Earlier this year, the Biden administration reestablished the Interagency Working Group on the Social Cost of Greenhouse Gases. Its first move was to discard the Trump administration’s flawed social cost values, which significantly understated the per-ton climate damages of greenhouse gas emissions. The Working Group published interim values, based on Obama-era estimates, and is now working to revise those values by January 2022 to incorporate the latest science and economics.
Broadening the Use of the Social Cost of Greenhouse Gases in Federal Policy
While federal agencies and U.S. states have on occasion applied the social cost of greenhouse gas valuations to other areas, agency use of these valuations outside of regulatory cost-benefit analysis has been somewhat sporadic and limited. We highlight a number of areas in which the federal government should expand its application of the social cost of greenhouse gases.
Strategically Estimating Climate Pollution Costs in a Global Environment
Debate has reemerged about whether federal agencies’ policy analyses should focus on climate pollution costs that will occur only within U.S. borders, rather than on the full global valuation of climate damages. We encourage the Working Group to focus on global estimates—but also provide robust domestic-only valuations as a backstop for future estimates of climate costs.
About Time: Recalibrating the Discount Rate for the Social Cost of Greenhouse Gases
Nearly two decades have passed since the federal government holistically reviewed its broader choice of discount rates for analyzing agency actions. We highlight the new data and literature that strongly point toward the need for lower discount rates, and recommend a declining discount rate schedule that would achieve a more consistent approach.
Expert Elicitation and the Social Cost of Greenhouse Gases
Researchers often formally elicit the views of subject-matter experts to help clarify consensus on complex or uncertain topics. Our report highlights several updates, incorporating data from expert elicitations, that the Working Group should consider as it works to improve the social cost of greenhouse gases.
Playing with Fire: Responding to Criticism of the Social Cost of Greenhouse Gases
Federal agencies will need to offer considered and detailed responses to objections raised in the notice-and-comment processes for individual regulations or administrative actions that apply the Working Group’s social cost valuations. The Working Group should consider providing such responses now, and our report offers a blueprint for responding to objections being raised by opponents of climate regulation.