GOP SENS. CHALLENGE INCREASED SOCIAL CARBON COST ESTIMATES

Tamar Hallerman
GHG Monitor
6/21/13

Republicans on the Senate Environment and Public Works Committee challenged the Obama Administration’s recently-revised social cost of carbon (SCC) estimates this week, arguing that the new figures were devised behind closed doors to advance the President’s regulatory agenda. In a June 18 letter to the heads of the Department of Energy, the Environmental Protection Agency and the White House Office of Management and Budget, Sen. David Vitter (R-La.), the committee’s ranking member, and six GOP colleagues said they were “troubled” by the recent SCC revisions, revised by the Obama Administration May 31. “We are troubled by reports on the updated estimate, especially the continued use of lower discount rates that appear to diverge from the Office of Management and Budget’s own existing guidance and the apparent lack of stakeholder involvement in the effort,” the lawmakers said. “… This is a significant change to an already highly controversial estimate, and as such requires transparency, open debate, and an adherence to well-understood and previously agreed-upon rules.”

The lawmakers noted the effect the SCC changes could have on upcoming decisions related to the Keystone XL pipeline and greenhouse gas regulations for the power sector. They asked for the interagency working group in charge of calculating the revised estimates to provide clarity about the process used for determining the new SCC values by July 2. “With such a dramatic increase in the mere three years since setting the initial SCC, the interagency working group points to changes in the models used that predict more impacts from climate change.  Despite years of questions being raised about the data and modeling underlying the claims of catastrophic global warming, to the best of our knowledge, there is no evidence of any circumstances in which the economic valuation of carbon decreased,” the GOP senators said.

SCC Impacts Cost-Benefit Analyses, Rulemakings

Government agencies often use SCC metrics while performing cost-benefit analyses during the federal rulemaking process. The metric aims to evaluate the social and economic impact of damages associated with emitting a tonne of carbon such as property damage from increased flood risk, changes in agricultural productivity and impacts on human health. An interagency working group of a dozen federal agencies, including DOE and EPA, formulated the initial SCC figures in 2010, establishing four sets of estimates based on different sets of modeling and discount rates—or the metrics used to translate how much future damages that occur as a result of climate change will cost in today’s values. The group’s updated estimates from last month find that in 2007 dollars at a 3 percent discount rate—the median estimate listed—the social cost of carbon will be $43 dollars a tonne in 2020 and $71 in 2050. That is compared to $26.30 listed in the previous analysis for the year 2020 and $44.90 for 2050. The task force said the updated SCC estimates reflect the increasing impact of climate change and updated assumptions for factors like sea level rise and adaptation.

The SCC figures have been points of contention from both sides of the climate change debate. While high-profile multinational and environmental groups like the Intergovernmental Panel on Climate Change and the Natural Resources Defense Council have argued that the SCC values assigned from the government studies are not high enough, conservatives and pro-business groups have said that the values overestimate the damage potential of climate change and are too economically burdensome. Heather Zichal, the President’s top energy and environment aide, said this week that the White House stands by the updated SCC figures. “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. We feel very confident in where those numbers landed,” she said during a June 19 event hosted by the magazine the New Republic.