The Social Cost of Carbon - Options for Applying a Metric in Flux
20 September 2023
In essence, the social cost of carbon is an estimate of the damage caused by each ton of carbon pollution released into the air, in dollars. [...] All three of the options presented herein have corresponding values for the social cost of methane and the social cost of nitrous oxide. [...] In its 2021 update, the Interagency Working Group acknowledged that its valuations were substantial underestimates due to the use of high discount rates and the failure to incorporate the latest climate science and economics.33 Key stakeholders, including the National Academies of Sciences, have been calling for an update to the Working Group’s approach for years. [...] States should therefore be wary of adopting the Working Group’s valuations, and any that apply the Interagency Working Group’s valuations should follow the practice of several states that place greater weight on the higher end of the range (i.e., the values that use a 2.5% discount rate35 or a 3% discount rate and 95th percentile damage estimate36). [...] Dep’t of Env’t Conservation, Climate Change Guidance Documents Interagency Working Group on the Social Cost of Greenhouse Gases, 2021 Technical Support Document Reports for Policymakers The Cost of Climate Pollution, CostOfCarbon.org • States Using the SCC • Frequently Asked Questions Justin Gundlach & Iliana Paul, The Social Cost of Greenhouse Gases: A Guide for State Officials (2022).