The social cost of carbon in U.S. regulatory impact analyses: an introduction and critique
By L. Johnson, Chris Hope. Journal of Environmental Studies and Sciences, 2012
115 citations recorded by the source corpus.
In 2010, as part of a rulemaking on efficiency standards, the U.S. government published its first estimates of the benefits of reducing CO2 emissions, referred to as the social cost of carbon (SCC). Using three climate economic models, an interagency task force concluded that regulatory impact analyses should use a central value of \$21 per metric ton of CO2 for the monetized benefits of emission reductions. In addition, it suggested that sensitivity analysis be carried out with values of \$5, \$35, and \$65. These estimates have been criticized for relying upon discount rates that are considered too high for intergenerational cost–benefit analysis, and for treating monetized damages equivalently between regions, without regard to income levels. We reestimate the values from the models (1) using a range of discount rates and methodologies considered more appropriate for the very long time horizons associated with climate change and (2) using a methodology that assigns “equity weights” to damages based upon relative income levels between regions—i.e., a dollar’s worth of damages occurring in a poor region is given more weight than one occurring in a wealthy region. Under our alternative discount rate specifications, we find an SCC 2.6 to over 12 times larger than the Working Group’s central estimate of \$21; results are similar when the government’s estimates are equity weighted. Our results suggest that regulatory impact analyses that use the government’s limited range of SCC estimates will significantly understate potential benefits of climate mitigation. This has important implications with respect to greenhouse gas standards, in which debates over their stringency focus critically on the benefits of regulations justifying the industry compliance costs.
Subfields: Economics and Econometrics, Renewable Energy, Sustainability and the Environment
View Paper: https://www.semanticscholar.org/paper/8573cd82a1eb5c600b16b1becc460f4d1c269e4d
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Citations in the corpus
- Supply Chain Design and Carbon Penalty: Monopoly vs. Monopolistic Competition (2015, background): “Several researchers have documented that the estimated carbon cost can range from $50 to $300 per metric ton of CO 2 (Frank 2012, Tol 2008, Johnson and Hope 2012).”
- Global, regional and local health impacts of civil aviation emissions (2015, background): “…we show that the monetized health costs of aviation emissions exceed aviation’s fatal accident costs and noise costs by an order of magnitude, and is on the same order as aviation’s climate costs for discount rates of 2% and 3% (as are appropriate to climate change costing Johnson and Hope 2012).”
- Some Contributions of Integrated Assessment Models of Global Climate Change (2017, background): “11See Johnson and Hope (2012), Tol (2008, 2009), and Nordhaus (2014) for more on these projections of the SCC. IAMS.”