Michael Greenstone Testifies On The Social Cost of Carbon
Hearing convened by the U.S. House Committee on Science, Space and Technology, Subcommittees on Environment and Oversight.
On February 28, 2017, EPIC Director Michael Greenstone, the Milton Friedman Professor in Economics, testified before the U.S. House Committee on Science, Space and Technology's Subcommittees on Environment and Oversight on the social cost of carbon.
His full testimony can be found here.
Hearing: At What Cost? Examining the Social Cost of Carbon
Testimony by Michael Greenstone
Thank you Chairman Biggs, Chairman LaHood, Ranking Member Bonamici, Ranking Member Beyer and members of the Subcommittees on Environment and Oversight for inviting me to speak today. My name is Michael Greenstone, and I am the Milton Friedman Professor in Economics and Director of the Energy Policy Institute at the University of Chicago. My research focuses on estimating the costs and benefits of environmental quality, with a particular emphasis on the impacts of government regulations.
The social cost of carbon is a key metric used to assess the costs and benefits of environmental regulations that aim to reduce greenhouse gas emissions. It is the monetary cost of the damages caused by the release of an additional ton of carbon dioxide into the atmosphere. Simply put, it reflects the cost of climate change—accounting for the destruction of property from storms and floods, declining agricultural and labor productivity, elevated mortality rates, and so forth. It is perhaps the most critical component of regulatory policy in this area because, by calculating the costs of climate change, the social cost of carbon allows for the calculation of the monetary benefits of regulations that reduce greenhouse gases. So, for example, a regulation that reduces carbon dioxide emissions by 10 tons would have societal benefits of $100 if the value of the social cost of carbon were $10. These benefits can then be compared to the costs that the regulation imposes to determine whether the regulation is socially beneficial on net. The social cost of carbon has been used to guide the design of about 80 regulations since its original release in 2010.
As such, I appreciate the opportunity to speak with you today about the methods and parameters used to establish the social cost of carbon. I will make several points today that I first summarize here.