How To Use The Social Cost Of Carbon To Stop The Crisis

The Number With The Power To Halt The Climate Crisis; Wonky as it sounds, the social cost of carbon holds the key to crafting policies that avoid harm from greenhouse gas emissions.

Phil Davies, May 31, 2019 (Ensia)

“…[The social cost of carbon (SCC) is] a wonky number that captures the economic burden to society at a given point in the future of a metric ton of carbon dioxide released today. Because the SCC represents the economic benefit we’ll reap tomorrow by cutting CO2 emissions today, it gives us a way to put a dollar value on efforts to reduce future emissions and forestall climate change…[A number of countries, mainly in North America, have adopted the SCC as a tool for incorporating the impact of carbon into policies intended to prevent harm from climate change. Getting the SCC right — or at least agreeing on a range of values supported by the best available science — is vital to efforts to mitigate the climate crisis through regulation and market-based solutions such as carbon taxes…

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Calculating the SCC involves projecting increases in CO2 emissions due to population and economic growth, modeling the climate’s response to those emissions, and translating climatic change into expected economic damages (and benefits, in some instances) across multiple economic sectors. Because people typically value a dollar today more than a dollar tomorrow, a discount rate — typically between 2.5% and 7% annually — is applied to future damages. Discounting significantly reduces the impact, in current dollars, of damages that occur decades from now, and thus the benefits of preventing them. For example, at an annual discount rate of 3 percent, US$100 of climate damages in 2100 is worth about US$7 today…

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Many governments have set the SCC at about US$50 per metric ton of CO2 — the “central” estimate of a federal interagency working group in 2016. This figure is for emissions in 2020…But cost estimates of harm from CO2 emissions [from things like more frequent wildfires and large-scale migration] range from as little as US$1 per metric ton (a number proposed by the Trump administration) to over US$400 per metric ton — the number that emerged from a 2018 study by a team of U.S. and European researchers…Economists and climate researchers are [tapping the power of big data] to get a better handle on the SCC and make it less mysterious to regulatory analysts and policymakers…After all the revising and tweaking, the SCC is likely to remain an imperfect measure…But researchers hope to reduce that uncertainty and boost confidence in the SCC as the basis for policy aimed at avoiding the worst consequences…” click here for more

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