Putting a Social Price on Carbon. Is $37 a Ton Adequate?

Dollar Sign Christies Images Via Bloomberg

Feb. 27 — The models used by a federal interagency working group to determine the value regulators will use to determine the cost of carbon dioxide emissions hasn't been adequately peer reviewed, several industry groups told the White House.

The federal government's revised $37 per ton social cost of carbon figure also fails to meet the White House Office of Management and Budget's guidance for developing influential policy-relevant information as required by the Information Quality Act, 19 industry groups said in joint comments.

“The SCC estimates are the product of a 'black box' process and any claims to their supposed accuracy (and therefore, usefulness in policymaking) are unsupportable,” the industry groups said.

The industry groups, including the U.S. Chamber of Commerce, the American Chemistry Council, the American Petroleum Institute and the National Association of Manufacturers, said the OMB and the interagency working group that developed the revised social cost of carbon figure haven't made publicly available the data underpinning their decision.

They argued that it is impossible to comment on the revised figure without understanding the assumptions that went into its development.

“Providing an opportunity to comment, but then denying or withholding access to the data necessary to inform such comments, may be designed to give a superficial appearance of transparency and collaboration, but, in reality, merely perpetuates an impermissibly opaque process,” they said.

Cost Set in November

In November, federal agencies set the social cost of carbon at $37 per metric ton in 2007 dollars for 2015.

That is up from the $24 per metric ton figure established in 2010. The White House said the increase was the result of better data input into the models.

The social cost of carbon is used to calculate impacts such as the net effects on damaged property, agriculture and human health from extreme weather linked to climate change for each metric ton of carbon dioxide emissions. The comment period closed Feb. 26.

The industry groups said that the models used to generate the revised figure haven't been subject to an adequate peer review.

“The SCC estimates are as much a product of the inputs to the models as they are the product of the models themselves,” the industries said. “Stated plainly, if unreliable or questionable data are entered into the models, there is no basis for concluding that reliable estimates would result. The inputs that drive the SCC estimates (and the input selection criteria) were never peer reviewed—nor are the majority of them even known.”

Environmental groups said Feb. 26 that the models used by the interagency working group that developed the updated carbon figure rely on outdated science and may not reflect the full cost of carbon dioxide's impact.

Carbon Figure in Use

The industry groups said they suffered a “tangible harm” from the revised carbon cost figure because it was already being used by agencies such as the Environmental Protection Agency and the Energy Department before the comment period closed.

They argued that the models used by the interagency working group produced a broad range of figures for the social cost of carbon, making it unsuited for use in assessing the impact of federal regulations and actions. The interagency working groups hasn't adequately assessed the uncertainties involved, the industry groups said.

Some of those same industry groups petitioned the White House in September to withdraw its figure on the social cost of carbon and repeat its analysis through a publicly transparent process.

OMB announced a new public comment period on the social cost of carbon figure in November after the number was revised from $38 per metric ton to $37 per ton.


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