Fatally flawed metric or the most important number that you’ve never heard of?
“The social cost of carbon is the most important number that you’ve never heard of,” according to University of Chicago economist Michael Greenstone. Greenstone led the interagency working group that devised this metric during the Obama administration. Since it was first calculated in 2010, the social cost of carbon has been used to justify 80 different federal regulations that purportedly provide Americans with over a trillion dollars’ worth of benefits.
“The social cost of carbon is nothing but a political tool lacking scientific integrity and transparency conceived and utilized by an administration pushing a green agenda to the detriment of the American taxpayers,” insisted Rep. Darin LaHood (R-Il.), chair of the Oversight Subcommittee of the House Committee on Science, Space and Technology. LaHood’s remarks were made as he opened a hearing called “At What Cost? Examining the Social Cost of Carbon” earlier this week.
“This metric did not simply materialize out of thin, and dirty, air,” countered Rep. Don Beyer (D-Va). Beyer argued that the social cost of carbon (SCC) metric was devised by the Obama administration through a process that “was transparent, has been open to public comment, has been validated over the years and, much like our climate, is not static and changes over time in response to updated inputs.”
So what are these politicians fighting about? The social cost of carbon is a measure, in dollars, of the long-term damage done by a ton of carbon dioxide emissions in a given year. Most of the carbon dioxide that people add to the atmosphere comes from burning coal, oil, and natural gas. The Obama administration’s interagency working group calculated that the SCC was about $36 per ton (in 2007 dollars). This figure was determined by cranking damage estimates through three different integrated assessment models that try to link long-term climate change with econometric projections. Notionally speaking, imposing a tax equal to the SCC would encourage people to reduce their carbon dioxide emissions while yielding revenues that could be used to offset the estimated damage, e.g., by building higher sea walls or developing heat-resistant crops.
Can citizens take that $36-a-ton estimate to the bank? Not really.