The EPA Is Rewriting The Most Important Number In Climate Economics
EPIC Director Michael Greenstone comments on the social cost of carbon.
Climate economists refer to it as “the most important number you’ve never heard of”. The social cost of carbon (SCC) tries to capture the cost of an additional ton of carbon-dioxide pollution in a single number—around $47 in present dollars. Using it, more than $1trn worth of benefits have been calculated in economic-impact assessments that accompany environmental regulations. But now that the Environmental Protection Agency (EPA) is headed by Scott Pruitt, a climate-change sceptic who is friendly with fossil-fuel firms, the maths is likely to be redone. In its recent proposal to repeal the Clean Power Plan, a contentious Obama-era rule that sought to curb CO2 emissions from power plants, the EPA buried a significant haircut to the cost of carbon. The new calculations place it anywhere between $1 and $6—a cut of between 87% and 98%. Mr Pruitt, who has zealously applied himself to undoing the work of the past administration, could use the revised number to justify wiping away reams of environmental regulation that are based on it.
After a court ruled in 2008 that regulators must take the negative externalities of CO2 emissions into account, agencies began using differing estimates of the costs it imposed. The calculation requires simultaneous modelling of climate change and its impact on human health, migration and economic productivity—a fiendishly difficult task. The Obama administration convened a committee of experts to do this in 2009. It began publishing estimates that year. In March, President Donald Trump issued an executive order disbanding the committee and withdrawing all of its technical guidance (it had published social-cost estimates for other greenhouse gases like methane and nitrous oxide too)...
...The previous calculations of the social cost of carbon were not perfect. The National Academy of Science published a 300-page report in January offering refinements. “There was a consensus that the social cost of carbon was in need of updating,” says Michael Greenstone, who served on Mr Obama’s Council of Economic Advisers. “But we should be updating it so that all the advances in our understanding are included. Instead, the Trump administration is ignoring science, and trying to find the dials to turn down regulation, with no analytical evidence."