What is the social cost of carbon?
To turn the tide against climate change, on the day of his inauguration US president Joe Biden signed an executive order instituting a raft of policy changes and initiatives. One directed his team to reassess the social cost of carbon. This seemingly obscure concept puts a number on how much damage a metric ton of carbon dioxide emitted today will do in the future, in order to show how much a given climate policy would benefit the economy in the long run. More than in previous assessments, Biden’s team explicitly called for considerations of environmental justice and intergenerational equity, referring to the perils of climate change to future generations.
On Feb. 26, the Biden administration announced an initial estimate of $51 per ton of carbon. But the cost is not a settled matter, and Biden’s advisers are still studying the latest research to make a more comprehensive update. Scientists and economists continue to debate the value of the social cost of carbon—experts have come up with a broad range of numbers, some more than $200 per ton of carbon—as well as its scope and effectiveness at shaping policy at a key climate moment. Their analysis involves making decisions about exactly which climate costs to include and whether government policies should aim to pay now or pay later on the way to the administration’s stated goal of having a carbon-neutral economy by 2050.
The concept isn’t new. The federal government began incorporating the social cost of carbon in climate-related regulations in 2010, factoring it into requirements for the fuel economy of cars and trucks, the levels of air pollution from power plants, and the energy efficiency of consumer appliances. But the Trump administration backtracked on these and many other regulations. Now, the US has less than a decade left to slash carbon emissions by about half to avoid the most disastrous climate impacts, according to the United Nations Intergovernmental Panel on Climate Change.
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