EMITTERS CALL ON OMB TO SCRAP SOCIAL COST OF CARBON ESTIMATES

Tamar Hallerman
GHG Monitor
9/13/13

Seven trade groups representing high-emitting industries are calling on the White House Office of Management and Budget to withdraw the social cost of carbon (SCC) estimates the government uses to gauge the future social and economic costs of emitting a ton of carbon into the atmosphere. The trade organizations, which include the American Petroleum Industry, American Chemistry Council and the National Association of Manufacturers, argue in a petition of correction sent to OMB last week that the SCC estimates “fail in terms of process and transparency” and that the government should refrain from using the figures in rulemakings until a “transparent, public process” can take place to hammer out new figures. “The SCC estimates fail to comply with OMB guidance for developing influential policy-relevant information under the Information Quality Act,” the petition states. “The SCC estimates are the product of an opaque process and any pretensions to their supposed accuracy (and therefore usefulness in policy-making) are unsupportable.”

The petition criticized OMB for “shielding” the new batch of SCC estimates from public comment and peer review when they were quietly released in May tucked into new efficiency standards for microwave ovens. The trade groups also questioned the modeling used to develop the new cost figures, saying that they did not adequately address uncertainty or offer “a reasonably acceptable range of accuracy.” “OMB and the [intergovernmental working group that compiled the new SCC estimates] have sheltered the model choices, models, data inputs and analyses from peer review,” they said, particularly questioning why the most recent SCC estimate is 60 percent higher than the previous figures released in 2010.

This year’s SCC figures represent a significant increase from the initial figures the government began using in 2010. The updated SCC estimates found that in 2007 dollars at a 3 percent discount rate—the median estimate listed—the social cost of carbon will be $43 a ton in 2020 and $71 in 2050. That is compared to the previous $26.30 figure the government used for the year 2020 and $44.90 for 2050. The intergovernmental panel said the SCC estimates were compiled from three independent, peer-reviewed data models that take into account factors like sea level rise and adaptation when assessing the impact of climate change, and that recent changes in the three models led to the SCC estimate increases.

WH Officials Defend Changes

Obama Administration officials have defended the SCC updates in recent months after Congressional Republicans challenged the estimates. “Those numbers fall very much in line with many of the numbers in the private sector and are built on such a strong body of economic and educational literature,” Heather Zichal, the President’s top energy and environment aide, said during a June speech. Howard Shelanski, the new Administrator of the White House Office of Information and Regulatory Affairs (OIRA), said the SCC changes do not constitute a rulemaking, so they do not require public comment. The SCC is an “input into the rulemaking process. In those rulemaking processes, any rulemaking in which the social cost of carbon is used as part of the cost-benefit analysis will be subject to notice and comment and there will be an open opportunity for people to comment on all aspects of that rule, including the social cost of carbon,” Shelanski said during a July hearing.

Government agencies use SCC figures while performing cost-benefit analyses during the federal rulemaking process, and the changes could have an impact on upcoming regulations on carbon pollution rules from EPA. Since the updated SCC figures increase the value of future carbon emissions avoided, a rulemaking clamping down on CO2 emissions from the power sector, such as the EPA’s proposed greenhouse gas emissions performance standards for new fossil plants, would subsequently have higher benefits listed, making it easier for such standards to clear a cost-benefit analysis. A bill introduced in the House this summer would require the White House to accept public comment on the SCC changes before they could be used during the rulemaking process.