The Obama administration is quietly moving forward with a regulation at the heart of the president’s global warming plan, based on estimates experts dispute.
Friday is the deadline for comments on the Obama administration’s “social cost of carbon” (SCC) estimate. The administration raised the cost of emitting one ton of carbon dioxide to $37 last year, which will have to be used by federal agencies when crafting new regulations.
Raising the SCC from $21 per ton to $37 per ton would inflate the monetary benefits of regulations that would reduce carbon emissions, which would make it look like President Obama’s plan to cut 80 percent of U.S. emissions by 2050, for example, would yield more monetary benefits than they otherwise would.
But the SCC is based on flawed assumptions. For one thing, even the Working Group that developed the SCC acknowledged: “There is currently a limited amount of research linking climate impacts to economic damages, which makes this exercise even more difficult.”
The American Coalition for Clean Coal Electricity points out that the SCC also inflates the benefits of lowering emissions by using a global analysis, which contradicts regulatory guidelines.
“This creates a mismatch in benefit-cost analyses that overstates the benefits of a regulation by comparing the costs imposed on the U.S. economy to benefits that are assumed to occur everywhere in the world,” ACCCE states in its comments to the White House Office of Management and Budget (OMB).
“In this apples-to-oranges comparison, U.S. consumers would be paying the full cost of future worldwide benefits,” ACCCE adds.
But a bigger flaw in the SCC estimate still exists, according to attorney Francis Menton. The SCC hinges on a global warming metric known as “climate sensitivity” — that is, how much global temperatures would rise from a doubling of atmospheric carbon dioxide concentrations.
The SCC estimate was derived using three different economic modelling programs which translate atmospheric concentrations into temperature rises based on the United Nations Intergovernmental Panel on Climate Change’s (IPCC) climate sensitivity finding. Those temperature rises on then converted into economic damages.
The latest update to the SCC from November 2013 was based on IPCC data from the IPCC’s climate report from October of last year. The most recent IPCC global warming report, however, could not give a central climate sensitivity estimate.
“No best estimate for equilibrium climate sensitivity can now be given because of a lack of agreement on values across assessed lines of evidence and studies,” the IPCC noted in its report from last year.
“First, it means that IPCC is clear that it has not been able to develop a credible subjective probability density function for the equilibrium climate sensitivity parameter,” Menton wrote in his OMB comments.
“Second, it means that the IPCC admits that it does not have a credible mean, mode or median value of the equilibrium climate sensitivity parameter,” Menton added. “In the mathematics of Decision Theory, this situation is called Complete Ignorance Uncertainty.”
While the IPCC said they were 95 percent confident global warming was driven by human greenhouse gas emissions, they have not given a central estimate for climate sensitivity and were also less certain about the lower-bound climate sensitivity estimate.
“Clearly, America’s initial conditions in terms of its fossil fuel resources, its economic growth prospects, its debt levels, and so forth, matter, if the government is going to arbitrarily increase U.S. energy prices via such carbon taxes,” Menton said.
Environmentalists have supported the increased SCC. Even former vice president Al Gore has weighed in on the SCC and has helped environmentalists deliver more than 120,000 comments to the White House Office of Management and Budget (OMB) in support of putting a high cost on carbon emissions.
“Right now, carbon polluters are using our atmosphere as an open sewer, and it’s costing all of us– in disaster clean-up, altered growing seasons and public health impacts,” said Gore, whose personal investments would likely benefit from a high cost of carbon estimate.
“The carbon calculus needs to accurately reflect the high cost we’re all paying for the damage done to our planet,” the failed presidential candidate added. “The Social Cost of Carbon is a vital step in doing just that.”
But pushing the SCC estimate would inflate the benefits of radical environmental policies, while masking the true costs of such rules. It would also give more credibility to those pushing for a tax on carbon dioxide emissions. Having an official government estimate of the monetary damages of carbon would provide a jumping of point for lawmakers to peg the price of carbon at.
“In short, for many reasons, the current SCC estimates are not only worthless; they are extremely dangerous to put forward by this task force as credible input to U.S. energy, economic and national security-related policy analyses,” Menton said.
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