The Social Cost of Carbon is Going Up
The social cost of carbon is defined by environmental think tank Resources for the Future as "an estimate, in dollars, of the economic damages that would result from emitting one additional ton of greenhouse gases into the atmosphere." This estimate is crucial for guiding government policy on high-emission activities. The social cost of carbon will be updated at the end of February, and will likely be higher.
Resources for the Future: Unpacking the Social Cost of Carbon, March 30, 2021.
Why this Matters
If the social cost of carbon goes up, industries that cause higher levels of pollution will be more expensive to operate, and conversely, policies that lower emissions would become more economically feasible.
This would help lower the world's emissions, which is increasingly urgent. Carbon levels hit a three-million-year high last year, reversing the drop in emissions during the first year of the pandemic, and the Rhodium Group estimated that emissions will surpass pre-pandemic levels this year.
Reuters: 2021 saw jump in greenhouse-gas emissions, says report, January 10, 2022.
Revising Carbon's Social Cost
The Trump Administration discounted future damages caused by climate change in order to lower the social cost of climate change. By using an estimate that made carbon emissions seem less harmful, they were allowed to skyrocket.
President Biden, on his first day in office, implemented an executive order that would reassess the social cost of carbon and in the meantime, set it at the pre-2017 $51 per metric ton. But given the prevalence of extreme weather events last year, it seems that this is still too low. In a paper published this week, economists found that this figure won't get us to net-zero emissions by 2050.
A spokesperson for the Office of Management and Budget told Axios:
This Administration is committed to accounting for the costs of greenhouse gas emissions as accurately as possible, and we remain on track to provide a more complete revision of the estimates on a timeline consistent with what we had outlined to the public in February 2021.