In the News

EPA scored a victory when the Supreme Court reinstated its cross-state emissions rule for power plants, but changing market and compliance conditions may force the agency to rethink how the rule is implemented. … The EPA’s Clean Air Interstate Rule, a predecessor to the cross-state rule that the D.C. Circuit also struck down, has remained in effect. Now the EPA needs to address how it will transition between the two programs, state air pollution regulators and attorneys said. “Having this issue in legal limbo for so long, EPA should move as quickly as they can to implement,” Richard Revesz, director of the Institute for Policy Integrity, told Bloomberg BNA April 29

Economists and scientists may have seriously underestimated the “social cost” of carbon emissions to future generations, according to a warning in the journal Nature. Social cost is a calculation in U.S. dollars of the future damage that might be done by the emission of one metric ton of carbon dioxide as greenhouse gas levels soar and climates change, sea levels rise and temperature records are broken in future decades. How much would society save if it didn’t emit that ton of carbon dioxide? One recent federal estimate is $37. Such a measure helps civil servants, businessmen and ministers to calculate the impact of steps that might be taken. On the other hand, says Richard Revesz of New York University School of Law and a research team consisting of U.S. and Swedish colleagues, assumptions of cost per ton – and these range from $12 to $64 according to various calculations – are based on models that need to be improved and extended. Our descendants will pay a higher price for greenhouse gas build-up as real costs are updated over time.

Rooftop solar electricity generation may seem like something that everyone can agree on. It helps homeowners save money on their electricity bills. It can help support the rest of the electrical grid during times of high usage or outages. It can help utilities meet their renewable energy mandates. And, if it replaces dirty fossil fuel power, it will reduce harmful air pollution, including carbon pollution that threatens to warm our climate and destroy our planet. However, utilities are concerned that increased development of rooftop solar generation will threaten their ability to maintain vital infrastructure, equitable rates for all ratepayers, and their own financial viability.

Future generations will have to pay more for today’s carbon emissions than what governments across the world currently understand. The climate models used by policymakers around the world to estimate the economic and social costs of CO2 emissions have to be improved according to Thomas Sterner, professor of Environmental Economics at the School of Business, Economics and Law, University of Gothenburg, and six other scientists in the prestigious journal Nature.

The U.S. government makes lots of regulatory decisions that have important implications for the climate. Any benefit-cost analysis of these decisions ought to include their climate impact. If a particular decision will lead to more greenhouse gas emissions — building the Keystone XL pipeline, for example — that figure ought to go on the cost side of the ledger. If the decision will lead to fewer greenhouse gas emissions — such as carbon pollution standards for power plants — that figure adds to the benefits side. Such benefit-cost analyses require a dollar figure for the social cost of carbon pollution. The best we currently have is around $40 for each ton of carbon dioxide emitted, calculated by averaging results from three of the most prominent and well-established climate-economic models. Uncertainties around the $40 value notwithstanding, putting in $0 is not an option. That, sadly, is what some with clear stakes in the outcome are arguing, however weak the ground they stand on. In fact, $40 is very likely on the low end of the true cost of CO2, as a recent commentary in Nature points out.

Amid a major lobbying effort in Washington surrounding the social cost of carbon, has the Obama administration been transparent enough with its modeling and final cost determination? How likely is a legal challenge to the administration’s current rule? During today’s OnPoint, Michael Livermore, a professor at the University of Virginia School of Law and a senior adviser at the Institute for Policy Integrity, explains why he believes the administration could be underestimating the social cost of carbon.

Costs of carbon emissions are being underestimated, but current estimates are still valuable for setting mitigation policy, say Richard L. Revesz, Peter H. Howard, Kenneth Arrow, Lawrence H. Goulder, Robert E. Kopp, Michael A. Livermore, Michael Oppenheimer, and Thomas Sterner.

On 31 March, the Intergovernmental Panel on Climate Change released its latest report on the impacts of climate change on humans and ecosystems. These are real risks that need to be accounted for in planning for adaptation and mitigation. Pricing the risks with integrated models of physics and economics lets their costs be compared to those of limiting climate change or investing in greater resilience. Last year, an interagency working group for the U.S. government used three leading economic models to estimate that a tonne of carbon dioxide emitted now will cause future harms worth US$37 in today’s dollars. This ‘social cost of carbon’ represents the money saved from avoided damage, owing to policies that reduce emissions of carbon dioxide.

In an article published in the April 10 issue of Nature journal, Nobel laureate economist Kenneth Arrow and Lawrence Goulder, both of Stanford, along with six other law and economics scholars, said the controversial “social cost of carbon” calculations developed by the federal government are too low, not too high, as conservatives argue.

In a new report as part of the Cost of Carbon Pollution project, a trio of groups—the Environmental Defense Fund, NYU’s Institute for Policy Integrity, and the Natural Resources Defense Council—explain how the Obama administration is continuing to lowball these “social cost of carbon pollution” estimates. … The debate seems obscure, but it could actually have an effect on hundreds of rules set by the federal government, says Ricky Revesz, director of the Institute for Policy Integrity and former dean of NYU’s School of Law. A high enough dollar cost figure could justify the government investing in and setting policies that spur the development of new energy and carbon capture technologies that reduce emissions. A low figure means that fewer investments would probably occur. Of course, there is uncertainty in estimating these figures but Revesz says that is a fact of life. “Anything that’s important has uncertainty attached to it,” he says. “If anything, the number has always been understated.”

A new report by the Environmental Defense Fund, the Institute for Policy Integrity, and the National Resource Defense Council shows how far away we are from understanding carbon emissions’ full cost to society. The U.S. government estimates that the social cost of carbon emissions is about $37 a tonne. But the report finds that the “latest scientific and economic research shows that $37 should be viewed as a lower bound” for the cost of carbon. Current models, the report says, miss or poorly account for the damage carbon does to human health, agriculture, oceans, forests, and ecosystems.