By Emily Pontecorvo

President Joe Biden’s first environment-related executive order, signed on Inauguration Day, contained an abundance of actions intended to bring science back into government decision-making. As expected, his instructions for federal agencies started with pulling a key permit for the Keystone XL pipeline and reversing a number of Trump-era regulations on methane emissions and efficiency standards. But he also did something much more far-reaching — directed his agencies to recalculate the social cost of carbon.

The social cost of carbon is an extremely important number, with a very boring name, that tells the government how much it really costs to put carbon into the atmosphere. On the flip side, it also tells regulators how much money can be saved by not putting carbon into the atmosphere. It’s the result of climate modelers and economists coming together and asking, if we emit another ton of carbon — or methane or nitrous oxide, two other planet-warming gases — how much will that cost us in earthly damages like reduced crop yields, extreme weather havoc, and death?

The Obama White House was the first to require government agencies to use this number as part of any cost-benefit analysis of new regulations. To be clear, this doesn’t mean the administration put a price on carbon — the social cost of carbon didn’t make fossil fuels any more expensive for you or me. Instead, it was a factor that helped justify climate-friendly federal rules like energy efficiency standards for appliances and vehicles and limits on methane emissions from the oil and gas sector. Trump subsequently weakened many of these rules.

Biden’s executive order reconvenes that group and directs it to put out interim numbers that agencies should use for the social cost of carbon, methane, and nitrous oxide within 30 days. The group must also develop final numbers by the end of the year. The interagency group will have a chance not only to address the issues the National Academies raised, but also to incorporate the last four years’ worth of science into the numbers. Economists who study the social cost of carbon say that when all of the latest research is taken into account, the number is likely to go up. Researchers from the University of Chicago recently made an argument for the social cost of carbon to land at $125 per ton.

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Areas of Focus: Energy Markets
Definition
Energy Markets
Well-functioning markets are essential for providing access to reliable, affordable energy. EPIC research is uncovering the policies, prices and information needed to help energy markets work efficiently.
Fossil Fuels
Definition
Fossil Fuels
Under current policies, fossil fuels will play an important role in the energy system for the foreseeable future. EPIC research is exploring the costs and benefits of these fuels as...
Social Cost of Carbon
Definition
Social Cost of Carbon
The social cost of carbon is an essential tool for incorporating the cost of climate change into policy-making, corporate planning and investment decisionmaking in the United States and around the...
Updating the United States Government’s Social Cost of Carbon
Definition
Updating the United States Government’s Social Cost of Carbon
As the Biden administration updates the social cost of carbon, their thorough review should include using the latest climate modeling, applying new climate damage estimates, employing lower discount rates, and...
Updating the United States Government’s Social Cost of Carbon
Definition
Updating the United States Government’s Social Cost of Carbon
Policymakers could immediately return to the Obama Administration’s social cost of carbon approach paired with a more appropriate discount rate that together would produce a social cost of $125 per...
Updating the United States Government’s Social Cost of Carbon
Definition
Updating the United States Government’s Social Cost of Carbon
Policymakers could immediately return to the Obama Administration’s social cost of carbon approach paired with a more appropriate discount rate that together would produce a social cost of $125 per...