I have been worried that the social cost of carbon was a concept a bit too esoteric to grab the public’s attention despite the vast importance that it may play in our daily lives. I have heard it described as “a little wonky” and “difficult for a mainstream audience.”
But my worries have been alleviated a bit with yesterday’s article in the Wall Street Journal by Keith Johnson.
The social cost of carbon, or SCC, is the current dollar amount that is assigned to the future damage that each emitted ton of carbon dioxide from human activities (mostly energy-related) is purportedly going to cause. (For a broader discussion of "social costs," see here.)
Johnson hits the nail on the head in summarizing the significance of the SCC:
The number is important because the more costly carbon pollution is deemed to be, the greater the apparent economic benefits of new environmental regulations. The climate plan hinges on such regulations, including restrictions on new power plants that the Environmental Protection Agency is set to release in late September.
As I and others (including Johnson in the Journal article) have pointed out, there are so many variables whose values are unknown (or unknowable) involved in its determination that the SCC can be set at virtually any value that the user desires it to be.
The most prominent user is the Obama administration which has introduced the SCC into the cost-benefit analysis that must be performed for all proposed rules and regulations. Since this administration seems to like issuing rules and regulations—especially when they can be claimed to mitigate human-caused climate change—it prefers the value of the SCC to be high so that the supposed “benefits” that accrue through any carbon dioxide emission reductions that the new regulations may engender can be used to offset the actual costs that will result from the new rules.
But just how the administration justifies the determination of a high value of the SCC is a matter of growing debate.
To try an insure that the SCC isn’t (mis)used before the debate can be settled (although there are signs that they are too late), the U.S. House of Representatives, in one of its last actions before recess, passed a bill which limited the administration’s use of the SCC. My concern was that this is where the matter would stop as the initial indications were that the Senate probably wouldn’t address the topic and that the president would veto it anyway.
But with yesterday’s Journal article and a newly announced open round of public comments on a Petition for Reconsideration of the Department of Energy’s use of the SCC, perhaps the matter will continue to grow in the public’s conscience.
And it should, because the administration’s determinations of the SCC is extremely squirrely, to say the least. I recently wrote:
The administration’s SCC is a devious tool designed to justify more and more expensive rules and regulations impacting virtually every aspects of our lives, and it is developed by violating federal guidelines and ignoring the best science.
The more people know about this, the better.