By Jean Chemnick
The White House is expected to release a temporary estimate for the dollar value of carbon dioxide on Friday.
And it promises to be a lot higher.
President Biden pledged to introduce interim social cost estimates for carbon, methane and nitrous oxides as part of his sweeping day one executive order on Jan. 20. They will replace estimates developed by the Trump administration that critics said were artificially low.
The figures are important because they underlay federal actions — from rulemakings to National Environmental Policy Act assessments — that are promulgated across the federal government. The actions can impact the environment, commercial activity and communities.
This week’s revision of those figures is just the first step. Biden’s order tasked three White House offices with leading a yearlong process to deliver a more substantial rethinking of the social cost figures.
Some experts have urged the Biden administration to consider making changes even to the interim estimates it releases this week to show substantially higher social costs. Such a move would justify more costly and robust regulations at EPA and other agencies.
Economist Michael Greenstone, who co-chaired the interagency working group that formulated the carbon figures under Obama, said in a report last month that the 3% central discount rate used in the process is no longer appropriate. The discount rate can radically alter the value of CO2 by raising or lowering the estimated future benefits of reducing emissions today.
Greenstone recommended that a 2% rate should be used with this week’s interim figure. That would raise the social cost of carbon to $125 a ton — substantially changing the balance of costs and benefits in many federal rules.