Roberto Borgert, a student at UChicago Law School, contributed to this post.
One year in, President Trump’s climate policy agenda has largely focused on rolling back any progress started by his predecessor—from suspending a rule to limit methane leaks from oil and gas operations on federal land to beginning the process of repealing the Obama Administration’s signature climate change regulation, the Clean Power Plan, and withdrawing from the Paris Agreement. While much of the focus has been on how Congress, states and cities are responding to these actions, the real fight over combating climate change is happening in the courtroom.
Of all the legal challenges, some of the most important center on the Administration’s actions to cast aside the social cost of carbon, a critical tool for evaluating the impacts of greenhouse gas emissions. This tool provides a consistent, rational, evidence-based approach for setting policy and assessing actions related to climate change, regardless of one’s political beliefs.
How did we get here? Before an administrative agency issues a significant rule or regulation, it is required to analyze whether the benefits of the regulation outweigh its costs. In 2008, the 9th Circuit ruled that the government cannot assume that the costs from climate change are zero when conducting the cost-benefit analysis. An interagency working group, co-led by my University of Chicago colleague Michael Greenstone, formed to create the social cost of carbon metric. Fast forward to 2016, and the courts judged the inter-agency’s approach used to determine the social cost of carbon as reasonable.
This metric is so important because it allows government to gauge whether the benefits of a regulation that reduces greenhouse gases are greater than its costs to society. The tool has been used to support about 80 regulations since its original release. So, whether it is used or not has big implications for efforts to address climate change.
Naturally, the Trump administration is targeting it. It’s used a couple different strategies to do so.
First, President Trump has issued an executive order revoking all the documents produced by the interagency working group as no longer representative of government policy. As a result, some agencies have argued that they no longer need to use the social cost of carbon when assessing rules, regulations and actions.
There are several reasons why this doesn’t stand the legal test. Laws, such at the National Environmental Policy Act (NEPA), require policymakers to use high quality information that includes accurate scientific analysis when making decisions. The best available science is the social cost of carbon as it was originally created. The government’s own watchdog has recognized that the social cost of carbon used up-to-date academic models, incorporated new information as it became available, and employed consensus-based decision making. No other comparable metric has been developed. The social cost of carbon is truly in a tier of its own.
As such, litigation surrounding the Trump administration’s lifting of the federal coal-leasing moratorium, pipeline approvals, and leases for fossil-fuel development center on arguments that the government failed to consider the social cost of carbon and climate change in its reports and decisions.
For example, a coalition of environmental NGOs and states is challenging in federal court the administration’s decision to lift an Obama-era moratorium on federal coal leasing. The argument is that, before lifting the decision, the government was required under NEPA to consider the environmental consequences of lifting the moratorium, including on our changing climate. Specifically, NEPA mandates the preparation of an environmental impact statement when a major federal action will have a significant effect on the human environment. The purpose of the statement is to inform the administrative agency of any environmental implications before making a decision and to keep the public informed of the environmental effects of government actions.
By not preparing a new environmental impact statement, and by refusing to update the program’s existing 40-year-old environmental impact statement with a social cost of carbon analysis, the government is failing to meet its NEPA obligations. In doing so, it is also denying citizens the information needed to understand the environmental effects of the federal coal leasing program. The NGOs and states— including the Abrams Environmental Law Clinic at the University of Chicago Law School, which I direct—are asking only that the administration comply with the law. Using the social cost of carbon is a vital component of that compliance.
The case against the coal leasing moratorium is just one of many. The same arguments are being used in other coal-related cases against President Trump’s actions to expand existing coal mines and in natural gas infrastructure permitting cases to combat the Federal Energy Regulatory Commission’s moves to approve projects without considering the effects of burning natural gas on climate change. While several of these NEPA-based challenges are still pending, if even one court finds that the government must consider the social cost of carbon, that ruling would set a powerful precedent for future litigation efforts.
The Trump administration’s second strategy to undermine the social cost of carbon is to reduce the value so it doesn’t justify carbon rules. Under this approach, it appears each agency could use almost any figure that it wants. For example, while the Obama administration estimated the social cost of carbon to be around $42 per ton of carbon and applied it across all departments, the Environmental Protection Agency (EPA) under the current administration has estimated it to be between $1 and $6 under its proposed changes to the Clean Power Plan. So, the Clean Power Plan, for instance, wouldn’t pass the cost-benefit test using the EPA’s new social cost of carbon estimates. When looking at the analysis, it seems the Trump administration set arbitrary numbers to support its belief that the Plan was too costly.
Tinkering with the social cost of carbon metric to further one’s ideological agenda is dangerous. Today, President Trump’s EPA may say it is $1; tomorrow, an EPA under Bernie Sanders might say it is $300. Introducing ideological motives into what should be a technical matter undermines faith in good government and politicizes scientific determinations.
Instead, we need to rely on the law and the pure science. The law requires that an agency give a reasoned explanation for its decision to use, or not use, the social cost of carbon in individual rulemaking. If an agency chooses to use a social cost of carbon, it also must explain why it settled on a particular figure.
Courts typically defer to agency justifications, but occasionally will recognize that the purported “reasoned explanation” used to justify foregoing a social cost of carbon analysis is too strained and will require the agency to redo its analysis. This has happened in both the coal and natural gas context. To date, the courts have not required that an agency use a specific social cost of carbon figure.
Getting the number right is important. Using the wrong figure would lead the government to regulate greenhouse gas emissions too much or too little or to allow certain projects to be undertaken when they should not, or vice versa. Moreover, we all need a single, consistent figure in order to plan and invest appropriately.
The credibility of the social cost of carbon is only underscored by the fact that states, countries and even companies, are using it in their planning and rulemaking. For example, Minnesota and Colorado both use a modified social cost of carbon for utility planning purposes. New York and Illinois employ the Obama administration’s social cost of carbon in their determinations of the value of zero-emission credits for power producers.
These states, countries and companies realize that we must balance the costs of mitigating climate change today with the coming climate damages. One can only hope that, while the Trump administration may continue on the path of using this metric to support its own beliefs, the branch of the government that prompted the social cost of carbon’s creation in the first place, will be the one that helps us meet this balance responsibly: the federal courts.
Interested in learning more? We discuss this issue in greater depth in EPIC’s ‘Off the Charts’ podcast here.