Whatever the administration comes up with is likely to end up in the federal courts, as has been the pattern throughout the history of the SCC. E&E notes that the attorneys general of Missouri and Louisiana, both Republicans, have already filed suit challenging Biden’s “use of the IWG’s interim social cost of greenhouse gases.”
–Kennedy Maize