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Examining the Social Cost of Carbon

August 16, 2013 in Economics

By Paul C. "Chip" Knappenberger

Paul C. “Chip” Knappenberger

On Friday, Aug. 9, the Federal Register posted an announcement calling for public comments on the use of the “social cost of carbon” in DOE rulemaking. The members of the House of Representatives have already presented their opinions on social cost of carbon by passing a bill just prior to recess prohibiting its use by the EPA without consent of Congress. It is unclear whether the Senate will take up the issue, although the prohibition would almost certainly face a presidential veto. But without good cause.

The social cost of carbon is a poor concept from the start. It is an ill-conceived, one-sided supposed measure of the damages associated with climate change resulting from human emissions of carbon-containing greenhouse gases (such as carbon dioxide and methane). Or, rather, it is a measure of the damages predicted to occur by a collection of computer models — computer models which themselves largely fail at capturing the climate evolution during recent decades.

Under normal circumstances, little attention would be paid to the esoteric squabbling of economists arguing about how to place a largely theoretical value on a measure which is imprecise and ever-changing by its very nature. However, the social cost of carbon has been elevated to the limelight by the Obama administration which has introduced it into the cost-benefit analysis that must be performed for new rules and regulations.

But in its haste to find a way to regulate greenhouse gas emissions, the administration has turned its back on both standing federal guidelines as well as sound science.”

The social cost of carbon — or its converse, the alleged benefits conferred by reducing carbon dioxide emissions — has become one the administration’s favorite tools for counteracting the high costs associated with an ever-growing string of actual and proposed new rules governing everything from microwave oven efficiency to coal-killing power plant emissions standards.

The administration is so empowered by the social cost of carbon, that, realizing still untapped potential, it recently upped its initial estimates of the social cost of carbon by about 50 percent. By assigning a central damage estimate (cost) of $35 for each ton of emitted carbon dioxide rather than $21 per ton, more and costlier regulations can be neutralized by the purported benefits of greenhouse gas reductions.

But in its haste to find a way to regulate greenhouse gas emissions, the administration has turned its back …read more

Source: OP-EDS

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