In the News

The seven scientists behind the article, due to be published 10 April, conclude that the reports by the UN climate panel serve an important function in setting the agenda for climate research. Yet the most important role of the Intergovernmental Panel on Climate Change (IPCC) is to inform the global political discussion on how the harm caused by climate change should be handled.

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.

The federal government’s revised social cost of carbon figure is too low to adequately capture several social and economic harms posed by climate change, environmental groups said in a report released March 13. The $37 per metric ton figure that federal agencies use to calculate the impact of climate change in their regulations is either missing or improperly quantifying the threats posed by increased risk of high-ozone days, drought, ocean acidification, loss of species and habitat and other impacts, according to the report, “Omitted Damages: What’s Missing From the Social Cost of Carbon,” issued by the Institute for Policy Integrity, the Environmental Defense Fund and the Natural Resources Defense Council.

Carbon dioxide emissions are causing the climate to change and those changes come with a real cost. The big questions are what’s the price tag for that “social” cost and when does it gets paid? According to a new report, current best estimates could actually be on the low end thanks to “unknown unknowns.” The most recent estimate for the cost of a ton of carbon emissions — referred to as the social cost of carbon — is $37. That number was calculated in 2013 by 12 federal agencies using three models that incorporate both our physical understanding of climate change and the cost of climate impacts around the globe. The new report published March 13 argues that these estimates are far too low because they ignore or poorly quantify 29 key climate impacts. The Cost of Carbon Project, a partnership between the Institute for Policy Integrity, Environmental Defense Fund, and Natural Resources Defense Council, published the report.

The Obama administration’s controversial social cost of carbon underestimates the economic damage done by carbon dioxide emissions by ignoring some of warming’s effects on health and resource availability, according to a report released today by New York University’s Institute for Policy Integrity, the Natural Resources Defense Council and the Environmental Defense Fund. The paper seeks to refute industry allies’ charges that the Obama administration inflated costs when it revised the tally sharply upward last year. The estimate released last May put the SCC at $37 per ton of CO2, up from an estimated $24 a ton in 2010. “While some have questioned the increase in the SCC as too high, a thorough examination of the latest scientific and economic research shows that $37 should be viewed as a lower bound,” report author Peter Howard said. “This is because the studies available to estimate the SCC omit many climate impacts — effectively valuing them at zero.”

The U.S. government uses $37 as its estimate of how much a ton of carbon dioxide emitted into the atmosphere costs, including decreased agricultural productivity, damage from rising sea levels and harm to human health related to climate change. The Obama administration updated that figure, known as the “social cost of carbon,” in November. But a report released Thursday argues that $37 is far too low. It doesn’t include costs of other major climate impacts, such as increased respiratory illness from higher pollen or ozone, or the spread of insect-borne diseases such as Lyme disease, or the toll that ocean acidification will take on fisheries. The report comes from the environmental groups Natural Resources Defense Council and Environmental Defense Fund, and the Institute for Policy Integrity, based at New York University’s School of Law. Policy Integrity economic fellow Peter Howard authored the report, posted on the group’s website, Cost of Carbon.