What is the "social cost of carbon"? It depends on who you ask. The Biden Administration's current tally is $51 per metric ton, but according to a new study, it's more than three times as much — or about $185 per metric ton. That disparity could have serious consequences for climate change mitigation efforts in the future.
"Many times it's clear what the value of something is, and it's clear how much it might cost you. You go into a store, you see the price of bread," said Richard G. Newell, Ph.D., co-author of the study and president and CEO of the nonprofit research institution Resources for the Future (RFF). "When it comes to things like environment and like climate change, there's no price, there, that we can directly measure. There's no clear metric of what the value is of reducing our emissions, so that number has to be created."
Part of the reason for the disparity in values is that determining the social cost of carbon entails a very complicated process that seeks to quantify the dollar value of societal damages wrought from releasing carbon into the atmosphere. Authors of the study, published on Sept. 1 in the journal Nature, included tallies of everything from climate change-related crop loss and the demand for heating and cooling to infrastructure damage related to flooding and extreme weather — and even the loss of human life.
The social cost of carbon is an important metric for policymakers when determining the cost-benefit analysis of various climate-related policies. This can include decisions about the fuel economy of vehicles, the energy efficiency of appliances, or what types of power plants to build. With such high-stakes decisions resting on a calculation, it's important to get it right.
The U.S. government currently values the social cost of carbon at about $51 per ton. The figure is a relic from the Obama Administration, adjusted for inflation.
The social cost of carbon dates back to the George W. Bush Administration. As science evolves, so too should the methodology for determining the social cost of carbon. President Barack Obama's administration updated the calculation and methodology several times. President Donald Trump subsequently slashed the cost artificially, and when President Joe Biden took office, he reinstated the Obama-era figure on an interim basis pending better research.
Newell said there's no way of knowing whether the Biden Administration will adopt the $185 figure for its own, but he believes it will be "influential." Should the government match that number, he said, "the implication of that would be the government would be putting more than three times as much value on reducing emissions when they're developing those policies."
Although when budgeting, it's typically wise to cut costs, Newell said the social cost of carbon is one area policymakers won't want to skimp.
"Because climate change is such a long-term problem, and the impacts are, again, lasting for decades or centuries, the more weight you put on the future and the more we care about the future, the bigger this number is going to be," Newell said.