Making the Social Cost of Carbon More Social


by Susan E. Dudley, Director, Brian Mannix, Research Professor, & Sofie E. Miller, Senior Policy Analyst

December 03, 2013

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On November 1, 2013, the White House released updated values for the “social cost of carbon” (SCC) to be used by various agencies when evaluating the benefits of emissions regulations, energy efficiency standards, renewable fuel mandates, technology subsidies, and other policies intended to mitigate global warming. Use of a uniform SCC reflects an effort to bring some consistency to a vast portfolio of different policies aimed at reducing carbon emissions from sources ranging from power plants, to cars, to household products. 

Perhaps more significant than the updated SCC values themselves is the administration’s commitment to seeking public comment on them. Until now, despite President Obama’s commitment to “creating an unprecedented level of openness in Government,” the administration has rebuffed requests to subject the SCC and its underlying models and assumptions to public scrutiny.

President Obama has publicly committed to addressing climate change through an ambitious regulatory agenda, to be undertaken by multiple federal agencies using a wide range of existing statutory authorities. While the merits of this climate agenda as a whole are debatable, the use of a unified SCC makes sense. The SCC summarizes into a single number (more properly, a range of numbers) a vast array of information derived from scientific and economic research and modeling. All of this information is subject to disagreement and the relationships embedded in the calculation of the SCC are extraordinarily complex, presenting a daunting challenge to anyone trying to arrive at a consensus figure. (See “Pricing Carbon When We Don’t Know the Right Price,” Summer 2013.) Nonetheless, it is worthwhile to try. To the climate, all carbon dioxide molecules look alike, so any cost-effective collection of carbon-reduction policies must have the same implicit marginal cost. The use of a consistent set of SCC values government-wide can discourage government agencies from trying to outbid each other in their efforts to save the planet, resulting in inefficient policy choices

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