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Policy Integrity Scholarship and Advocacy Shapes EPA’s New Climate Damage Valuations

On December 2nd, EPA released a new methane regulation that includes final updated values for the social cost of greenhouse gas metrics. These metrics, which were published in draft form last year, quantify the expected economic damages caused by greenhouse gas emissions and are used to evaluate the costs and benefits of climate-related regulations and other policy decisions. As the methane rule analysis highlights, the new metrics reveal enormous benefits from reducing climate pollution.

The updated metrics align with many of the recommendations Policy Integrity made in our comments on the draft values, and our scholarship and analysis were cited heavily in the associated federal documentation. EPA calculated climate damages by averaging three damage functions, one of which was based on a paper by Peter Howard and Thomas Sterner. The agency also adopted Policy Integrity's argument for the need to consider global climate damages when setting the scope of damages to examine. Similarly, it relied on our arguments in favor of using lower discount rates when assessing the value of future damages — an approach called for by leading economic experts. Notably, the new metrics still omit many key climate damages, leading to valuations that remain conservative.

Policy Integrity’s new report shows how the new values and discount rates will affect analysis of other major environmental rules. The changes provide greater support for strong regulations to reduce climate pollution from power plants and motor vehicles.