Social cost of carbon

Source:  Climate Etc.  idso positive CO2

by Judith Curry

The debate on the social cost of carbon is heating up.

White House

The White House has recently issued a Technical Support Document on the Social Cost of Carbon [link].   Excerpts from the Executive Summary:

The purpose of the “social cost of carbon” (SCC) estimates presented here is to allow agencies to incorporate the social benefits of reducing carbon dioxide (CO2) emissions into cost-benefit analyses of regulatory actions that impact cumulative global emissions. The SCC is an estimate of the monetized damages associated with an incremental increase in carbon emissions in a given year. It is intended to include (but is not limited to) changes in net agricultural productivity, human health, property damages from increased flood risk, and the value of ecosystem services due to climate change. 

The SCC estimates using the updated versions of the models are higher than those reported in the 2010 TSD. By way of comparison, the four 2020 SCC estimates reported in the 2010 TSD were $7, $26, $42 and $81 (2007$). The corresponding four updated SCC estimates for 2020 are $12, $43, $65, and $129 (2007$). The model updates that are relevant to the SCC estimates include: an explicit representation of sea level rise damages in the DICE and PAGE models; updated adaptation assumptions, revisions to ensure damages are constrained by GDP, updated regional scaling of damages, and a revised treatment of potentially abrupt shifts in climate damages in the PAGE model; an updated carbon cycle in the DICE model; and updated damage functions for sea level rise impacts, the agricultural sector, and reduced space heating requirements, as well as changes to the transient response of temperature to the buildup of GHG concentrations and the inclusion of indirect effects of methane emissions in the FUND model. 

The Hill

The controversy surrounding this issue is reported today in a post by The Hill.  Excerpts:

The White House will seek new public comment on the “social cost of carbon” (SCC), a metric that helps regulators estimate the benefits of rules that cut greenhouse gas emissions.

The Office of Management and Budget (OMB) decision arrives amid criticism from industry groups and Republicans who say the Obama administration’s May 2013 upward revision of the SCC earlier lacked public input.

The “social cost of carbon” has lately been a flashpoint in wider political and lobbying battles over White House’s climate change policy, especially planned Environmental Protection Agency carbon standards for power plants.

Howard Shelanski, the top White House regulatory official, said in a blog post late Friday afternoon that the administration was making new changes to the estimate, and would launch a public comment period “in response to public and stakeholder interest.”

Business groups, such as the Chamber of Commerce and the American Petroleum Institute, have been challenging the revised estimate on various fronts.

In addition, the GOP-led House recently passed a bill that would prevent the EPA from using the metric in major energy rules.

Background info

The Yale Forum on Climate Change has a good post SCC – Social Costs of Carbon: Continuing a little told story.  This article provides a lot of good background information.

Another good background post is at CSIS.

Dr. Craig Idso

Dr. Craig Idso

Opposing view points

The SPPI takes a different approach to this issue, looking at The Positive Externalities of CO2.  Excerpt:

It is clear from the material presented in this report that the modern rise in the air’s CO2 content is providing a tremendous economic benefit to global crop production. 
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The very real positive externality of inadvertent atmospheric CO2 enrichment must be considered in all studies examining the SCC; and its observationally-deduced effects must be given premier weighting over the speculative negative externalities presumed to occur in computer model projections of global warming. Until that time, little if any weight should be placed on current SCC calculations.
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Another contrary view is provided by Media Matters WSJ Contradicts Experts on Social Cost of Carbon.  Punchline:
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WSJ Editorial Suggests There Should Be No Social Cost Of Carbon. In an editorial, The Wall Street Journal criticized the Obama administration for raising the social cost of carbon, or the estimate of the damages caused by emitting a ton of carbon dioxide in one year, which is used by regulatory agencies to calculate the benefit of reducing carbon emissions.The Journal suggested that the social cost of carbon should be $0, approvingly citing the previous lack of a social cost for carbon, adding that “Congress has never legislated that there are social costs to carbon emissions” and claiming that assigning such as cost is an “inventio[n]” to “ri[g] the rule-making”:

JC comment:  The bottom line seems to be that SCC is being established as a surrogate for a National Carbon Tax.  My reaction to all this is that it seems like the uncertainty in SCC is  colossal, I am not convinced that we should even have confidence in the sign of the SCC in light of the SPPI and WSJ analyses.  And the White House is presenting values of SCC with two significant figures?  Uncertain T. Monster is not pleased.  There has been no attempt to propagate uncertainty through the FUND, DICE and PAGE models, not to mention whatever front end assumptions about carbon and climate are being used as inputs.

And even if we did have confidence in the SCC numbers, the policies evolving around the SCC seem quite convoluted and who knows how they would even play out at achieving the larger policy objectives.

And finally, I return to the issues raised in the preceding post, 20 tips for interpreting scientific claims.  Some commenters seemed to think this was pretty much kindergarten stuff and of course policy makers (or their staffers) understand this stuff.  Well anyone taking seriously the White House’s SCC numbers  needs to go back to kindergarten and pay attention to the 20 tips.

In light of the importance of SCC to U.S. climate/energy policy, it seems that much more attention needs to be paid to this issue.

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