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The US government's estimated price tag for greenhouse gas
emissions, or the "social cost of carbon" jumped from $1 to $51 per
metric ton of carbon dioxide emissions after an interagency working
group decided on 26 February to
temporarily return to an inflation-adjusted figure used by the
Obama administration.
The 14-agency group, tasked a month ago by newly elected
President Joe Biden to present an interim carbon cost figure, said
it will have an updated estimate for carbon dioxide emissions based
on the latest science in January 2022. This final estimate will be
vetted through a public process.
The working group also set separate interim social costs for two
other potent greenhouse gases, methane at $1,500 per metric ton and
nitrous oxide at $18,000 per metric ton. The majority of nitrous
oxide comes from agriculture, while methane is released during the
extraction of fossil fuels.
The group is charged with estimating and regularly updating the
number used to calculate economic impacts on farm productivity,
human health, natural disasters, migration and more when greenhouse
gases are added, ton for ton, to the atmosphere and climate change
worsens. The Trump administration disbanded the group and its
estimates in 2017 under an order seeking to promote fossil fuel
projects and energy independence.
By returning to the Obama-era estimate of about $52 per metric
ton for carbon dioxide, the interagency working group acknowledged
that agencies will be operating with an outdated figure, but said
it will support scientifically more accurate rulemaking for
now.
"This update reflects the immediate need to have an operational
[carbon cost estimate] for use in regulatory benefit-cost analyses
and other applications that was developed using a transparent
process, peer-reviewed methodologies, and the science available at
the time of that process," the 14-agency working group said in its
report Friday.
But critics said the group could have done better than to just
resort to an estimate that is seven years old, while others blasted
it for being a thinly veiled "carbon tax."
"Given the magnitude of the climate crisis and the timeline we
face, we will need to spend significantly more than $51 per ton to
address climate change effectively," said James Goodwin, a senior
policy analyst with the Center for Progressive Reform.
Meanwhile, Sen. John Barrasso, Republican-Wyoming, ranking
member of the Senate Committee on Energy and Natural Resources
warned that the higher carbon cost estimate will bring higher
energy costs for consumers and red tape for industry.
"Since the president can't rationalize the crippling costs of
his climate policies, he needs to exaggerate the benefits,"
Barrasso said in a terse statement Friday evening. "It's a move
straight from the Obama administration's playbook. No one will be
fooled this time."
Scientists, however, have long used the social cost of carbon in
their research, and several states have continued to use the
Obama-era estimate in their policymaking. Richard Revesz, a
professor at New York University School of Law and director for
Institute for Policy Integrity, said whatever comes out of the
working group going forward will be reviewed by leading economists
and other experts.
"It sets forth a blueprint for the computation of final values,
incorporating recent developments in science and economics and the
input of the National Academies of Science, Engineering, and
Medicine," he said.
The next update in 2022 will likely be significantly higher
since research shows the interim estimate of $51 is too low, he
added.
In a paper published in the U.S.
National Bureau of Economic Research earlier this month, Joe
Stiglitz of Columbia University and Lord Nicholas Stern of the
London School of Economics argued that the social cost of carbon
need to be around $100 to make sure policies align with the goals
of the Paris Agreement.
Under Trump, the US Environmental Protection Agency and other
federal agencies used an estimate that ranged from $1 to $7 and
showed a much smaller cost from greenhouse gas emissions. It
arrived at that figure by, among other things, only counting U.S.
impacts even though climate change is a global problem.
Revising the cost downward helped agencies justify policies such
as the decision to roll back the Obama-era Clean Power Plan in
2019, and in January to issue the nation's first airline emission
rule. The aircraft rule had no impact since the industry had
already met its new emission requirements.
Posted 26 February 2021 by Karin Rives, Senior Journalist, IHS Markit