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Policy Impacts

Supporting the Social Cost of Carbon

The Social Cost of Carbon (SCC) is the best available estimate of the damage done by each ton of carbon dioxide that is released into the air, and Policy Integrity has been a leader in encouraging and tracking use of the SCC in both federal and state-level policies. In late 2019, a state court affirmed New York’s reliance on the SCC, specifically citing Policy Integrity’s brief and evidence showing that the Social Cost of Carbon is the “best tool to reflect the environmental monetary damages attributable to reduced carbon emissions.” The court ruling will provide guidance for other states pursuing climate policies.

On the federal level, Policy Integrity played a role in a critical court case supporting the use of the SCC. The U.S. Court of Appeals for the Seventh Circuit upheld Department of Energy’s (DOE) use of the SCC in its analysis of the agency’s energy efficiency standards for commercial refrigerators. The judges’ opinion acknowledged Policy Integrity’s brief for the case. This marked the first time that a court had ruled on the legality of an agency’s use of the tool. The judges adopted reasoning consistent with many of our brief’s arguments about the SCC, while rejecting a host of arguments that are often used to challenge rules that reduce emissions. Policy Integrity’s brief was the only one to address most SCC issues. As a result of this ruling, federal agencies can be confident in using the SCC, which could greatly increase the economic efficiency of rules that reduce carbon pollution. And though the Trump administration has recently sought to pull back on using the tool, the case continues to provide strong support for continued use of the SCC. The case garnered considerable media attention, and Cass Sunstein, former head of the Office of Information and Regulatory Affairs, called the decision “one of the most important climate change rulings ever.”