Michael Greenstone, Milton Friedman Distinguished Service Professor in Economics; Director, EPIC; Director, Becker Friedman Institute
Tamma Carleton, Assistant Professor of Economics, Bren School of Environmental Science and Management at the University of California, Santa Barbara
The social cost of carbon (SCC), the total cost to society from the release of a ton of CO2 emissions, is vital in evaluating the benefits and costs of climate policies. To bring the SCC to the frontier of knowledge, Carleton and Greenstone recommend that the Biden administration immediately update it by using a discount rate of no higher than 2 percent and including global damages. These changes would produce a social cost of carbon of $125 per metric ton. As a second step, they recommend that the Biden administration form an interagency working group with the goal of returning the SCC to the frontier of understanding about the science and economics of climate change.