Institute for Policy Integrity

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Comments to Minnesota on the Social Cost of Carbon

July 31, 2017

The Minnesota Public Utility Commission (PUC) updated its social cost of carbon (SCC) values last week to a range of approximately $9 to $43, drawing from the 2015 Interagency Working Group (IWG) estimates. Minnesota’s use of the IWG SCC values recently came under scrutiny by industry groups in the state, who cited the recent energy executive order as reason to revisit the PUC externality estimates. After initial oral arguments, parties were invited to submit revised SCC values. Accordingly, we shared our recent comments to the U.S. Army Corps of Engineers, along with a cover letter explaining the importance of our analysis to the PUC.

Our comments make the case that despite Executive Order 13,783, agencies should continue to use the most-recent IWG estimates for the social costs of greenhouse gases, as this would be consistent with OMB’s Circular A-4. To the Minnesota PUC, we emphasized the following points from these comments: reliance on a global estimate of the social cost of greenhouse gases is consistent with Circular A-4; reliance on a 3% or lower discount rate for inter-generational effects—or a declining discount rate—is consistent with Circular A-4; and Circular A-4 requires agencies to coordinate and use the best available data and methodologies to estimate the social cost of greenhouse gases.

Filed under Climate Change and Energy Policy, Public Comments