LAWMAKER PUSHES OIRA CHIEF ON SCC CHANGES

Tamar Hallerman
GHG Monitor
7/19/13

The top Republican on a House Oversight and Government Reform subcommittee sharply questioned the White House’s top regulatory official this week on why the Obama Administration did not seek public comment on recent changes made to the government’s social cost of carbon (SCC) estimates. Rep. James Lankford (R-Okla.), chairman of the Energy Policy, Health Care and Entitlements Subcommittee, said it “raises some red flags” that the White House included increases to its SCC estimates—the metric used to gauge the future social and economic costs of emitting a tonne of carbon into the atmosphere—tucked deep into new efficiency standards for microwave ovens earlier this summer and did not publicize the change or ask for public input. “The social cost of carbon will affect the cost of electricity … and every product that’s manufactured and transported in America. This is no simple rules change with little effect,” Lankford said during a hearing on the SCC changes late this week. “I don’t think it’s unreasonable to ask how this rule changed, why it changed, what’s the science behind the change, who made the change and why it came out right now.”

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. Lankford criticized the White House for not making SCC open for public comment up front. A bill introduced in the House earlier this month would require the White House to accept public comment on recent changes to its social cost of carbon estimates.

Three Models Determine SCC

Reviewed by an intergovernmental group of federal agencies, the new SCC figures represent a significant increase from the initial figures the government began using in 2010. The updated estimates find that in 2007 dollars at a 3 percent discount rate—the median estimate listed—the social cost of carbon will be $43 a tonne 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 known as FUND, DICE and PAGE 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.

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.
Lankford Questions 50 Percent Increase

Lankford questioned Shelanski on the large increases in some of the SCC estimates between 2010 and 2013. “There’s a 50 percent increase on the 3 percent discount rate” in one of the updated SCC models, he said. “That’s a fairly significant increase from 2010, which raises some red flags. If the model is a trustworthy one, [why] has it proven to be wrong by 50 percent in three years?” Shelanski responded that when the initial SCC modeling was published in 2010, “it was well understood that those were the best models available, they were well peer-reviewed, but they were also under development and would change.” He added that the changes in the SCC value between 2010 and 2013 were made only from “refinements to the underlying models” within FUND, DICE and PAGE. “The federal government inputs, such as the discount rate, population growth, climate sensitivity distribution and socio-economic trajectories used to develop the 2010 estimates remain unchanged,” he said.

Meanwhile, Subcommittee Ranking Member Jackie Speier (D-Calif.) said that while “there is room for disagreement with any process,” she challenges the SCC’s critics to “bring their own suggestions on how to improve” the SCC and how it is calculated. “What I would not agree with, are those critics who advocate that we make no estimate. That would be a colossal mistake for any of us in a position of responsibility to make,” Speier said. A group of Senate Republicans challenged the new estimates last month, arguing that the new figures were devised behind closed doors to advance the President’s regulatory agenda and kill the case for projects favored by Republicans like the Keystone XL pipeline.